Urban Outfitters Inc. (URBN) in a recent regulatory filing stated that so far in the second quarter of fiscal 2014, it has been witnessing high single-digit growth in comparable retail segment net sales.
Urban Outfitters’ initiatives to optimize inventory level and focus on increasing customer count through store expansion, online and mobile marketing endeavors and expansion of direct-to-consumer business have paid off well amid the sluggish economic environment.
This Zacks Rank #3 (Hold) stock posted better-than-expected first-quarter fiscal 2014 earnings. The quarterly earnings of 32 cents a share surpassed the Zacks Consensus Estimate of 29 cents and jumped 39.1% year over year.
Total net sales of Urban Outfitters climbed 14% to $648.2 million during the first quarter, reflecting healthy performance of its Direct-to-Consumer business coupled with sturdy sales through new store openings and double-digit growth at wholesale operations. Despite robust sales results, it missed the Zacks Consensus Estimate of $650 million.
Going forward, Urban Outfitters is optimistic that fiscal 2014 will present considerable opportunity for gross-margin improvement. The company expects to enhance margins by approximately 50 basis points through improvements in brands and lower markdowns.
We expect Urban Outfitters to sustain its growth momentum going forward on the back of new store openings, increase in direct penetration, growing wholesale operations, technology advancements and merchandising improvements.
Other Stocks to Consider
Until any further upward revision in the Zacks Rank of Urban Outfitters, the other stock worth considering in the non-food retail, wholesale sector includes Big 5 Sporting Goods Corp. (BGFV), which holds a Zacks Rank #1 (Strong Buy) and is expected to continue with its upbeat performance. The Gap, Inc. (GPS) and Cabela's Incorporated (CAB), carrying a Zacks Rank #2 (Buy) are also worth considering.
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