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Here's Why Urban Outfitters (URBN) is Outpacing the Industry
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Urban Outfitters Inc. (URBN - Free Report) is strategically set for long-term growth and market leadership through its significant initiatives, including FP Movement and Nuuly. The company has seen a remarkable uptrend in its stock performance over the past three months, driven by strong market demand and brand resonance. Its impressive performance in the first quarter of fiscal 2025 and forward-looking strategies highlight robust consumer engagement and a commitment to retail expansion, digital innovation and sustainability. With ongoing investments in these areas, URBN is set to maintain a competitive edge and achieve enduring success.
This evolution has solidified the company’s position as a key player in the ever-changing retail landscape. In the said period, URBN's stock has risen 22.1%, outpacing the Retail-Apparel and Shoes industry’s 7.5% jump, the sector’s 6.2% hike and the S&P 500's growth of 11.4%.
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $5.45 billion and $5.73 billion, suggesting year-over-year growth of 5.8% and 5.1%, respectively. Also, the Zacks Consensus Estimate for the current and next year’s earnings per share is pegged at $3.57 and $3.94, suggesting year-over-year growth of 9.9% and 10.1%, respectively.
Image Source: Zacks Investment Research
Strong Retail Performance Bodes Well
Urban Outfitters’ total Retail segment has experienced growth, significantly driven by the Free People Group and the Anthropologie Group. Net sales in the Retail segment increased 5.8% year over year, with comparable sales rising 4.6% in the first quarter of fiscal 2025.
This growth in comparable Retail segment sales was fueled by strong high-single-digit growth in digital sales and modest low-single-digit growth in retail store sales. Notably, comparable Retail net sales increased 17.1% year over year at Free People and 10.4% at Anthropologie, demonstrating the company’s adaptability to market trends and its dedication to providing value to customers.
Other Growth Endeavors
Nuuly, Urban Outfitters’ rental business, also showcased significant growth, adding more than 50,000 active subscribers from the fourth quarter of fiscal 2024. By the end of the fiscal first quarter, Nuuly had more than 244,000 active subscribers, with an average of more than 224,000 throughout the quarter.
This increase reflects a strong market response to Nuuly’s offerings and an expanding customer base. The Nuuly segment reported a 51.4% increase in net sales for the fiscal first quarter primarily due to a 45% rise in the average number of active subscribers from the previous year.
The FP Movement exemplifies Urban Outfitters’ innovative approach and strategic foresight. This initiative achieved remarkable 25% growth in the Retail segment in the fiscal first quarter, driven by strong market demand and brand loyalty. Plans for FP Movement include expanding store locations, optimizing store sizes and developing wholesale partnerships to enhance its presence in the activewear market.
Additionally, Free People’s wholesale segment saw a 6% year-over-year sales increase in the fiscal first quarter, propelled by strong full-price sales in department and specialty stores. By leveraging a comprehensive approach across multiple sales channels and focusing on consumer engagement, URBN aims to sustain the success of the FP Movement and boost revenue growth in the competitive activewear industry.
Looking Ahead
This Zacks Rank #2 (Buy) company is optimistic about sustained consumer demand. It anticipates mid-single-digit total sales growth for the fiscal second quarter. URBN expects mid-single-digit comparable sales growth for Anthropologie in fiscal 2025. With a planned capital expenditure of $210 million, URBN will focus on expanding its retail footprint by opening 57 stores, and investing in logistics and IT infrastructure to enhance operational efficiency.
To wrap up, investors should consider Urban Outfitters for its strong growth trajectory, driven by successful brands like Free People and Anthropologie. The company's innovative approach, expanding digital and rental businesses, and strategic investments in retail expansion and operational efficiency position it well for sustained growth and profitability.
Three Other Solid Picks
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Canada Goose (GOOS - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings indicates growth of 13.7% from the year-ago actual. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
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Here's Why Urban Outfitters (URBN) is Outpacing the Industry
Urban Outfitters Inc. (URBN - Free Report) is strategically set for long-term growth and market leadership through its significant initiatives, including FP Movement and Nuuly. The company has seen a remarkable uptrend in its stock performance over the past three months, driven by strong market demand and brand resonance. Its impressive performance in the first quarter of fiscal 2025 and forward-looking strategies highlight robust consumer engagement and a commitment to retail expansion, digital innovation and sustainability. With ongoing investments in these areas, URBN is set to maintain a competitive edge and achieve enduring success.
This evolution has solidified the company’s position as a key player in the ever-changing retail landscape. In the said period, URBN's stock has risen 22.1%, outpacing the Retail-Apparel and Shoes industry’s 7.5% jump, the sector’s 6.2% hike and the S&P 500's growth of 11.4%.
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $5.45 billion and $5.73 billion, suggesting year-over-year growth of 5.8% and 5.1%, respectively. Also, the Zacks Consensus Estimate for the current and next year’s earnings per share is pegged at $3.57 and $3.94, suggesting year-over-year growth of 9.9% and 10.1%, respectively.
Image Source: Zacks Investment Research
Strong Retail Performance Bodes Well
Urban Outfitters’ total Retail segment has experienced growth, significantly driven by the Free People Group and the Anthropologie Group. Net sales in the Retail segment increased 5.8% year over year, with comparable sales rising 4.6% in the first quarter of fiscal 2025.
This growth in comparable Retail segment sales was fueled by strong high-single-digit growth in digital sales and modest low-single-digit growth in retail store sales. Notably, comparable Retail net sales increased 17.1% year over year at Free People and 10.4% at Anthropologie, demonstrating the company’s adaptability to market trends and its dedication to providing value to customers.
Other Growth Endeavors
Nuuly, Urban Outfitters’ rental business, also showcased significant growth, adding more than 50,000 active subscribers from the fourth quarter of fiscal 2024. By the end of the fiscal first quarter, Nuuly had more than 244,000 active subscribers, with an average of more than 224,000 throughout the quarter.
This increase reflects a strong market response to Nuuly’s offerings and an expanding customer base. The Nuuly segment reported a 51.4% increase in net sales for the fiscal first quarter primarily due to a 45% rise in the average number of active subscribers from the previous year.
The FP Movement exemplifies Urban Outfitters’ innovative approach and strategic foresight. This initiative achieved remarkable 25% growth in the Retail segment in the fiscal first quarter, driven by strong market demand and brand loyalty. Plans for FP Movement include expanding store locations, optimizing store sizes and developing wholesale partnerships to enhance its presence in the activewear market.
Additionally, Free People’s wholesale segment saw a 6% year-over-year sales increase in the fiscal first quarter, propelled by strong full-price sales in department and specialty stores. By leveraging a comprehensive approach across multiple sales channels and focusing on consumer engagement, URBN aims to sustain the success of the FP Movement and boost revenue growth in the competitive activewear industry.
Looking Ahead
This Zacks Rank #2 (Buy) company is optimistic about sustained consumer demand. It anticipates mid-single-digit total sales growth for the fiscal second quarter. URBN expects mid-single-digit comparable sales growth for Anthropologie in fiscal 2025. With a planned capital expenditure of $210 million, URBN will focus on expanding its retail footprint by opening 57 stores, and investing in logistics and IT infrastructure to enhance operational efficiency.
To wrap up, investors should consider Urban Outfitters for its strong growth trajectory, driven by successful brands like Free People and Anthropologie. The company's innovative approach, expanding digital and rental businesses, and strategic investments in retail expansion and operational efficiency position it well for sustained growth and profitability.
Three Other Solid Picks
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Canada Goose (GOOS - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings indicates growth of 13.7% from the year-ago actual. GOOS has a trailing four-quarter average earnings surprise of 70.9%.