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Urban Outfitters Inc.

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Shares of Urban Outfitters have performed better than the industry in a year, courtesy of positive earnings and sales surprise streak. We are upbeat on the company’s third-quarter fiscal 2019 performance, wherein both the top and bottom lines grew year over year and also beat the consensus mark for the sixth successive time. Notably, comparable retail segment net sales increased for the fifth quarter in row, while all the three brands registered comps growth. We believe new store openings, increased digital penetration, merchandising improvements and international expansion bode well. Management is also making efforts to enhance the performance of brands through store refurbishment and by bringing in more compelling assortments. However, a likely increase in SG&A expenses during the final quarter owing to higher digital marketing investments, incentive-based compensation and increased store payroll may strain margins to an extent.


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