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Urban Outfitters (URBN) Rallies 55% in a Year: Here's Why
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Urban Outfitters, Inc. (URBN - Free Report) seems a lucrative bet, thanks to its robust business strategies and solid fundamentals. URBN’s strategic growth initiative, which is the FP Movement, and store-growth endeavors are also impressive. Management has been strengthening its direct-to-consumer business, enhancing productivity across existing channels and optimizing inventory levels.
Buoyed by such tailwinds, the company reported sturdy results for first-quarter fiscal 2024, wherein the top and the bottom line beat the Zacks Consensus Estimate. Also, sales and earnings grew year over year. Brand-wise, net sales were up 12.8% year over year at Anthropologie Group and 11.4% at Free People. Segment-wise, net sales at the Retail unit rose 4%, while the comparable Retail segment’s net sales grew 5% from the same-period level of fiscal 2023 backed by a low-single-digit increase in retail-store sales and a high single-digit rise in digital channel sales.
We note that management is impressed with the sturdy overall consumer demand at the start of the first quarter of fiscal 2024. This is likely to continue throughout the second quarter, wherein the total company sales growth will be in the mid-single digits. This growth will be backed by a mid-single-digit increase in the Retail segment’s comp sales and a high double-digit rise in the Nuuly segment’s sales year over year.
URBN’s gross margin rate for the second quarter is likely to improve nearly 300 basis points year over year, buoyed by increased initial product margins from lower inbound freight costs and reduced merchandise markdowns.
Image Source: Zacks Investment Research
All these strengths have aided the shares of this Philadelphia, PA-based company to rally 55.4% in a year, outperforming the industry’s 4.9% decline. Analysts look optimistic about this Zacks Rank #1 (Strong Buy) company. For fiscal 2024, the Zacks Consensus Estimate for URBN’s sales and earnings per share (EPS) is currently pegged at $5.04 billion and $2.75, respectively, suggesting 5.1% and 57.1% growth from the year-ago period’s corresponding figures.
For fiscal 2025, the consensus estimate for sales and EPS presently stands at $5.24 billion and $2.94, respectively, indicating an increase of 3.9% and 6.9% each from the previous fiscal year’s actuals.
Strategies in Detail
Management has been making investments in the FP Movement with digital and creative brand prospects. It believes that the FP Movement will lure a wider base of customers to the Free People brand. Having a differentiated position in the fitness and wellness space, the FP Movement offers a major growth opportunity and is expected to boost Free People’s brand revenues.
In addition, management remains optimistic about the prospects of Nuuly, which comprises the Nuuly Rent and Nuuly Thrift brands. During the fiscal first quarter, Nuuly, the subscription-based rental service for women’s clothes, contributed $42.7 million to net sales. This reflected an increase from $17.3 million recorded in the earlier fiscal year’s comparable period, backed by a 149% rise in subscribers. Subscriber growth is driven by new subscribers and improvements in subscriber retention. Going forward, management remains optimistic about the prospects of Nuuly.
Being a multi-brand and multi-channel retailer, Urban Outfitters offers a flexible merchandising strategy. The company also has a significant domestic and international presence with rapidly expanding e-commerce activities.
All in all, Urban Outfitters’ stock proves to be a solid investment bet now due to the aforesaid strengths.
Eye These Solid Picks Too
We have highlighted three other top-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Stitch Fix (SFIX - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 732%, respectively, from the year-ago reported figures. ANF delivered a trailing four-quarter earnings surprise of 480.6%, on average.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO delivered an average earnings surprise of 9.2% in the trailing four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 4.1% from the year-ago reported figure.
Stitch Fix, the lifestyle apparel and accessories retailer, currently carries a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 7.7%, on average.
The consensus estimate for Stitch Fix’s current financial-year EPS suggests growth of 9.6%, from the year-ago reported figure.
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Urban Outfitters (URBN) Rallies 55% in a Year: Here's Why
Urban Outfitters, Inc. (URBN - Free Report) seems a lucrative bet, thanks to its robust business strategies and solid fundamentals. URBN’s strategic growth initiative, which is the FP Movement, and store-growth endeavors are also impressive. Management has been strengthening its direct-to-consumer business, enhancing productivity across existing channels and optimizing inventory levels.
Buoyed by such tailwinds, the company reported sturdy results for first-quarter fiscal 2024, wherein the top and the bottom line beat the Zacks Consensus Estimate. Also, sales and earnings grew year over year. Brand-wise, net sales were up 12.8% year over year at Anthropologie Group and 11.4% at Free People. Segment-wise, net sales at the Retail unit rose 4%, while the comparable Retail segment’s net sales grew 5% from the same-period level of fiscal 2023 backed by a low-single-digit increase in retail-store sales and a high single-digit rise in digital channel sales.
We note that management is impressed with the sturdy overall consumer demand at the start of the first quarter of fiscal 2024. This is likely to continue throughout the second quarter, wherein the total company sales growth will be in the mid-single digits. This growth will be backed by a mid-single-digit increase in the Retail segment’s comp sales and a high double-digit rise in the Nuuly segment’s sales year over year.
URBN’s gross margin rate for the second quarter is likely to improve nearly 300 basis points year over year, buoyed by increased initial product margins from lower inbound freight costs and reduced merchandise markdowns.
Image Source: Zacks Investment Research
All these strengths have aided the shares of this Philadelphia, PA-based company to rally 55.4% in a year, outperforming the industry’s 4.9% decline. Analysts look optimistic about this Zacks Rank #1 (Strong Buy) company. For fiscal 2024, the Zacks Consensus Estimate for URBN’s sales and earnings per share (EPS) is currently pegged at $5.04 billion and $2.75, respectively, suggesting 5.1% and 57.1% growth from the year-ago period’s corresponding figures.
For fiscal 2025, the consensus estimate for sales and EPS presently stands at $5.24 billion and $2.94, respectively, indicating an increase of 3.9% and 6.9% each from the previous fiscal year’s actuals.
Strategies in Detail
Management has been making investments in the FP Movement with digital and creative brand prospects. It believes that the FP Movement will lure a wider base of customers to the Free People brand. Having a differentiated position in the fitness and wellness space, the FP Movement offers a major growth opportunity and is expected to boost Free People’s brand revenues.
In addition, management remains optimistic about the prospects of Nuuly, which comprises the Nuuly Rent and Nuuly Thrift brands. During the fiscal first quarter, Nuuly, the subscription-based rental service for women’s clothes, contributed $42.7 million to net sales. This reflected an increase from $17.3 million recorded in the earlier fiscal year’s comparable period, backed by a 149% rise in subscribers. Subscriber growth is driven by new subscribers and improvements in subscriber retention. Going forward, management remains optimistic about the prospects of Nuuly.
Being a multi-brand and multi-channel retailer, Urban Outfitters offers a flexible merchandising strategy. The company also has a significant domestic and international presence with rapidly expanding e-commerce activities.
All in all, Urban Outfitters’ stock proves to be a solid investment bet now due to the aforesaid strengths.
Eye These Solid Picks Too
We have highlighted three other top-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Stitch Fix (SFIX - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 732%, respectively, from the year-ago reported figures. ANF delivered a trailing four-quarter earnings surprise of 480.6%, on average.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO delivered an average earnings surprise of 9.2% in the trailing four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 4.1% from the year-ago reported figure.
Stitch Fix, the lifestyle apparel and accessories retailer, currently carries a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 7.7%, on average.
The consensus estimate for Stitch Fix’s current financial-year EPS suggests growth of 9.6%, from the year-ago reported figure.