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Is URBN Stock a Buy, Hold or Sell Post Holiday Sales Results?
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Urban Outfitters Inc. (URBN - Free Report) released its fiscal 2024 holiday sales results last Monday, reigniting discussions about the stock’s prospects. Investors are confronted with an important question: Should they increase their investment, hold their current position or sell their shares?
The holiday sales performance for Urban Outfitters demonstrates that its diverse portfolio of brands, strong e-commerce growth and successful expansion strategies are paying off. However, the decline in sales at URBN's core brand and the mixed performance across physical stores point to areas wherein the company may need to refine its strategies to strengthen its position in a competitive retail landscape.
URBN reported a 10% year-over-year increase in total company net sales for the two months ending Dec. 31, 2024. The Retail segment’s net sales grew 7%, with comparable Retail segment net sales rising 6%.
The increase in comparable sales was driven by a strong performance in digital channel sales, which saw high-single-digit growth, while retail store sales saw low-single-digit growth. Within the Retail segment, comparable net sales increased 10% year over year at Anthropologie and 9% at Free People, while Urban Outfitters saw a decline of 4%.
The FP Movement brand within the Retail segment saw an impressive 23% year-over-year increase in comparable net sales, while the Free People brand saw a more modest 6% rise. The Nuuly segment experienced significant growth, with net sales rising 55%, driven primarily by a 53% increase in the average number of active subscribers from the previous year.
The Wholesale segment also saw a strong performance, with net sales increasing 29% year-over-year. This growth was primarily driven by an increase in Free People wholesale sales, particularly due to higher sales to specialty customers and department stores. Overall, the holiday performance reflects strong growth across several key segments, particularly digital and wholesale, while the Urban Outfitters brand faced challenges in comparable sales.
Here's How Estimates Stack Up for URBN
The positive sentiment surrounding Urban Outfitters is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the current quarter, resulting in an upward revision of 1 cent to 88 cents. The consensus estimate for earnings for the next quarter has also advanced by 2 cents to 75 cents per share. This indicates year-over-year growth of 27.5% and 8.7%, respectively.
The Zacks Consensus Estimate for the current and next quarter’s sales is pegged at $1.60 billion and $1.26 billion, respectively, implying year-over-year growth of 7.9% and 5.3%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Growth Drivers Behind Urban Outfitters' Success
Anthropologie remains a central driver of URBN's success, benefiting from strong sales in both physical stores and online channels. The brand continues to attract and retain customers through innovative products and effective marketing strategies. Its ability to enhance customer acquisition underscores its capacity to meet shifting consumer demands.
Nuuly, Urban Outfitters' rental service, is well-positioned for success, supported by an expanding subscriber base and strategic partnerships. The introduction of new digital features, along with increased fulfillment capacity, strengthens Nuuly's presence in the growing rental market. This solid foundation provides confidence in its prospects within the multi-billion-dollar industry.
Free People has shown strong performance across both retail and wholesale segments, driven by its focus on functional, fashionable activewear. The success of its FP Movement line has resonated with its target audience. Free People's expansion plans highlight confidence in sustaining its success within the Urban Outfitters portfolio.
Urban Outfitters excels through effective pricing, inventory management and seamless integration of digital and physical retail. The company adapts to shifts in consumer behavior while maintaining profitability. This strategic approach ensures Urban Outfitters remains competitive in a rapidly changing retail landscape.
URBN Stock’s Valuation
Urban Outfitters is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.87X, which positions it at a discount compared with the industry’s average of 1.78X. The stock is also trading below the Retail-Wholesale sector’s P/S level of 1.55, observed over the past year. This suggests that the URBN stock is priced attractively relative to its peers’ levels, positioning it as a potential bargain.
URBN Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
Urban Outfitters’ stock has experienced a 52.5% increase over the past three months compared with the industry’s growth of 16.8%. The company’s focus on customer acquisition, operational efficiency and brand innovation has driven this significant growth. These initiatives have supported the company in outperforming the sector and the S&P 500 index’s respective growth of 8% and 3.4% in the same period.
URBN Stock Past Three-Month Performance
Image Source: Zacks Investment Research
Final Thoughts on Urban Outfitters
Investors may consider URBN stock as a compelling opportunity due to its diverse brand portfolio, strong e-commerce growth and successful expansion strategies. While certain challenges remain concerning like the decline in sales at its core Urban Outfitters brand, the company's growth in segments like Anthropologie, Free People and Nuuly sales points to overall strength. The upward revision in earnings estimates and attractive stock valuation enhance the appeal for investors, positioning URBN to deliver solid returns. The company currently sports a Zacks Rank #1 (Strong Buy).
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts 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 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for ANF’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales indicates growth of 14.4% and 14.1%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 41.1%.
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Is URBN Stock a Buy, Hold or Sell Post Holiday Sales Results?
