Urban Outfitters tumbled Thursday as analysts cut their price targets following its Q2 report late Wednesday. Elsewhere, Crocs was upgraded on a new partnership with actress Sydney Sweeney.
Philadelphia-based Urban Outfitters on Tuesday reported a 12.7% increase in earnings to $1.24 per share. FactSet expected earnings of $1 per share. Net sales rose 6.3% to a record $1.35 billion, just beating forecasts for $1.34 billion.
Sales for its Anthropologie, Free People and Nuuly brands all rose. However, the company's flagship Urban Outfitters brand recorded an 8.4% decline in sales.
Companywide comparable sales grew 2% for the quarter, slowing from 4.9% growth last year and missing estimates for a 3% increase.
Comparable sales at Free People and Anthropologie both rose around 7%, while Urban Outfitters posted a 9.3% decline in comparable sales.
CEO Richard Hayne on the earnings call said all Urban Outfitters' retail brands "registered a slight sales slowdown in mid-July that continues in August."
Analyst Response
A number of firms slashed their price targets on Urban Outfitters stock following the report. Wells Fargo said that although the Q2 results were solid, the focus is on go-forward commentary about the July slowdown and higher-than-planned inventory, The Fly reported. Estimates for numbers for the second half of the year are coming down, Wells Fargo added, which will likely pull down some soft-line retailers Thursday. The firm lowered its price target on URBN to 40 from 48 and kept an equal weight rating on shares.
Jefferies noted that Q2 showed the continuation of strong sales results despite weakness at the namesake brand. However, they decelerated into August and promotional activity is expected to increase. Urban Outfitters' North America President Shea Jensen in the earnings call outlined a five pillar plan to recover the brand and return to growth. But that will result in "gradual change" and Jefferies still has "modest concerns" about Urban's near-term outlook. The firm lowered its price target on URBN to 34 from 35 and kept an underperform rating on the shares.
Baird, Morgan Stanley, BMO Capital and BofA also cut price targets on Urban Outfitters.
Urban Outfitters stock tumbled 9.6% Thursday to drop below support at its 200-day moving average, which it has held since October.
Shares pared 2024 gains to 5.1% through Thursday.
Crocs Upgraded On Sydney Sweeney Partnership
Meanwhile, Crocs late Wednesday announced Sydney Sweeney as the global spokesperson for their HeyDude brand.
The new brand campaign will center around two-time Emmy nominated actress Sweeney with multiple marketing approaches, including out-of-home advertising and coordinated social media efforts.
Williams upgraded Crocs stock to buy from hold on the announcement and hiked its price target to 163 from 135, The Fly reported. The target was about 16% above where shares closed on Wednesday.
The firm said that Sweeney will aim to attract young consumers and bring needed attention to the HeyDude brand. Meanwhile, Crocs has a history of driving shorter-term positive results with its long-term brand marketing, which Williams says it could repeat with HeyDude.
In addition, Williams believes Crocs' new Echo Wave Mule and Echo Surge Sneaker will perform well within the athletic specialty channel.
Crocs stock rose 1% Thursday, moving further above its 50-day line.
CROX is working up the right side of a cup base with a 165.32 buy point.
Shares rallied more than 52% this year.
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