Urban Outfitters is fashionable again

The trendy retailer has recovered from earlier missteps, and its shares won't be heading to the discount rack.

By Jonathan Berr Aug 21, 2013 10:31AM
Shares of Urban Outfitters (URBN) soared more than 8% Tuesday after the trendy retailer reported results that knocked Wall Street's socks off. This is a big change for the Philadelphia-based company, which a year ago had what analysts called "a fashion issue" -- a nice way of saying consumers thought its merchandise was ugly.


Better products, though, have led to better results.

Net income in the recent quarter rose 25% to $76.4 million, or 51 cents per share, versus $61.3 million, or 42 cents per share, a year earlier. Sales jumped 12% to $759 million, the highest in the company's history, fueled by gains across all its major brands. Analysts had expected a profit of 48 cents per share on sales of $768 million. 


Investors, however, were willing to overlook the earnings miss because Urban Outfitters' results were otherwise outstanding. Sales at locations open for at least a year surged 38% at Free People, which specializes in what it calls Bohemian fashions. Those sales rose 9% at Anthropoligie, whose offerings include apparel and housewares. And they gained 5% at its namesake brand.


Pedestrians walk past the Urban Outfitters Inc. store in San Francisco, Calif. (© David Paul Morris/Bloomberg via Getty Images)Fewer markdowns enabled Urban Outfitters to post gross margins of 39.3% in the latest quarter, an improvement from 37.6% a year earlier.


Speaking on the earnings conference call, CEO and co-founder Richard Hayne struck a confident note, saying changes in retail industry "present us with unparalleled opportunities for growth" and that the company had the capital to take advantage of them.


Urban Outfitters is planning to open 35 to 40 new stores during the year, 16 of which will be outside the U.S., as it bets that its well-heeled customers won't hold back on spending the way the less wealthy have been doing. Some on Wall Street are betting that the retailer’s stock has more room to run.


Although the average 52-week price target on Urban Outfitters is $47.31, analysts at Wedbush are forecasting that the stock could reach $52, roughly 19% above where it recently traded. Its price-to-earnings multiple is about 22.3, well under its five-year high of 26.45, according to Reuters.


The time to buy Urban Outfitters is now because the stock doesn’t appear headed to the discount rack anytime soon.


Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Tags: URBN
Aug 21, 2013 12:36PM
Not sure retailers (especially clothing) is where you want to be over the next year, the recovery (as slow as it has been) has stalled.  Clothes are something a family can make last a little longer, and if things go south (like if QE's stop) they will make them last longer.
Aug 27, 2013 11:18AM
Will never be fashionable to me if they continue donating to candidates of Rick Santorum's ilk.
Aug 27, 2013 8:24AM
Aug 21, 2013 12:22PM
is that company where white people go to by clothes to pretend they're black people? that's typical of course if they're liberals, libs are so damn guilt-ridden they need to PRETEND to be someone other than the WHITE race, have you ever seen a white liberal wearing and acting 'black'? it's sooooo  pathetic! beyond the scope, and they had 'issues'?? you don't say?? 'issues' a fancy word for crap in this case, oh I'm sorry 'bohemian' translation: ghetto, thug, trashy, pants hangin' off you azz gangsta, nuff said....

whatsa matter you guilt-ridden hate-driven liberal vermin, hittin' too close to home am I? well you think about that while Egypt burns, obama supported muslim brootherhood animals burning Coptic Christian churches while your fcked up messiah says NOTHING!! oh but trayvon martin he's all over that stupid story!!! BUT BURNING CHURCHES? NOTHING ABOUT THAT!!!!  flying his stupid dog to Martha's Vineyard in the meantime ON A MILITARY BILLION DOLLAR OSPREY TRANSPORT NO LESS!!!

 thanks to your black muslim phony 'unifier', yep we're sooo damn unified that the mid east is burning, we're in staggering financial ruin, unemployment's spikin' UPward not down....Detroits in uber bankruptcy and the market is plummeting...yep oh the unification of it all!!
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