Urban Outfitters Inc. (URBN - Free Report) released its fiscal 2024 holiday sales results last Monday, reigniting discussions about the stock’s prospects. Investors are confronted with an important question: Should they increase their investment, hold their current position or sell their shares?
The holiday sales performance for Urban Outfitters demonstrates that its diverse portfolio of brands, strong e-commerce growth and successful expansion strategies are paying off. However, the decline in sales at URBN's core brand and the mixed performance across physical stores point to areas wherein the company may need to refine its strategies to strengthen its position in a competitive retail landscape.
Urban Outfitters’ Holiday Performance: Key Takeaways
URBN reported a 10% year-over-year increase in total company net sales for the two months ending Dec. 31, 2024. The Retail segment’s net sales grew 7%, with comparable Retail segment net sales rising 6%.
The increase in comparable sales was driven by a strong performance in digital channel sales, which saw high-single-digit growth, while retail store sales saw low-single-digit growth. Within the Retail segment, comparable net sales increased 10% year over year at Anthropologie and 9% at Free People, while Urban Outfitters saw a decline of 4%.
The FP Movement brand within the Retail segment saw an impressive 23% year-over-year increase in comparable net sales, while the Free People brand saw a more modest 6% rise. The Nuuly segment experienced significant growth, with net sales rising 55%, driven primarily by a 53% increase in the average number of active subscribers from the previous year.
The Wholesale segment also saw a strong performance, with net sales increasing 29% year-over-year. This growth was primarily driven by an increase in Free People wholesale sales, particularly due to higher sales to specialty customers and department stores. Overall, the holiday performance reflects strong growth across several key segments, particularly digital and wholesale, while the Urban Outfitters brand faced challenges in comparable sales.
Here's How Estimates Stack Up for URBN
The positive sentiment surrounding Urban Outfitters is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the current quarter, resulting in an upward revision of 1 cent to 88 cents. The consensus estimate for earnings for the next quarter has also advanced by 2 cents to 75 cents per share. This indicates year-over-year growth of 27.5% and 8.7%, respectively.
The Zacks Consensus Estimate for the current and next quarter’s sales is pegged at $1.60 billion and $1.26 billion, respectively, implying year-over-year growth of 7.9% and 5.3%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Growth Drivers Behind Urban Outfitters' Success
Anthropologie remains a central driver of URBN's success, benefiting from strong sales in both physical stores and online channels. The brand continues to attract and retain customers through innovative products and effective marketing strategies. Its ability to enhance customer acquisition underscores its capacity to meet shifting consumer demands.
Nuuly, Urban Outfitters' rental service, is well-positioned for success, supported by an expanding subscriber base and strategic partnerships. The introduction of new digital features, along with increased fulfillment capacity, strengthens Nuuly's presence in the growing rental market. This solid foundation provides confidence in its prospects within the multi-billion-dollar industry.
Free People has shown strong performance across both retail and wholesale segments, driven by its focus on functional, fashionable activewear. The success of its FP Movement line has resonated with its target audience. Free People's expansion plans highlight confidence in sustaining its success within the Urban Outfitters portfolio.
Urban Outfitters excels through effective pricing, inventory management and seamless integration of digital and physical retail. The company adapts to shifts in consumer behavior while maintaining profitability. This strategic approach ensures Urban Outfitters remains competitive in a rapidly changing retail landscape.
URBN Stock’s Valuation
Urban Outfitters is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.87X, which positions it at a discount compared with the industry’s average of 1.78X. The stock is also trading below the Retail-Wholesale sector’s P/S level of 1.55, observed over the past year. This suggests that the URBN stock is priced attractively relative to its peers’ levels, positioning it as a potential bargain.
URBN Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
Urban Outfitters’ stock has experienced a 52.5% increase over the past three months compared with the industry’s growth of 16.8%. The company’s focus on customer acquisition, operational efficiency and brand innovation has driven this significant growth. These initiatives have supported the company in outperforming the sector and the S&P 500 index’s respective growth of 8% and 3.4% in the same period.
URBN Stock Past Three-Month Performance
Image Source: Zacks Investment Research
Final Thoughts on Urban Outfitters
Investors may consider URBN stock as a compelling opportunity due to its diverse brand portfolio, strong e-commerce growth and successful expansion strategies. While certain challenges remain concerning like the decline in sales at its core Urban Outfitters brand, the company's growth in segments like Anthropologie, Free People and Nuuly sales points to overall strength. The upward revision in earnings estimates and attractive stock valuation enhance the appeal for investors, positioning URBN to deliver solid returns. The company currently sports a Zacks Rank #1 (Strong Buy).
Other Key Picks
Some other top-ranked stocks are The Gap, Inc. (GAP - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts 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 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for ANF’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales indicates growth of 14.4% and 14.1%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 41.1%.