Urban Outfitters Inc.
), the retailer of apparel, footwear and accessories, and an
S&P 500 company, is scheduled to report its second quarter
financial results for fiscal year ending January 2013, after the
market closes on Monday, August 20.
The current Zacks Consensus Estimate for the quarter is pegged
at 33 cents a share that reflects a decline of 5.7% from the
prior-year quarter's earnings. The estimates in the current Zacks
Consensus range between a low of 31 cents and a high of 35 cents a
share. The Zacks Consensus estimates revenue to be at $673 million
for the quarter.
Recap of First-Quarter
Urban Outfitters posted better-than-expected first-quarter
results. The quarterly earnings of 23 cents a share beat the Zacks
Consensus Estimate of 20 cents, and came in line with the
prior-year quarter's earnings. Lower shares outstanding as well as
top-line growth benefited the bottom line.
After registering a growth of 9.3% in the fourth quarter of
2012, Urban Outfitters said that total net sales climbed 8.6% to
$568.9 million during the first quarter. However, total net sales
fell short of the Zacks Consensus Estimate of $582 million.
Net sales by brands grew 13.2% to $266.4 million at Urban
Outfitters, 2.9% to $235.1 million at Anthropologie and 19.2% to
$61.7 million at Free People.
Zacks Agreement & Magnitude
The Zacks Consensus Estimate remained stable over the last 30
days, as out of 26 analysts covering the stock, one made upward
revisions and one made downward revisions in the estimates, thus
balancing each other. Also in the last 7 days, no movement was
noticed in the Zacks Consensus Estimate, as only one analyst raised
the estimate and none lowered the same.
Mixed Earnings Surprise History
With respect to earnings surprises, Urban Outfitters missed as
well as topped the Zacks Consensus Estimate over the last four
quarters in the range of negative 10% to positive 15%. The average
remained at 5.2%, suggesting that Urban Outfitters has outpaced the
Zacks Consensus Estimate by the same magnitude in the trailing four
Being a multi-brand and multi-channel retailer, Urban Outfitters
offers a flexible merchandising strategy. The company also has a
significant domestic and international presence with rapidly
expanding e-commerce activities. It remains committed to improve
comparable-store sales performance, adding new brands and
optimizing inventory levels.
Further, to increase customer count, the company plans to
augment store openings in North America and Europe, open retail
outlets in Asia, enhance online and mobile marketing endeavors,
increase wholesale distribution in Europe and Asia, and
considerably expand direct-to-consumer business worldwide.
Moreover, the company's debt-free balance sheet also augurs well
for future growth.
Fashion obsolescence remains the key concern for Urban
Outfitters business model, which includes a sustained focus on
product and design innovation. This may adversely impact the
company's comparable-store sales and margins. Gross margin
contracted approximately 130 basis points to 35.6%, whereas
operating margin shriveled 190 basis points to 9.3%.
Currently, we have a long-term "Neutral" recommendation on the
stock. However, Urban Outfitters, which competes with
Abercrombie & Fitch Co.
), retains a Zacks #4 Rank that translates into a short-term "Sell"
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