Urban Outfitters Inc.
) in its recent SEC filing stated that so far in the first
quarter of fiscal 2014, it has been witnessing high single-digit
growth in comparable-store sales. Consequently, shares of this
Zacks Rank #3 (Hold) company rose 4.4% to $40.10 during
after-market trading hours.
Urban Outfitters' initiatives to optimize inventory level and
focus on increasing customer count through store expansion,
online and mobile marketing endeavors and expansion of
direct-to-consumer business have paid off well amid the sluggish
The company posted fourth-quarter fiscal 2013 earnings of 56
cents a share, which more than doubled from earnings of 27 cents
in the comparable year-ago quarter. Total net sales of Urban
Outfitters climbed 17.3% to $856.8 million, while comparable
retail segment net sales including the comparable
direct-to-consumer channel escalated 11%.
Gross profit for the quarter soared 42.6% to $313.7 million,
whereas gross margin expanded 650 basis points to 36.6%.
Operating income marked a significant improvement during the
quarter and surged by 104.4% to $131.9 million, while operating
margin escalated 660 basis points to 15.4% due to rise in regular
price comp sales and efficient inventory management.
Despite robust results, this stock's earnings missed the Zacks
Consensus Estimate by a penny. In fact, Urban Outfitters has
missed the Zacks Consensus Estimate for the 2nd straight quarter,
which is a matter of concern. A look at the company's earnings
surprise history reveals that it has missed the Zacks Consensus
Estimate in 3 of the last 5 quarters.
Going forward, management now projects fiscal 2014 gross
margin to increase by 50 basis points. Alongside, Urban
Outfitters hinted that web products carrying low margin and
increased delivery expenses are apprehended to weigh upon the
margins. Moreover, macroeconomic headwinds and increased
competition remain a drag on the stock.
Other Stocks to Consider
Until any further upward revision in Urban Outfitters' rank,
other stocks worth considering in the non-food retail, wholesale
Lumber Liquidators Holdings Inc.
), all of which carry a Zacks Rank #1 (Strong Buy).
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