What happened

Shares of Urban Outfitters (NASDAQ:URBN), an apparel retailer with brands including Anthropologie, Free People, and its namesake Urban Outfitters, are up over 6% Wednesday afternoon after the company reported record fourth-quarter sales data.

So what

Urban Outfitters announced its net sales for the three months and the year ended Jan. 31, 2020: Sales increased 3.6%, compared to the prior year, to a record $1.17 billion. Better still, comparable retail-segment net sales increased 4%, thanks to growth in the digital channel. The strong digital growth was partially offset by negative retail-store sales, as the company continues to struggle with its brick-and-mortar business. Comparable retail-segment net sales increased 9% at Free People and 6% at Anthropologie Group, while the Urban Outfitters figure was flat.

Woman shopping in a clothing store

Image source: Getty Images.

Now what

Management noted that promotional activity was higher than planned, but said it was necessary to leave inventory in good standing at all three brands. That favorable inventory position should leave the company's brands well-positioned as it transitions into the spring season.

However, we'll have to wait to see what cost the additional promotional activity will have on fourth-quarter margins. While margins could take a hit, investors are likely pushing the stock higher today because sales are trending in the right direction, considering the pessimism from its prior sales data one month ago.

Tune into Urban Outfitters' fourth-quarter and fiscal 2020 earnings results on March 3, when management can shed more light on the competitive landscape, to see if the company can continue its sales momentum into the new year.