Negative September sales have continued into Urban Outfitters third-quarter

Negative September sales have continued into Urban Outfitter's third-quarter

US lifestyle retailer Urban Outfitters said the negative comparable retail sales it reported in September have continued into its third-quarter.

Due to the lower than expected sales, the company said it believes its gross profit margin may deleverage for the third quarter at a rate greater than during the first half of the year. This, the firm said, could negatively impact earnings.

In August, the firm reported a decline in earnings to US$67.5m from $76.4m a year earlier. Gross profit declined 194 basis points, but total sales were up 7% to $811.2m.

FB&R analyst Susan Anderson believes Urban Outfitters is likely caught in "structural shift".

"We do not yet see a turnaround catalyst for Urban Outfitters and believe it will continue to be pressured by the shifting teen/young adult landscape (increased competition from e-commerce, fast fashion, international entrants, and spending shifts). We appreciate the differentiated nature of Urban Outfitters merchandise but believe the price points continue to be elevated for the teen/young adult consumer.

"In the past, Anthropologie was able to offset much of the Urban Outfitters weakness, but the ability could be reduced going forward, particularly with weak missy spending patterns," she noted.