Urban Outfitters delivered an unexpected earnings gain for its fiscal first quarter late Tuesday, with peers Abercrombie & Fitch and American Eagle Outfitters due next week. Urban Outfitters stock tumbled below a key level on Wednesday.
As retail earnings pick up, Gen Z fashion retailers are consolidating and working on buy points. But growth rates are expected to slow amid tougher comparisons. Retail giant Target posted weak earnings and guidance Wednesday.
Urban Outfitters Earnings
Estimates: Analysts expected Urban Outfitters earnings per share to fall 5% to 53 cents in the April-ending quarter, according to FactSet. Sales were seen rising 6%, year over year, to $1.179 billion, with same-store sales up 3.5%.
Results: Urban Outfitters earnings rose 23% to 69 cents per share, vs expectations for a 5% decline. Revenue grew 7.8% to $1.20 billion, with same-store sales up 4.6%, an earnings release said on Tuesday.
Net sales rose over Q1 at the company's higher-end Anthropologie and Free People brands, but fell 12.5% at the namesake Urban Outfitters brand.
Outlook: "Customer demand remains robust for our spring and summer fashion, which bodes well for continued sales growth in Q2," Urban Outfitters CEO Richard Hayne said in the release.
Analysts now anticipate 11% profit growth in fiscal 2025 and 9% the following year, FactSet shows.
Urban Outfitters earnings boomed 91% in fiscal 2024 after cratering the previous year. The Philadelphia-based company's fiscal year ends in January.
Urban Outfitters Stock Sinks
Shares of the trendy apparel retailer sank 4.6% to 39.42 in heavy volume on the stock market today.
Urban Outfitters stock has been working on a 47.29 buy point in a 13-week consolidation, MarketSurge pattern recognition shows. But shares undercut the 50-day moving average on Wednesday after opening slightly higher.
Abercrombie stock broke out past 140.28 on Monday and slipped 1.7% within the buy zone on Wednesday. American Eagle stock lost 4.2% on Wednesday as it continues to work on a 26.44 buy point, while hitting resistance at the 50-day line.
Earnings Drag From Namesake Brand
Urban Outfitters flourishes a near-perfect 98 EPS Rating, on the back of earnings growth above 50% and as high as 120% in four of the last five quarters.
On Wednesday, analysts at Jefferies kept an underperform rating on Urban Outfitters stock while hiking their price target by $3 to $35, the Fly.com said. The firm's new price target suggests further possible downside for the retail stock after Wednesday's drop.
While Anthropologie and Free People "continue to drive strong sales," the analysts said they remain concerned about the flagship Urban Outfitters banner, which continues to see meaningful same-store sales declines, including a 14% Q1 drop, as well as higher merchandise markdowns.
Despite "encouraging" commentary for the quarter to date, Urban Outfitters faces promotional headwinds and increased competition, Jefferies said.
Abercrombie reports May 29 before the open. American Eagle reports May 29 after the close. Gap reports late on May 30.
