Urban Outfitters, Inc. (URBN Quick QuoteURBN - Free Report) reported results for fourth-quarter fiscal 2024, wherein the bottom line missed the Zacks Consensus Estimate but improved from the prior fiscal year’s quarterly levels.

Shares of this Philadelphia, PA-based player have increased 32.4% in the past three months compared with the industry’s 17% growth.

Deeper Insight

This lifestyle-specialty retailer delivered adjusted earnings per share of 69 cents, lagging the Zacks Consensus Estimate of 73 cents. However, the bottom line increased 81.6% from the comparable quarter of the prior fiscal year. On a reported basis, the company posted earnings of 50 cents a share.

Net sales on an adjusted basis for the three months ending Jan 31, 2024, rose 8% from the same-period level of last fiscal to $1.50 million. On a reported basis, the company posted sales of $1.49 billion. The consensus estimate is pegged at $1.49 million.

Brandwise, adjusted net sales were down 12.5% from the comparable period’s level in fiscal 2023 to $372.6 million at Urban Outfitters. The metric was up 12.7% to $679.5 million at Anthropologie Group and 18.3% to $362.3 million at Free People. Nuuly, the subscription-based rental service for women’s clothes, contributed $72.2 million to net sales, reflecting an increase of 69.1% from the earlier fiscal year’s comparable period, backed by a 56% rise in the company’s average active subscribers. Menus & Venues’ net sales amounted to $8.8 million, up 22.2% from the level recorded in the prior fiscal year’s corresponding period.

Segmentwise, adjusted net sales at the Retail unit rose 6.2% to $1.37 billion, while the metric at the Wholesale unit grew 3.3% to $54.4 million. The Wholesale unit’s sales were driven by a 7.8% rise in Free People Group wholesale sales on increased sales to department stores, partly offset by lower wholesale sales at Urban Outfitters. We note that the comparable Retail segment’s net sales grew 4.9% from the same-period level of fiscal 2023 backed by high single-digit growth in digital channel sales and low single-digit increase in retail-store sales.

By brand, the comparable Retail segment’s net sales jumped 18.9% at the Free People Group and 12% at the Anthropologie Group. The same, however, dropped 13.6% at Urban Outfitters.

An Insight Into Margins

In the quarter under review, adjusted gross profit rose 19.6% from the same-quarter level of fiscal 2023 to $451.8 million. Also, the adjusted gross margin expanded 293 basis points (bps) to 30.2%, mainly owing to increased initial merchandise markups on reduced inbound transportation costs.

Selling, general and administrative (SG&A) expenses were up 10.6% from the fourth-quarter fiscal 2023 level to $345.4 million. As a percentage of net sales, SG&A deleveraged 73 bps to 24.8%, mainly due to increased incentive-based compensation costs, and elevated marketing and creative expenses.

URBN recorded an adjusted operating income of $81.3 million, up from $42.7 million in fourth-quarter fiscal 2023. As a rate of sales, the adjusted operating margin increased 230 bps to 5.4% from the level registered in the quarter ending Jan 31, 2024.

Store Update

In fiscal 2024, this current Zacks Rank #3 (Hold) player inaugurated 26 outlets, including 11 Free People (comprising seven FP Movement stores), seven Urban Outfitters, seven Anthropologie Group and one Menus & Venues restaurant. URBN closed 20 retail locations, including eight Urban Outfitters, eight Anthropologie Group, one Free People Group and three Menus & Venues restaurants. In the aforementioned period, one Urban Outfitters franchisee-owned store was opened.

As of Jan 31, 2024, URBN operated 262 Urban Outfitters stores in the United States, Canada and Europe; 237 Anthropologie Group stores in the United States, Canada and Europe; 198 Free People stores (including 38 FP Movement stores) in the United States, Canada and Europe; nine Menus & Venues restaurants; seven Urban Outfitters franchisee-owned stores and two Anthropologie Group franchisee-owned stores.

Other Financial Details

Urban Outfitters ended the quarter with cash and cash equivalents of $178.3 million and a total shareholders’ equity of $2.11 bllion. As of Jan 31, 2024, total inventory fell 6.3% from the same period in fiscal 2023. Total Retail segment inventory decreased 4.6% with Retail segment comparable inventory declining 1.9%. Wholesale segment inventory tumbled 22% on improved inventory control.

URBN provided net cash of $509.4 million from operating activities during the twelve-month period ending Jan 31, 2024.

During fiscal 2024, the company repurchased and subsequently retired 4.7 million common shares for about $112 million. As of Jan 31, 2024, 19.2 million common shares were available under the program.

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The Zacks Consensus Estimate for American Eagle’s current financial-year sales suggests growth of 5% from the year-ago reported figure.

Hibbett, a key sporting goods retailer, currently carries a Zacks Rank #2 (Buy). HIBB delivered an earnings surprise of 24.2% in each of the trailing four quarters.

The Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.