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Urban Outfitters (URBN) Up 1.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Urban Outfitters (URBN - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Urban Outfitters due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Urban Outfitters reported better-than-expected results for first-quarter fiscal 2024 wherein the top and the bottom line beat the Zacks Consensus Estimate. Also, sales and earnings grew year over year. The company delivered earnings per share of 56 cents, surpassing the Zacks Consensus Estimate of 36 cents. The bottom line increased 69.7% from 33 cents per share recorded in the prior fiscal year’s comparable quarter.
Deeper Insight
Net sales for the three months ending Apr 30, fiscal 2024, rose 5.9% from the same-period level of fiscal 2023 to $1,113.7 million. The metric beat the Zacks Consensus Estimate of $1,091 million.
Brandwise, net sales were down 13.7% from the comparable period’s level in fiscal 2023 to $308.7 million at Urban Outfitters. The metric was up 12.8% to $473.6 million at Anthropologie Group and 11.4% to $273.7 million at Free People.
Nuuly, the subscription-based rental service for women’s clothes, contributed $51.5 million to net sales, reflecting an increase from $22.8 million recorded in the earlier fiscal year’s comparable period, backed by a 149% rise in the company’s subscribers. Menus & Venues’ net sales amounted to $6.1 million, up 3.4% from the level recorded in the prior fiscal year’s corresponding period.
Segmentwise, net sales at the Retail unit rose 4% to $1,004.1 million, while the metric at the Wholesale unit dipped 11% to $58.1 million. Wholesale unit’s sales were driven by a 14% decline in Free People Group wholesale sales on lower sales to department stores and specialty customers, while Urban Outfitters wholesale sales grew by $1 million.
We note that the comparable Retail segment’s net sales grew 5% from the same-period level of fiscal 2023 backed by a low-single-digit increase in retail-store sales and a high single-digit rise in digital channel sales. This was partly offset by a 1% adverse impact of foreign currency fluctuations. By brand, the comparable Retail segment’s net sales jumped 17% at the Free People Group and 13% at the Anthropologie Group. The same, however, dropped 13% at Urban Outfitters.
An Insight Into Margins
In the quarter under review, gross profit rose 14.8% from the same-quarter level of fiscal 2023 to $371.2 million. Also, the gross margin expanded 260 basis points (bps) to 33.3%, mainly owing to increased initial merchandise markups at all brands on lower inbound transportation costs. The metric also gained from lower merchandise markdowns at the Anthropologie Group and Free People Group brands.
Selling, general and administrative (SG&A) expenses increased 8.2% from the first-quarter fiscal 2023 level to $299.8 million. As a percentage of net sales, SG&A deleveraged 59 bps to 26.9%, mainly due to increased compensation costs.
URBN recorded an operating income of $71.4 million, up from $46.2 million in first-quarter fiscal 2023. As a rate of sales, the operating margin increased 200 bps to 6.4% from the level registered in the quarter ending Apr 30 in fiscal 2023.
Other Financial Details
Urban Outfitters ended the quarter with cash and cash equivalents of $171.7 million and a total shareholders’ equity of $1,850.7 million. As of Apr 30, 2023, total inventory fell 6.3% from the first-quarter fiscal 2023 level to $590.3 million. The Total Retail segment’s inventory slipped 5% while the Wholesale segment‘s inventory tumbled 23%.
URBN provided net cash of $36.3 million from operating activities during the three-month period ending Apr 30. For fiscal 2024, management projects capital expenditures of nearly $230 million.
Urban Outfitters did not repurchase any shares during the fiscal first quarter. As of Apr 30, 2023, URBN had 19.2 million shares remaining under its share repurchase programs.
Outlook
Management is impressed with the sturdy overall consumer demand at the start of the first quarter of 2024. This is likely to continue throughout the second quarter, wherein the total company sales growth will be in the mid-single digits.
This growth will be backed by a mid-single-digit increase in the Retail segment’s comp sales and a high double-digit rise in the Nuuly segment’s sales year over year. This growth will be partly offset by lower sales in the Wholesale segment. Currency headwinds are expected to affect total sales growth by about 100 bps.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Urban Outfitters has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Urban Outfitters has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Urban Outfitters is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Foot Locker (FL - Free Report) , a stock from the same industry, has gained 1.8%. The company reported its results for the quarter ended April 2023 more than a month ago.
Foot Locker reported revenues of $1.93 billion in the last reported quarter, representing a year-over-year change of -11.2%. EPS of $0.70 for the same period compares with $1.60 a year ago.
Foot Locker is expected to post earnings of $0.04 per share for the current quarter, representing a year-over-year change of -96.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -63%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Foot Locker. Also, the stock has a VGM Score of C.
