In its Form 10-K filed today, Urban Outfitters said that thus far in fiscal 2010, "sales are less than the same period in the prior year and our comparable store sales trend has declined from our most recently completed quarter." That appears to be the piece of information that's driving the company's shares down by more than 7% at my last check.
As was the case when Urban Outfitters reported less-than-stellar fourth quarter results, it's not exactly surprising to find some weakness right now. Consumer confidence remains abysmally low, at 26. Many consumers' newfound fiscal responsibility is killing retail, after all. Although the non-specific gloomy disclosure certainly isn't good news, I'm not sure that dumping the stock is a reasoned reaction.
After all, things have been terribly rough in general, and there are many retailers that are getting brutalized in this environment; comparatively, Urban Outfitters looks pretty darn strong. Circuit City is no more. Borders Group
Things are tough and getting tougher, and retail is bearing the brunt of the pain as the economy sheds more jobs and consumers rein in their previously overheated spending.
I plan on holding on to my Urban Outfitters shares, though. Although the safest bets in retail are stocks like Wal-Mart
The overall economic climate is a precarious one, to be sure, and I am concerned that things could get a whole lot worse in our economy before they get better. However, for those who are willing to dip their toes into the retail sector right now and hold on for the very long term, seek out the strong names as a good rule of thumb. I count Urban Outfitters to be among the strongest as the retail sector goes into "survival of the fittest" mode.
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