Urban Outfitters 4Q Sales Fall Due To COVID-19; Shares Slip

Urban Outfitters reported 4Q FY21 adjusted earnings per diluted share (EPS) of $0.30, which came in ahead of analysts’ estimates of $0.28.

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The lifestyle retailer and owner of brands like Anthropologie and Terrain posted sales of $1.09 billion, a decline of 6.9% year-on-year due to the impact of the COVID-19 pandemic. Analysts had estimated net sales of $1.01 billion.

Shares of Urban Outfitters (URBN) declined 1.6% in extended hours trading on March 2.

Urban Outfitters’ CEO, Richard A. Hayne said, “As we begin our new fiscal year, we are encouraged by the positive sales results all three brands delivered in North America quarter-to-date. We’re particularly excited by the recent uptick in demand for ‘going-out’ type apparel and believe this bodes well for our spring and summer seasons.”

The company’s comparable net sales for the retail segment fell 7% year-on-year due to reduced traffic at its stores because of the pandemic and store occupancy restrictions. However, URBN’s digital channels showed double-digit growth. In FY21, URBN opened 20 new retail locations and closed 10. (See Urban Outfitters stock analysis on TipRanks)

Following the announcement of URBN’s top-line results last month, Oppenheimer analyst Brian Nagel assigned a Hold rating on the stock. Nagel said in a note to investors, “Management attributed the weak top-line performance to continued pressure on store traffic caused by the coronavirus pandemic and related occupancy restrictions.”

Nagel added, “We continue to monitor URBN closely. While we applaud management for many of the company’s significant strategic position efforts, we remain concerned with ongoing indications of a lack of consistency and fundamental momentum at the chain.”

The rest of the Street is sidelined on the stock with a Hold consensus rating based on 3 Buys, 5 Holds, and 1 Sell. The average analyst price target of $32.88 implies around 2.6% downside potential to current levels.