Strong holiday sales results facilitated
Urban Outfitters Inc
) to attain a new 52-week high of $43.46 on Friday, before
closing at $43.39. Moreover, shares of this Zacks Rank #2 (Buy)
company has generated a solid return of approximately 72.9% in
the past one year.
Drivers that Triggered Momentum
Urban Outfitters posted sturdy sales results for the key
holiday season. The company stated that net sales for the two
months period ended Dec 31, 2012, jumped 15% year over year to
$666 million. Comparable retail segment net sales, including
comparable direct-to-consumer channel, escalated 9%, reflecting
robust sales across all brands.
Comparable retail segment net sales jumped 33% at Free People,
while it rose by 10% and 5% at Urban Outfitters and
Anthropologie, respectively. Net sales at Direct-to-consumer
increased 38%, while the wholesale segment marked an elevation of
21% in net sales for the period.
Moreover, for the 11-month period ended Dec 31, 2012, total
net sales surged 12% year over year to $2.6 billion, while
comparable retail segment net sales increased 6%. The company
stated that comparable-store net sales edged down 1%, while
Direct-to-consumer net sales soared 29%. Wholesale segment marked
an increase of 11% in net sales during the period.
Besides Urban Outfitters, other apparel and accessories
Francesca's Holding Corp
) recorded strong sales in the holiday season.
Urban Outfitters, being a multi-brand and multi-channel
retailer, offers flexible merchandising strategy. The company
also has a significant domestic and international presence with
rapidly expanding e-Commerce activities.
Going forward, the company remains committed to improve
comparable-store sales performance, sustain investments in
direct-to-consumer business, enhance productivity in existing
channels, add new brands and optimize inventory levels.
Stock's Key Indicators
From the valuation perspective, Urban Outfitters currently
trades at a forward P/E of 26.93x, well above the peer group
average of 13.32x. However, given the debt free balance sheet and
strong fundamentals, the stocks' premium valuation is justified.
Moreover, the company's return-on-equity (ROE) and
return-on-asset (ROA) of 16.8% and 12.1%, respectively, are
higher than the peer group averages. The company's strong
fundamentals are well supported by its long-term estimated EPS
growth rate of 18.3%.
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