US: Urban Outfitters cautions on Q1 despite earnings growth
- Q4 net earnings up 7.5%
- Sales climb 6%
- Cautions on Q1 performance
Lifestyle retailer Urban Outfitters has cautioned on its current quarter, despite booking an increase in fourth-quarter earnings.
The company behind the Anthropologie and Free People brands recorded earnings of US$88.7m in the three months to the end of January, an increase of 7.5% on earnings of $82.5m last year.
Total net sales were up 6% over the same quarter last year to a "record" $906m. Comparable retail segment sales edged up 1%.
Comparable sales increased 20% at Free People and 10% at Anthropologie. However, comparable sales at the group's Urban Outfitters chain dropped 9% as poor weather conditions hit traffic numbers.
CEO Richard Hayne said "continued challenges" facing the Urban Outfitters brand means the company remains "very cautious" about its first-quarter performance.
The company's share price was down 0.13% to $37.51 in after hours trading yesterday.
FBR & Co analyst Susan Anderson said weather and product issues are likely to continue to weigh on the Urban Outfitters segment in the first quarter.
However, she added: "We believe Anthro and Free People continue to post positive comps (likely +8% and +18%, respectively). We think an Urban Outfitters fix is a late-2014/2015 story, but management is taking the right steps now to enact a turnaround (restructuring, elevating the brand to focus on its core 18-28 demographic, increasing quality).
"Although Urban Outfitters will likely weigh on results near term, we continue to believe URBN offers a compelling long-term value proposition with growth via FP, e-commerce, international, differentiated product, strong omni-channel capabilities, and strong margins."
A turnaround is unlikely for Urban Outfitters in the near term, analysts believe, but changes could yield incremental improvements....
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