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Factors Likely to Impact Urban Outfitters (URBN) Q4 Earnings

Urban Outfitters, Inc. URBN is likely to register a bottom-line decline when it reports fourth-quarter fiscal 2021 results on Mar 2. The Zacks Consensus Estimate for quarterly earnings moved up by a penny in the past 30 days and is currently pegged at 30 cents per share. The consensus mark suggests a decline of 40% from earnings of 50 cents reported in the year-ago quarter. This specialty lifestyle products retailer delivered an earnings surprise of 73.3% in the last reported quarter. However, the company has a trailing four-quarter negative earnings surprise of 36.2%, on average.

Speaking of the top line, the company issued fourth-quarter sales numbers earlier this month. Net sales for the three months ended Jan 31, 2021, fell 6.9% year over year to $1,088.4 million.

Key Aspects to Note

Urban Outfitters is bearing the brunt of the coronavirus-led decline in store traffic, which is hampering store productivity. Notably, the company’s fourth-quarter sales were affected by lower store net sales. Brand-wise, sales were down 4.9%, 12.2% and 55.9% across Urban Outfitters, Anthropologie Group and Menus & Venues, respectively. Further, net sales in the Retail Segment fell 7%, while the same in the Wholesale Segment dropped 7.1%. Comparable Retail segment sales declined 7% on account of negative retail store net sales as robust conversion rates were unable to offset lower store traffic due to the pandemic and related occupancy restrictions. The dismal top-line performance in the fourth quarter is likely to have taken a toll on the bottom line as well.

While updating on holiday sales results in January, Urban Outfitters cautioned about deleverage in fourth-quarter gross profit margins by several hundred basis points. Deleverage in delivery and logistics expenses on higher penetration of digital sales, carrier surcharges and expedited shipments are likely to have hurt margins. Also, higher store occupancy costs due to negative store sales are likely to have affected margins.

Urban Outfitters, Inc. Price, Consensus and EPS Surprise

 

Urban Outfitters, Inc. price-consensus-eps-surprise-chart | Urban Outfitters, Inc. Quote

 

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Urban Outfitters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Urban Outfitters currently carries a Zacks Rank #4 (Sell) and an Earnings ESP of -10.42%.

Stocks Poised to Beat Estimates

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

Target Corporation TGT currently has an Earnings ESP of +2.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree, Inc. DLTR currently has an Earnings ESP of +1.94% and a Zacks Rank #2.

Foot Locker, Inc. FL has an Earnings ESP of +0.87% and a Zacks Rank #3, at present.

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