Is Urban Outfitters, Inc. Going the Way of Aeropostale and Abercrombie & Fitch?

Urban Outfitters just reported its third consecutive quarter of same store sales declines – is it time for shareholders to start panicking?

May 27, 2014 at 8:46AM

Once unbeatable apparel retailer Urban Outfitters (NASDAQ:URBN), owner of multiple retail brands, including its namesake Urban Outfitters, Anthropologie, BHLDN, Free People and Terrain, recently reported quarterly results. While the overall company performed well thanks to strong performances from Anthropologie and Free People, sales at its Urban Outfitters stores continued to sag.

The world of retail, as you can imagine, can oftentimes be unpredictable and extremely difficult to manage given the fact that it depends almost entirely on the current tastes and trends of the consumer. Can it be that Urban Outfitters is going the way of apparel retailers Aeropostale (NYSE:ARO) and Abercrombie & Fitch (NYSE:ANF), both once strongly sought-after brands that have also fallen on hard times?

If you don't count Urban Outfitters Stores...
For the first quarter of the current fiscal year, Urban Outfitters saw its sales rise to a total of $686.3 million compared to $648 million for the same period a year ago. The 5.9% increase follows a decent full year performance ended January 31, 2014, where total company sales rose to $3.086 billion from $2.8 billion year over year. In fact, the company managed to grow its top and bottom lines in nearly every year over the last five years.

Urban Outfitters






Net Sales

$3.09 billion

$2.8 billion

$2.5 billion

$2.3 billion

$1.94 billion

Net Income

$282 million

$237 million

$185 million

$273 million

$219 million


These results are not indicative of a company that is performing poorly. And these figures compare favorably to results posted by competitors Abercrombie & Fitch and Aeropostale,







Net Sales

$2.09 billion

$2.39 billion

$2.34 billion

$2.4 billion

$2.23 billion

Net Income (loss)

($142) million

$34.0 million

$69.5 million

$231 million

$229.5 million


Abercrombie & Fitch






Net Sales

$4.1 billion

$4.5 billion

$4.16 billion

$3.47 billion

$2.92 billion

Net Income

$54.6 million

$237 million

$143.9 million

$155.7 million



In fact, anyone looking at the long term results of these three companies would conclude that Urban Outfitters is performing quite well compared to its competitors. So what is the problem that has caused the stock to fall following its latest results? To put it simply, the problem with Urban Outfitters is the Urban Outfitters store.

In addition to listing corporate-wide results in its latest quarterly release, Urban Outfitters also provided a breakdown of the results of its individual branded stores:

Quarterly sales by brand 



Urban Outfitters

$277.7 million

$292.8 million

Anthropologie and BHLDN

$295.8 million

$268.3 million

Free People

$108.7 million

$83 million


$4.1 million

$3.8 million

Source: Yahoo! Finance.

As you can see, the problem isn't the entire company but rather its namesake stores. They have seen three consecutive quarters of same-store-sales losses, leading many to wonder if the retailer (once thought to be unbeatable in the retail space) has lost its charm. Fortunately for shareholders, the company is far more diversified than competitors like Abercrombie & Fitch and Aeropostale. Unlike these two companies, Urban Outfitters operates five brands, three of which are lifestyle brands--Urban Outfitters, Anthropologie, and Free People--providing an assortment of apparel, accessories, home decor, home furnishings, and other objects. While Abercrombie & Fitch operates its namesake brand in addition to Holister Co, neither of them are lifestyle brands, providing only apparel, accessories, and beauty products to customers.  Aeropostale is the least diversified of the three companies, with only two apparel and accessory brands under its name--Aeropostale and P.s. from Aeropostale, appealing to children and teenagers. Through its five brands Urban Outfitters offers a much larger variety of consumer goods, including decor for special events and the garden through its BHLDN and Terrain brands, which neither Aeropostale nor Abercrombie & Fitch offers.

Foolish takeaway
For now, shareholders of Urban Outfitters do not need to worry about their company going the way of Aeropostale and Abercrombie & Fitch. It seems that losses at its Urban Outfitters stores are being more than replaced by sales gains at its fast-growing Anthropologie and Free People stores. This is the company's major advantage over its struggling competitors -- it has multiple brands to appeal to a bigger piece of the consumer market. So, while it may not see massive gains until it can attract customers back to its Urban Outfitters stores, it's unlikely that this unique retailer is going anywhere anytime soon.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recent recruited a secret-development Dream Team to guarantee their newest smart device was kept hidden from the public for as long as possible. But the secret is out...and some early viewers are even claiming its everyday impact could trump the iPod, iPhone, AND the iPad. In fact, ABI Research predicts 485 million of these type of devices will be sold per year. But one small company makes this gadget possible. And their stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Natalie O'Reilly has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers