Urban Outfitters´ disappointing Q4
Tuesday, 13 March 2012
Urban Outfitters (URBN) stock fell 5.6% to $27.86 on Tuesday, becoming the biggest percentage decliner in the S&P 500 index, which was up 0.9% on the session. The American retailer saw its fourth quarter profit declined by 48%.
Late
Monday, the company said fourth-quarter profit fell to $39.3 million, or 27 cents a share, from $75.2 million, or 45 cents a share, a year ago. Revenue for the latest quarter rose 9% to $730.6 million from $668.4 million, with Internet sales up 14%. In contrast, analysts polled by FactSet Research had, on average, expected the specialty retailer to generate earnings of 29 cents a share on $730.6 million in sales.The specialty retail company operating under the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands announced net income of $39.3 million and $185.3 million for the fourth quarter and the year ended January 31, 2012, respectively. Earnings per diluted share were $0.27 for the quarter and $1.19 for the year.
For the fourth quarter of fiscal 2012, total company net sales increased 9% over the same quarter last year to $731 million. Comparable retail segment net sales, which include the Direct-to-Consumer channels, increased 2% for the quarter, while comparable store net sales decreased 1% for the quarter. Comparable retail segment net sales at Urban Outfitters, Free People and Anthropologie increased 3%, 9% and 1%, respectively. Direct-to-Consumer comparable net sales increased 14% and wholesale segment net sales rose 3% for the quarter.
For the year ended January 31, 2012, total Company net sales increased to $2.5 billion, or 9%, over the prior year. Comparable retail segment net sales were flat while comparable store net sales decreased 4%. Direct-to-Consumer comparable net sales rose 14% for the year and wholesale segment net sales increased 11%. "I am pleased that we managed our inventories to appropriate levels at year end even though our margins during the quarter suffered as a result," said Chief Executive Officer, Richard Hayne. "Our rate of full-priced selling has improved from fourth quarter levels as we seek to re-establish our historic full-price selling penetration." The reported 48% decline in fourth-quarter profit was bigger-than-expected, as well as the narrowing gross margin (-9.6%). As reported by Market Watch, “The lack of forward margin color concerned investors anticipating clear signs of the turn,” said J.P. Morgan analyst Brian Tunick. Still, Tunick kept an overweight rating on the stock, betting that Hayne and his new management team, including the return of Ted Marlow at the helm of the Urban brand, will herald “impressive” opportunities this year.
“We are disappointed, but really not surprised, that new management continues to think the only real answer to problems is to increase store counts through thick and thin, even when the product is not providing the answers (or justification) for unit expansion,” Brean Murray Carret & Co. analyst Eric Beder said.
