Back to top

Factors Likely to Shape Urban Outfitters' (URBN) Q4 Earnings

Read MoreHide Full Article

Urban Outfitters, Inc. (URBN - Free Report) is scheduled to release fourth-quarter fiscal 2019 results on Mar 5. In the trailing four quarters, the company’s bottom line outpaced the Zacks Consensus Estimate, the average being 14.5%. In the last reported quarter, the company delivered a positive earnings surprise of 11.1%.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 79 cents, reflecting an increase of 14.5% from 69 cents per share registered in the year-ago quarter. However, the consensus mark moved south by a penny over the past 30 days.

Factors to Consider

Urban Outfitters is gaining momentum on the back of its strategic endeavors such as store-expansion efforts, increase in digital penetration, growing wholesale operations, technology advancements and merchandising improvements. Furthermore, management is making efforts to enhance the performance of its brands through store refurbishment and by bringing in more compelling assortments.

Being a multi-brand and multi-channel retailer, the company offers flexible merchandising strategy. Urban Outfitters also has a significant domestic and international presence with rapidly expanding e-commerce activities. The company remains committed to improve comparable-store sales performance, sustain investments in the direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.

However, this lifestyle products and services company is grappling with increased SG&A expenses for a while now. Management expects SG&A expenses to increase by approximately 5% in the fourth quarter due to higher digital marketing investments, incentive-based compensation and increased store payroll.

Number Crunching

Urban Outfitters recently informed that net sales for the three months period (ended January 31, 2019) grew 3.7% to $1,128.9 million. Further, the company’s Comparable Retail segment net sales rose 3% buoyed double-digit increase in the digital channel, partly offset by a decline in retail store sales. Meanwhile, comparable Retail Segment net sales rose 4% at Free People, 4% at Urban Outfitters and 2% at the Anthropologie Group. Wholesale segment net sales jumped 3%.

Net sales by brands improved 3.1% to $447.5 million at Urban Outfitters, 3.9% to $464.6 million at Anthropologie Group, 3.8% to $209.3 million at Free People and 18.1% to $7.5 million at Food and Beverage.

What Does the Zacks Model Say?

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Urban Outfitters has a Zacks Rank #4 and an Earnings ESP of -0.50%, which make surprise prediction difficult.

Stocks With Favorable Combination

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat.

Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Foot Locker, Inc. (FL - Free Report) has an Earnings ESP of +1.26% and a Zacks Rank #2.

Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank #2.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>



More from Zacks Analyst Blog

You May Like