What happened

Shares of Urban Outfitters Inc. (NASDAQ:URBN) climbed 17.2% on Wednesday after the clothing retailer announced better-than-expected second-quarter results.

More specifically, Urban Outfitters' revenue during the quarter fell 2% year over year to $872.9 million, including a 3% decline in retail-segment sales to $790.6 million, and 10% growth in wholesale sales to $82.3 million. On the bottom line, that translated to net income of $49.9 million, or $0.44 per share, down from $76.9 million, or $0.66 per share in the same year-ago period.

By comparison -- as I noted when shares fell amid disappointing reports from Urban Outfitters' department-store peers last week -- Wall Street was expecting the company to post earnings of just $0.37 per share on lower revenue of $862 million.

Collage of Urban Outfitters clothing products


So what

Digging deeper, Urban Outfitters' top line included a 4.9% decline in comparable retail net sales, as 2.9% comps growth at the company's Free People concept was more than offset by declines of 4% at Anthropologie Group and 7.9% at Urban Outfitters.

Said Urban Outfitters CEO Richard Hayne:

While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments. ... We believe these initiatives combined with encouraging fashion apparel trends could lead to improved topline performance in future quarters.

Now what

Though the market certainly seems happy with Urban Outfitters' results, it's obvious the company isn't resting on its laurels. That's something investors should be more than pleased with, given today's ultracompetitive retail environment. Given Urban Outfitters' relative outperformance going into the second half of the year, it's no surprise to see shares climbing today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.