Urban Outfitters: What to Expect in its Q3
Urban Outfitters, Inc. (NASDAQ: URBN) is a Philadelphia, Pennsylvania based American specialty retail company that owns and operates over 400 locations around the world across five retail brands: Urban Outfitters, Anthropologie, Free People, Terrain, and BHLDN. The retailer is scheduled to release its fiscal third quarter earnings report on Monday, November 17th after market close.
The company is expected to post $0.42 earnings per share. During the same quarter last year, Urban’s EPS was $0.47, a decrease of 11% year-over-year
Urban Outfitters has said that its same-store sales have continued to decrease from September into October. As a result of lower-than-expected sales, management anticipates gross profit margin to remain under pressure in the quarter, possibly deleveraging at a higher rate than the first half of the fiscal year. Management indicated that this will ultimately have a negative impact on the company’s third-quarter earnings per share.
Foot traffic in the U.S has consistently been declining over the past couple of years due to consumers’ preference to online shopping. This has had a negative impact on stores like Urban Outfitters who rely on same-store sales for the majority of their revenue. Despite a major increase in online sales, Urban Outfitters most likely will see a decrease in revenue due to lower foot traffic. As Urban Outfitters’ plans to give an update on its third quarter results, it seems that the instability in its mainline brand has progressed despite its plans to offer fewer discounts in the third quarter. Although strong growth in Anthropologie and Free People have outweighed the significant fall at Urban Outfitters during the past few quarters, the decline may be too strong this time around.
Urban outfitters was the topic of controversy last month that hurt its public reputation when it featured a Kent State University sweatshirt with what seemed to be fake bloodstains for sale on its website, which for many elicited instant associations with the tragic Kent State massacre of 1970. Urban Outfitters denied it had intentionally referenced the shootings and immediately took the sweater off its website after the public backlash.
Will Urban Outfitters have another disappointing quarter, or will it surprise investors with a positive outcome?
On average, the top analyst consensus for Urban Outfitters is Hold