Financial Trading Blog
Stock of the day 13/08/2015 – Urban Outfitters Inc
The company announces its Q2 2016 earnings release on Monday.
After opening the year at $34.45 Urban Outfitters hit the ground running, and despite a wobble in the middle of January had climbed to a 6 month high of £39.50 by the start of March. Its fourth quarter results then saw the stock take off, with the company posting earnings per share of $0.60 against $0.30 expected, alongside a 4% jump in same-store sales and a 12% increase in total revenue to $1.10 billion, the first time the company had broken the big B. This helped the stock soar across the rest of March, hitting an all-time high of $48.90 towards the end of the month.
(Source: IT-Finance.com 13/08/2015)
However, this fervent trading was not to last long. From this peak Urban Outfitters saw a sustained decline, and ahead of its Q1 2016 results in the middle of May had fallen back to $39.59. Things rapidly went from bad to worse following this release, with earnings per share below the expected $0.30 at $0.26 alongside like-for-like sales rising 4% compared to the 5.3% forecast. This meant an 8% increase in net sales to $739 million barely registered as the stock tanked by 15% in one sitting. This eventually left the stock hovering around $35 to $36, a price range Urban Outfitters struggled to escape throughout the rest of May, June and July until further declines left it at a current trading price of $32.55 (IT-Finance.com, 13/08/2015), only marginally above the 8 month low it hit at the start of August.
One of the main reasons for Urban Outfitter’s struggle is Anthropologie. In those first quarter results back in May Anthropologie’s same-store sales only rose 1%; in comparison the Urban Outfitters brand rose 5% whilst Free People, the third of the holding company’s big three, saw its same-store sales leap by 17%. The Anthropologie misery apparently continued through the second quarter, with analysts at BMO Capital Markets claiming that the division is ‘struggling to regain traction…heading into fall’.
Despite its troubles, analysts still remain bullish on the stock, giving Urban Outfitters a consensus rating of ‘Buy’ with an average target price of $41.19.
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