Send me real-time posts from this site at my email

Urban Outfitters (URBN) Q4 Sales Decline Y/Y: Here's Why

The impact of the ongoing coronavirus pandemic was clearly visible in Urban Outfitters, Inc.’s URBN fourth-quarter fiscal 2021 sales. The metric not only declined year over year but also fell short of the Zacks Consensus Estimate. We note that sales dipped across major brands — including Urban Outfitters and Anthropologie Group — except Free People and Nuuly. Even stellar digital channel performance was not enough to offset lower store net sales.

Let’s Introspect

This lifestyle specialty retail company stated that net sales for the three months ended Jan 31, 2021, fell 6.9% year over year to $1,088.4 million. The metric also missed the Zacks Consensus Estimate of $1,101 million, following a beat in the preceding two quarters. The company informed that lower store net sales were partly offset by double-digit growth in digital channel sales.

Brand-wise, net sales were down 4.9% year over year to $428.1 million at Urban Outfitters and 12.2% to $431.4 million at Anthropologie Group. Again, Menus & Venues net sales amounted to $3 million, down 55.9% from the prior-year quarter. Nonetheless, the Philadelphia, PA-based company registered net sales increase of 1.6% to $219.3 million at Free People. Markedly, Nuuly, the subscription-based rental service for women’s clothes, contributed roughly $6.7 million to net sales, reflecting an increase 11.4% from the year-ago period.

We note that Urban Outfitters’ net sales at the Retail Segment dipped 7% to $1,013.9 million, while the same at the Wholesale Segment dropped 7.1% to $67.9 million. Comparable Retail segment net sales declined 7% on account of negative retail store net sales as robust conversion rates were unable to offset the lower store traffic due to the pandemic and related occupancy restrictions.

By brand, comparable Retail segment net sales declined 6% at Urban Outfitters and 11% at the Anthropologie Group, while rising 6% at Free People. Richard A. Hayne, CEO said, “I am pleased to report that all three brands registered nice improvement in ‘comp’ sales trends in January from that delivered during the Holiday period.”

While updating on holiday sales results on Jan 12, Urban Outfitters cautioned about deleverage in fourth-quarter gross profit margins by several hundred basis points. Management cited that deleverage in delivery and logistics expenses on higher penetration of digital sales, carrier surcharges and expedited shipments would hurt margins. Also, higher store occupancy costs on account of negative store net sales would further dent the margins.

Well Urban Outfitters has been underperforming the Retail - Apparel And Shoes industry for a while now. In the past three months, shares of this Zacks Rank #4 (Sell) have increased 10.6% compared with the industry’s rally of 47.4%.

Store Update

We note that Urban Outfitters has been rational with store openings. Encouragingly, during fiscal 2021, the company opened 20 new retail outlets — seven each Urban Outfitters and Anthropologie Group stores and six Free People stores (including two FP Movement stores). Meanwhile, it shuttered 10 retail locations — eight Urban Outfitters stores, one Anthropologie Group store and one Free People store. In the aforementioned period, six franchisee-owned stores were closed — four Urban Outfitters stores, one Anthropologie Group store and one Free People store.

Stocks to Consider

Boot Barn Holdings BOOT, a Zacks Rank #1 (Strong Buy) stock, has a trailing four-quarter earnings surprise of 23.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Children's Place PLCE flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 47.7%, on average.

Genesco GCO has a trailing four-quarter earnings surprise of 71.2%, on average. Currently, the stock sports a Zacks Rank #1.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Urban Outfitters, Inc. (URBN): Get Free Report
Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report
Genesco Inc. (GCO): Free Stock Analysis Report
The Childrens Place, Inc. (PLCE): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue