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Urban Outfitters' (URBN) Brands & FP Movement Look Good
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Urban Outfitters, Inc. (URBN - Free Report) remains committed toward driving overall growth, thanks to its robust business strategies and sound fundamentals. Management has been strengthening its direct-to-consumer business, enhancing productivity across the existing channels and optimizing inventory level. URBN’s strategic growth initiative, FP Movement, besides its store-growth endeavors, is also impressive.
Let’s delve deeper.
Strategic Discussion
Being a multi-brand and multi-channel retailer, Urban Outfitters offers flexible merchandising strategy. The company has also been significantly boosting its presence by rapidly expanding its e-commerce activities. Robust strength in the digital channel has been fueling the Retail unit’s growth. Digital customer growth was sturdy during fourth-quarter fiscal 2022, with total customers rising 30% from the fiscal 2020 level.
All brands and geographies recorded growth in fourth-quarter fiscal 2022. Each brand recorded positive retail segment comps, led again by the Free People Group brand, which delivered mid double-digit comps. Within the Retail segment, net sales of Free People Group increased 49%, and the same for Anthropologie Group and Urban Outfitters increased 14% and 3%, respectively.
Urban Outfitters’ FP Movement initiative holds promise. Management believes that the FP Movement initiative will attract a wider customer base to its Free People brand. Having a differentiated position in the fitness and wellness space, FP Movement offers a major growth opportunity and is expected to boost Free People brand's revenues. Encouragingly, the Movement’s stand-stores are performing outstandingly.
In addition, management remains optimistic about the prospects of Nuuly. Nuuly comprises the Nuuly Rent and Nuuly Thrift brands. During the fiscal fourth quarter, Nuuly contributed $17.3 million to net sales, reflecting a sharp increase of 188.3% from the same period of fiscal 2020. This is likely to keep fueling the company’s overall sales ahead.
What Else?
Despite the aforesaid strengths, Urban Outfitters has been witnessing inflationary pressures from inbound freight, delivery expenses, raw materials and wages. Also, the ongoing supply-chain headwinds and higher transportation expenses were deterrents. These factors hurt overall profits in the fourth quarter of fiscal 2022. Nevertheless, management has been making strategic moves to maneuver through this tough operating landscape.
Image Source: Zacks Investment Research
On last quarter’s earnings call, management had stated that demand in the fiscal fourth quarter was solid and was likely to continue through spring. During the first four weeks of the first quarter of fiscal 2023, the total Retail segment comp sales increased more than 20% from the same-period level in fiscal 2022 and fiscal 2020. Urban Outfitters also cited that consumer demand has been solid, which is likely to continue throughout the first quarter of fiscal 2023.
Urban Outfitters expects first-quarter sales to increase mid-teens from the fiscal 2020 actuals. It generated sales of around $928 million in the year-earlier quarter. Retail segment sales are expected to come in the mid-to-high teens range, while the Wholesale segment sales might be approximately flat.
URBN displays a Zacks Rank #3 (Hold). An expected long-term earnings growth rate of 18%, coupled with a VGM Score of A, further speak of its inherent potentials.
Shares of this Philadelphia, PA-based player have gained 1.5% against its industry’s 12.6% fall over the past three months. In addition, the Zacks Consensus Estimate for Urban Outfitters’ current financial year sales suggests growth of 8% from the year-ago period’s reported figure.
General merchandise retailer, Target, is currently Zacks #1 (Strong Buy) Ranked. TGT has an expected earnings per share (EPS) growth rate of 16.5% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the corresponding year-ago period’s levels. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.
Kohl's, an omnichannel retailer, currently carries a Zacks Rank #2 (Buy). KSS’ bottom line outperformed the Zacks Consensus Estimate by 4.8% in the last-reported quarter.
The Zacks Consensus Estimate for Kohl's current financial year sales suggests growth of 2.5% from the year-ago period’s reading. KSS has an expected EPS growth rate of 8% for three-five years.
Costco, which operates membership warehouses, carries a Zacks Rank of 2 at present. COST has a trailing four-quarter earnings surprise of 13.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 13.5% and 17.6%, respectively, from the corresponding year-ago period’s actuals. COST has an expected EPS growth rate of 9.1% for three-five years.
