Please ensure Javascript is enabled for purposes of website accessibility

Why Urban Outfitters Stock Surged Thursday

By Timothy Green - May 19, 2016 at 12:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The mall-based retailer's quarterly report showed that it held up better than analysts expected in a difficult environment for apparel stores.

Image Source: Urban Outfitters.

What: Shares of apparel retailer Urban Outfitters (URBN -1.25%) jumped on Thursday morning after the company reported positive first-quarter results. Despite weak results reported by many of its peers, the company managed to beat analysts' estimates for sales. The stock was up about 11% at 11:45 AM.

So what: Urban Outfitters reported quarterly revenue of $762.6 million, up 3.2% year over year, and about $3 million higher than analysts' average estimate. Total comparable retail sales increased by 1% year over year, driven by 2% comparable sales growth at the company's namesake stores. Comparable sales at the Anthropologie brand were flat, while the Free People brand suffered a 2% comparable sales decline.

Urban Outfitters' sales performance is particularly notable given the terrible results reported by other mall-based clothing chains. Gap (GPS -1.72%) released its first-quarter sales numbers earlier this month, reporting major declines in all of its brands, including a steep 11% slump in comparable sales at its Banana Republic chain. Gap has company-specific woes, including some major quality issues, but weak traffic was a serious problem.

Turning to profits, Urban Outfitters reported EPS of $0.25, flat year over year and in line with analysts' expectations. Net income declined by nearly 10% on higher marketing and technology costs, but the company's share-buyback program brought the share count down enough to offset that decline on a per-share basis.

Now what: With Gap and many other apparel retailers reporting weak sales, Urban Outfitters' positive results were enough to send the stock soaring on Thursday. Sales growth is still slow overall, and rising costs are an area of concern, but the company is holding up much better than many of its peers.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Urban Outfitters, Inc. Stock Quote
Urban Outfitters, Inc.
URBN
$19.74 (-1.25%) $0.25
The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$8.57 (-1.72%) $0.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.