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Factors Likely to Affect Urban Outfitters' (URBN) Q2 Earnings

Zacks Equity Research
·3 min read

Urban Outfitters, Inc. URBN is scheduled to release second-quarter fiscal 2021 results on Aug 25, after the closing bell. The company’s bottom line missed the Zacks Consensus Estimate in three of the trailing four quarters.

The Zacks Consensus Estimate for the bottom line is pegged at a loss of 28 cents per share, suggesting deterioration from year-ago earnings of 61 cents. Moreover, the loss estimate has widened by 6 cents over the past 30 days. The consensus mark for revenues is pegged at $696.2 million, indicating a decline of 27.7% from the figure reported in the year-ago quarter.

Key Factors to Note

While Urban Outfitters has been reopening stores in a phased manner with ease in coronavirus-induced restrictions, the temporary closures at some point in the quarter are likely to have weighed on performance. Management at its last earnings call stated that since the sales ramp-up is slow and most stores will be open for only part of the quarter, total comp store sales are likely to decline more than 60% in the fiscal second quarter.

Well these downsides are likely to have deterred sales across the company’s brands as well as its Retail and Wholesale segments. Nevertheless, investments in e-commerce and efforts to improve merchandise and optimize inventory are likely to have made up for some of the lost ground.

Further, any deleverage in SG&A expenses, as a rate to sales, is likely to show on margins. This may arise out of deleverage in store related expenses. Also, marketing expense (as a percentage of sales) is likely to have increased due to higher digital channel penetration.

Urban Outfitters, Inc. Price, Consensus and EPS Surprise

Urban Outfitters, Inc. Price, Consensus and EPS Surprise
Urban Outfitters, Inc. Price, Consensus and EPS Surprise

Urban Outfitters, Inc. price-consensus-eps-surprise-chart | Urban Outfitters, Inc. Quote

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Urban Outfitters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Urban Outfitters carries a Zacks Rank #4 (Sell) and an Earnings ESP of -13.04%.

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Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Big Lots BIG currently has an Earnings ESP of +5.04% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG currently has an Earnings ESP of +6.88% and a Zacks Rank #2 (Buy).

Best Buy BBY has an Earnings ESP of +0.24% and a Zacks Rank #2.

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