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Urban Outfitters (URBN) Up 1.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Urban Outfitters (URBN - Free Report) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Urban Outfitters due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Urban Outfitters Q1 Earnings Beat, Sales Improve Y/Y
Urban Outfitters reported better-than-expected results for first-quarter fiscal 2024 wherein the top and the bottom line beat the Zacks Consensus Estimate. Also, sales and earnings grew year over year. The company delivered earnings per share of 56 cents, surpassing the Zacks Consensus Estimate of 36 cents. The bottom line increased 69.7% from 33 cents per share recorded in the prior fiscal year’s comparable quarter.
Deeper Insight
Net sales for the three months ending Apr 30, fiscal 2024, rose 5.9% from the same-period level of fiscal 2023 to $1,113.7 million. The metric beat the Zacks Consensus Estimate of $1,091 million.
Brandwise, net sales were down 13.7% from the comparable period’s level in fiscal 2023 to $308.7 million at Urban Outfitters. The metric was up 12.8% to $473.6 million at Anthropologie Group and 11.4% to $273.7 million at Free People.
Nuuly, the subscription-based rental service for women’s clothes, contributed $51.5 million to net sales, reflecting an increase from $22.8 million recorded in the earlier fiscal year’s comparable period, backed by a 149% rise in the company’s subscribers. Menus & Venues’ net sales amounted to $6.1 million, up 3.4% from the level recorded in the prior fiscal year’s corresponding period.
Segmentwise, net sales at the Retail unit rose 4% to $1,004.1 million, while the metric at the Wholesale unit dipped 11% to $58.1 million. Wholesale unit’s sales were driven by a 14% decline in Free People Group wholesale sales on lower sales to department stores and specialty customers, while Urban Outfitters wholesale sales grew by $1 million.
We note that the comparable Retail segment’s net sales grew 5% from the same-period level of fiscal 2023 backed by a low-single-digit increase in retail-store sales and a high single-digit rise in digital channel sales. This was partly offset by a 1% adverse impact of foreign currency fluctuations. By brand, the comparable Retail segment’s net sales jumped 17% at the Free People Group and 13% at the Anthropologie Group. The same, however, dropped 13% at Urban Outfitters.
An Insight Into Margins
In the quarter under review, gross profit rose 14.8% from the same-quarter level of fiscal 2023 to $371.2 million. Also, the gross margin expanded 260 basis points (bps) to 33.3%, mainly owing to increased initial merchandise markups at all brands on lower inbound transportation costs. The metric also gained from lower merchandise markdowns at the Anthropologie Group and Free People Group brands.
Selling, general and administrative (SG&A) expenses increased 8.2% from the first-quarter fiscal 2023 level to $299.8 million. As a percentage of net sales, SG&A deleveraged 59 bps to 26.9%, mainly due to increased compensation costs.
URBN recorded an operating income of $71.4 million, up from $46.2 million in first-quarter fiscal 2023. As a rate of sales, the operating margin increased 200 bps to 6.4% from the level registered in the quarter ending Apr 30 in fiscal 2023.
Other Financial Details
Urban Outfitters ended the quarter with cash and cash equivalents of $171.7 million and a total shareholders’ equity of $1,850.7 million. As of Apr 30, 2023, total inventory fell 6.3% from the first-quarter fiscal 2023 level to $590.3 million. The Total Retail segment’s inventory slipped 5% while the Wholesale segment‘s inventory tumbled 23%.
URBN provided net cash of $36.3 million from operating activities during the three-month period ending Apr 30. For fiscal 2024, management projects capital expenditures of nearly $230 million.
Urban Outfitters did not repurchase any shares during the fiscal first quarter. As of Apr 30, 2023, URBN had 19.2 million shares remaining under its share repurchase programs.
Outlook
Management is impressed with the sturdy overall consumer demand at the start of the first quarter of 2024. This is likely to continue throughout the second quarter, wherein the total company sales growth will be in the mid-single digits.
This growth will be backed by a mid-single-digit increase in the Retail segment’s comp sales and a high double-digit rise in the Nuuly segment’s sales year over year. This growth will be partly offset by lower sales in the Wholesale segment. Currency headwinds are expected to affect total sales growth by about 100 bps.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Urban Outfitters has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Urban Outfitters has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Urban Outfitters is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Foot Locker (FL - Free Report) , a stock from the same industry, has gained 1.8%. The company reported its results for the quarter ended April 2023 more than a month ago.
Foot Locker reported revenues of $1.93 billion in the last reported quarter, representing a year-over-year change of -11.2%. EPS of $0.70 for the same period compares with $1.60 a year ago.
Foot Locker is expected to post earnings of $0.04 per share for the current quarter, representing a year-over-year change of -96.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -63%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Foot Locker. Also, the stock has a VGM Score of C.