What Investors Need to Know About Urban Outfitters' 3rd-Quarter Financial Results
- By Mayank Marwah
Urban Outfitters (URBN) came out with its third quarter financial results on Monday after market closed. The clothing and accessories retailer, besides meeting top-line growth expectations, met earnings expectations.
Snapshot of the quarter
The company reported net income of $78 million or 70 cents per share for the third quarter. As a matter of fact, the apparel retailer posted quarterly revenues of $973.5 million, up 9% from the same quarter last year. The sales gain was attributable to double-digit digital sales growth at each of the company's brands, namely Free People, Anthropologie Group and Urban Outfitters.
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The intrinsic value of URBN
The company's gross profit amounted to $338 million, up 13% year-over-year.
Operating income in the quarter totaled $96 million, reflecting 32% growth, as operating profit margin rose to 9.9% of net sales.
How did the brands fare?
Sales rose 8% for the Free People business. The brand witnessed tremendous growth in domestic business, department stores and digital businesses.
The company's Anthropologie sector witnessed an 8% rise in the retail segment comps sales. The given growth was due to robust performance in both digital and store front. In Anthro's international business segment, Europe's comps growth surpassed comps in North America both in the digital and store arena. The segment's wholesale business also gained momentum during the quarter. Besides the Home products, Anthropologie now has 19 fanatical home category shop-in-shops on Nordstrom.com.
Urban Outfitters' total retail segment comps inched up 7%. Apparel and accessories powered the brand's comps, while the home category surprisingly did well after failing miserably for almost a year. The segment registered positive comps in both North America and Europe in terms of digital and stores. The brand opened two new stores, one of which was in North America and the other one in Europe.
Guidance
The company sees selling, general and administrative expenses growing by roughly 5% in the coming quarter primarily due to anticipated increased incentive-based compensation due to the company's robust current year performance. The company would also put in money towards digital marketing to support sales.
The company projects earnings per share to stand of 83 cents in the fourth quarter, with revenue of $1.15 billion. For the current fiscal year, earnings per share are expected at $2.66 on revenues of $3.96 billion.
Disclosure: I do not hold any position in the stock mentioned.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Signs with URBN. Click here to check it out.
The intrinsic value of URBN
