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
7Comments
Aug 21, 2013 12:36PM
avatar
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
avatar
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
avatar
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!!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

104
104 rated 1
252
252 rated 2
457
457 rated 3
639
639 rated 4
495
495 rated 5
538
538 rated 6
704
704 rated 7
503
503 rated 8
350
350 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.