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Urban Outfitters' (URBN) Brands & FP Movement Look Good
Urban Outfitters, Inc. (URBN - Free Report) remains committed toward driving overall growth, thanks to its robust business strategies and sound fundamentals. Management has been strengthening its direct-to-consumer business, enhancing productivity across the existing channels and optimizing inventory level. URBN’s strategic growth initiative, FP Movement, besides its store-growth endeavors, is also impressive.
Let’s delve deeper.
Strategic Discussion
Being a multi-brand and multi-channel retailer, Urban Outfitters offers flexible merchandising strategy. The company has also been significantly boosting its presence by rapidly expanding its e-commerce activities. Robust strength in the digital channel has been fueling the Retail unit’s growth. Digital customer growth was sturdy during fourth-quarter fiscal 2022, with total customers rising 30% from the fiscal 2020 level.
All brands and geographies recorded growth in fourth-quarter fiscal 2022. Each brand recorded positive retail segment comps, led again by the Free People Group brand, which delivered mid double-digit comps. Within the Retail segment, net sales of Free People Group increased 49%, and the same for Anthropologie Group and Urban Outfitters increased 14% and 3%, respectively.
Urban Outfitters’ FP Movement initiative holds promise. Management believes that the FP Movement initiative will attract a wider customer base to its Free People brand. Having a differentiated position in the fitness and wellness space, FP Movement offers a major growth opportunity and is expected to boost Free People brand's revenues. Encouragingly, the Movement’s stand-stores are performing outstandingly.
In addition, management remains optimistic about the prospects of Nuuly. Nuuly comprises the Nuuly Rent and Nuuly Thrift brands. During the fiscal fourth quarter, Nuuly contributed $17.3 million to net sales, reflecting a sharp increase of 188.3% from the same period of fiscal 2020. This is likely to keep fueling the company’s overall sales ahead.
What Else?
Despite the aforesaid strengths, Urban Outfitters has been witnessing inflationary pressures from inbound freight, delivery expenses, raw materials and wages. Also, the ongoing supply-chain headwinds and higher transportation expenses were deterrents. These factors hurt overall profits in the fourth quarter of fiscal 2022. Nevertheless, management has been making strategic moves to maneuver through this tough operating landscape.
Image Source: Zacks Investment Research
On last quarter’s earnings call, management had stated that demand in the fiscal fourth quarter was solid and was likely to continue through spring. During the first four weeks of the first quarter of fiscal 2023, the total Retail segment comp sales increased more than 20% from the same-period level in fiscal 2022 and fiscal 2020. Urban Outfitters also cited that consumer demand has been solid, which is likely to continue throughout the first quarter of fiscal 2023.
Urban Outfitters expects first-quarter sales to increase mid-teens from the fiscal 2020 actuals. It generated sales of around $928 million in the year-earlier quarter. Retail segment sales are expected to come in the mid-to-high teens range, while the Wholesale segment sales might be approximately flat.
URBN displays a Zacks Rank #3 (Hold). An expected long-term earnings growth rate of 18%, coupled with a VGM Score of A, further speak of its inherent potentials.
Shares of this Philadelphia, PA-based player have gained 1.5% against its industry’s 12.6% fall over the past three months. In addition, the Zacks Consensus Estimate for Urban Outfitters’ current financial year sales suggests growth of 8% from the year-ago period’s reported figure.
Key Picks in Retail
A few stocks in the Retail sector that investors can consider are Target (TGT - Free Report) , Kohl's (KSS - Free Report) and Costco (COST - Free Report) .
General merchandise retailer, Target, is currently Zacks #1 (Strong Buy) Ranked. TGT has an expected earnings per share (EPS) growth rate of 16.5% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the corresponding year-ago period’s levels. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.
Kohl's, an omnichannel retailer, currently carries a Zacks Rank #2 (Buy). KSS’ bottom line outperformed the Zacks Consensus Estimate by 4.8% in the last-reported quarter.
The Zacks Consensus Estimate for Kohl's current financial year sales suggests growth of 2.5% from the year-ago period’s reading. KSS has an expected EPS growth rate of 8% for three-five years.
Costco, which operates membership warehouses, carries a Zacks Rank of 2 at present. COST has a trailing four-quarter earnings surprise of 13.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 13.5% and 17.6%, respectively, from the corresponding year-ago period’s actuals. COST has an expected EPS growth rate of 9.1% for three-five years.