Sturdy performance across Anthropologie and Free People brands
Urban Outfitters Inc
) to post better-than-expected third-quarter fiscal 2014 results.
The quarterly earnings of 47 cents a share beat the Zacks
Consensus Estimate by a couple of cents and jumped 17.5% year
Total net sales of Urban Outfitters climbed 11.7% to $774
million during the quarter, reflecting healthy comparable-store
sales performance coupled with sturdy sales through new store
openings and double-digit growth at its wholesale operations.
Total revenue of this Zacks Rank #3 (Hold) stock also came ahead
of the Zacks Consensus Estimate of $770 million.
Urban Outfitters' net sales increased 11.2% to $724.1 million
at the Retail Segment and 20.5% to $50 million at the Wholesale
Segment. Net sales by brands grew 3% to $341.9 million at Urban
Outfitters, 16.2% to $310.1 million at Anthropologie and 29.1% to
$113 million at Free People. Other revenue surged 35.4% to $9
Comparable retail segment net sales, including the comparable
direct-to-consumer channel, escalated 7%.
Comparable retail segment net sales rose by 30% and 13% at
Free People and Anthropologie, respectively, while it declined 1%
at Urban Outfitters.
Supported by strong sales, gross profit for the quarter soared
12.1% to $292.3 million, whereas gross margin expanded 11 basis
points to 37.7%, reflecting lower merchandise markdowns and
better merchandise margins at the Anthropologie and Free People
brands, partly offset by higher merchandise markdowns at the
Urban Outfitters brand in North America.
Operating income rose 12.8% to $105.5 million, while operating
margin increased approximately 12 basis points to 13.6%.
Urban Outfitters remains cautious about the holiday season,
which would be a tough one given the highly promotional
environment and limited shopping period. Retailers will leave no
stone unturned to tap this holiday season, be it early-hour store
openings, promotional events, or heavy discounts. Consequently,
this would keep margins under pressure.
During the quarter the company opened 9 new outlets. In the
fourth quarter the company plans to open 10 new stores, including
2 Anthropologie stores, 4 Free People stores and 4 Urban
Outfitters stores. This will bring the count of new stores opened
during fiscal 2014 to 36, including 15 Urban Outfitters stores,
13 Free People stores and 8 Anthropologie stores.
Other Financial Aspects
Urban Outfitters ended the quarter with cash and cash
equivalents of $194.9 million, marketable securities of $227.5
million and shareholders' equity of $1,596.3 million. Management
expects capital expenditures in the range of $190 million to $210
million for fiscal 2014.
Other Stocks to Consider
Until any further upgrade in Urban Outfitters' Zacks Rank,
other well performing stocks in the retail sector include
), carrying a Zacks Rank #1 (Strong Buy),
Five Below, Inc.
), both sporting a Zacks Rank #2 (Buy).
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