Why Urban Outfitters’ Stock Just Surged

It's "better positioned than most" retailers.


Although retailers have been having a tough time in the stock market lately, Urban Outfitters‘ stock soared yesterday, ending the trading session at $22.29, up 5.69 percent.

The Philly-based hipster chic retailer that owns Anthropologie, Free People and Terrain filed a 10Q report after trading ended on Tuesday — and it showed that the company is poised to have a good fourth quarter. (Typically, the fourth quarter and Christmas season is where retailers make or break their year.)

That prompted Citigroup analyst Paul Lejuez to say that Urban is “better positioned than most with very clean inventories and a more favorable product mix,” according to this report from Barron’s. He also said: “We believe URBN operates three differentiated concepts and we see significant growth opportunity in the U.S. and internationally. Though the market seems focused on downside to margins at Anthro, we believe the upside at Urban Outfitters is greater.”

Still, The Street rates Urban as a “hold” not a buy. Here’s why:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 1.3%.
  • URBN’s stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.91%, which is also worse that the performance of the S&P 500 Index.
  • The gross profit margin for URBAN OUTFITTERS INC is currently lower than what is desirable, coming in at 34.92%. It has decreased from the same quarter the previous year.

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