Urban Outfitters Closes Stores Worldwide Due to Coronavirus
Pandemic coronavirus has wreaked havoc on the U.S. Retail industry, which has already been facing the brunt of soft brick-and-mortar sales due to the popularity of e-commerce activities. Apart from affecting lives drastically, the novel coronavirus has been rattling the stock market and troubling economic activities worldwide. Unfortunately, COVID-19 has infected more than 170,000 people and killed more than 6,500 worldwide.
The devastating impacts of the deadly coronavirus have been leading to supply-chain disruptions, a slowdown in production activities and reduced demand for several commodities. However, the demand for toilet paper, cleaning supplies, medicines and related food staples is rising in the wake of the fast-spreading coronavirus. As a result, factories are shifting production of niche items to hold and speed up the production of more essential merchandise for the time being.
Meanwhile, companies are temporarily shutting down their brick-and-mortar stores, curtailing work hours, or permitting employees to work remotely, as part of safety measures. Several renowned players like Under Armour UAA, NIKE, Inc. NKE and Abercrombie & Fitch Co. ANF, among others, are taking such decisions. In fact, fashion and lifestyle retailer, Urban Outfitters, Inc. URBN, is no exception.
Delving Deep
Urban Outfitters recently decided to shut all stores worldwide till at least Mar 28 and workers will still be paid during this time off. However, the company’s e-commerce and subscription businesses will continue to operate in the meantime. Management has also permitted certain workers to work remotely. For employees who are unable to perform remotely, the company has asked them to work in shifts to lower density and maintain distance in its corporate offices. It has also improved cleaning protocols. Management also cited that plans may alter depending on the situation.
As of Jan 31, 2020, the company operated 248 Urban Outfitters stores, 231 Anthropologie Group stores and 144 Free People stores in the United States, Canada and Europe. Additionally, it operated 11 Food and Beverage restaurants, 5 Urban Outfitters franchisee-owned stores, one Anthropologie Group franchisee-owned store and one Free People franchisee-owned store.
Prior to this store-closure announcement, Urban Outfitters also provided updates on current business trends that have emerged since its last earnings call on Mar 3. The apparel retailer informed that it has witnessed a decline in traffic and sales across areas such as Milan, Italy, and Seattle, Washington, which are severely impacted by the coronavirus. Management also stated that it was unable to forecast the impact of COVID-19 on the business in the first quarter of fiscal 2021, driven by uncertainty regarding the spread of coronavirus in North America and Europe.
Stock Performance
Amid coronavirus concerns and the ongoing store closures, we are apprehensive about this Zacks Rank #3 (Hold) stock’s performance in the near future. In the past three months, shares of this Philadelphia, PA-based company have plunged 42.8%, wider than the industry’s 37.7% decline. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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