Factors Likely to Shape Urban Outfitters' (URBN) Q4 Earnings

Urban Outfitters, Inc.URBN is scheduled to release fourth-quarter fiscal 2019 results on Mar 5. In the trailing four quarters, the company's bottom line outpaced the Zacks Consensus Estimate, the average being 14.5%. In the las t report ed quarter, the company delivered a positive earnings surprise of 11.1%.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 79 cents, reflecting an increase of 14.5% from 69 cents per share registered in the year-ago quarter. However, the consensus mark moved south by a penny over the past 30 days.

Factors to Consider

Urban Outfitters is gaining momentum on the back of its strategic endeavors such as store-expansion efforts, increase in digital penetration, growing wholesale operations, technology advancements and merchandising improvements. Furthermore, management is making efforts to enhance the performance of its brands through store refurbishment and by bringing in more compelling assortments.

Being a multi-brand and multi-channel retailer, the company offers flexible merchandising strategy. Urban Outfitters also has a significant domestic and international presence with rapidly expanding e-commerce activities. The company remains committed to improve comparable-store sales performance, sustain investments in the direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.

However, this lifestyle products and services company is grappling with increased SG&A expenses for a while now. Management expects SG&A expenses to increase by approximately 5% in the fourth quarter due to higher digital marketing investments, incentive-based compensation and increased store payroll.

Number Crunching

Urban Outfitters recently informed that net sales for the three months period (ended January 31, 2019) grew 3.7% to $1,128.9 million. Further, the company's Comparable Retail segment net sales rose 3% buoyed double-digit increase in the digital channel, partly offset by a decline in retail store sales. Meanwhile, comparable Retail Segment net sales rose 4% at Free People, 4% at Urban Outfitters and 2% at the Anthropologie Group. Wholesale segment net sales jumped 3%.

Net sales by brands improved 3.1% to $447.5 million at Urban Outfitters, 3.9% to $464.6 million at Anthropologie Group, 3.8% to $209.3 million at Free People and 18.1% to $7.5 million at Food and Beverage.

What Does the Zacks Model Say?

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Urban Outfitters has a Zacks Rank #4 and an Earnings ESP of -0.50%, which make surprise prediction difficult.

Stocks With Favorable Combination

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to pos t earnings beat.

Zumiez Inc. ZUMZ has an Earnings ESP of +0.45% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Foot Locker, Inc. FL has an Earnings ESP of +1.26% and a Zacks Rank #2.

Abercrombie & Fitch Co. ANF has an Earnings ESP of +2.28% and a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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