Can Urban Outfitters Notch New 52-Week High on Growth Plans?
Shares of Urban Outfitters, Inc. URBN are hovering close to its 52-week high of $48.24. The company touched $47.07 on Jun 27, before closing the session at $45.55. Notably, this Zacks Rank #1 (Strong Buy) stock has gained 25.2% in the past three months, outperforming the industry’s rise of 12.8% and the overall sector’s increase of 9.3%.
We believe store openings, increased digital penetration, merchandising improvement and international expansion bode well. Management is also making all possible efforts to enhance the performance of brands through store refurbishment and by bringing in more compelling assortments.
Let’s find out whether the company will be able reach a new 52 week-high anytime soon.
Focus on Mutli-Brand Channel
Being a multi-brand and multi-channel retailer, Urban Outfitters offers flexible merchandising strategy. The company also has a significant domestic and international presence with rapidly expanding e-commerce activities. The company is focused on improving comparable-store sales performance, sustain investments in direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.
The company made an unprecedented move by acquiring Philadelphia’s The Vetri Family group of restaurants, including the Pizzeria Vetri chain. The attempt is seen as part of the company’s strategy to target and attract millennials to the stores.
Further, to expand reach, Anthropologie and Nordstrom entered into a partnership, whereby more than 200 items from Anthropologie Home are now available at select Nordstrom full-line stores and on Nordstrom.com. The Anthropologie Home collection offer categories like kitchen, dining and entertaining, bed and bath textiles, room decor, stationery and hardware.
Comparable Store Sales Remain Impressive
First-quarter fiscal 2019 is the third straight quarter when the company witnessed comparable sales growth. Comparable Retail Segment net sales jumped 10% buoyed by double-digit growth in the digital channel and increased retail store sales. This follows an increase of 4% and 1% in the preceding two quarters. Meanwhile, comparable retail segment net sales rose 15% at Free People, 10% at the Anthropologie Group and 8% at Urban Outfitters. Management hinted that based on current sales trends, it expects second-quarter sales comps to be almost in line with first quarter rate.
The company is rational about opening stores, having launched 38 outlets in both fiscal 2014 and 2015, and 31 and 29 in fiscal 2016 and 2017, respectively. During fiscal 2018, the company opened 18 new outlets — eight Free People stores, five Urban Outfitters stores, four Anthropologie Group stores and one Beverage restaurant.
The company shuttered 11 stores — three Anthropologie Group stores, two Urban Outfitters outlets, three Food and Beverage restaurants and three Free People stores — in the same time frame. During the first quarter of fiscal 2019, the company opened four new locations — two Free People stores and two Urban Outfitters outlets. The company also shuttered one Urban Outfitters outlet. Encouragingly, the company plans to open 18 new stores and intends to close 10 locations during fiscal 2019.
3 Other Retail Stocks Hogging the Limelight
Shoe Carnival, Inc. SCVL has a long-term earnings growth rate of 12% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. BURL has a long-term earnings growth rate of 18.1% and carries a Zacks Rank #2 (Buy).
Fossil Group FOSL delivered an average positive earnings surprise of 54.1% in the trailing four quarters. The Zacks Rank #2 company has a long-term earnings growth rate of 5%.
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