Urban Outfitters share price drops 14 per cent on disappointing earnings

 
Billy Ehrenberg
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In the fourth quarter last year, Urban Outfitters broke a three-quarter run of falling profits (Source: Getty)

Investors in Urban Outfitters received bad news this evening when disappointing results sent the trendy retailer’s share price plummeted 13.9 per cent in after-hours trading.

The figures

For the three months to 30 April, Urban Outfitters reported net income of $32.8m (£21m, or 25 cents a share) from $37.5m (26 cents a share) for the same quarter last year.

Analysts had been expecting rather more bullish results of 30 cents a share.

Revenue was up as total company net sales recorded a new record high of $739m – an eight per cent increase over the same quarter last year.

Gross profit across the group, which includes the Urban Outfitters, Anthropologie and Free People brands, was down 141 basis points, with lower margins and increased delivery costs taking their toll.

Comparable sales rose just four per cent, well behind the 5.3 per cent analysts expected.

Why it’s interesting

In the fourth quarter last year, Urban Outfitters broke a three-quarter run of falling profits, and the market had been hoping a new streak would begin here. The earnings estimates peaked at 31 cents a share a month ago, but had tailed off slightly to 30 cents as results neared. The 25 cent bombshell explains why shares have dropped off the edge.

What Urban Outfitters said

Richard A. Hayne, chief executive, said:

I am pleased to announce record first quarter sales and positive Retail segment comparable net sales at each of our brands. I believe our Retail segment comparable net sales growth is being driven by the success of our omni-channel strategy.

In short

Investors will be hoping last quarter's strong results were not just a flash in the pan, but only revenue numbers leave room for much optimism.

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