Urban Outfitters Reports Slow Quarter, Predicts More Dramatic Sales Decline in Upcoming Quarter

Urban Outfitters (URBN) shares were trading lower yesterday after the bell, when the company reported worse-than-expected first-quarter sales results and comparable retail segment sales declined 28%. The 28% decline was the result of very poor retail store sales due to mandated store closures, partially offset by low double-digit growth in the digital channel.

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The company reported first-quarterly losses of $1.41 per share on quarterly sales of $588.483 million, which missed the analyst consensus estimate of $693.550 million by 15.15%. This is a 31.92% decrease over sales of $864.413 million the same period last year.

Richard Hayne, CEO of Urban Outfitters, nevertheless sounded an upbeat tone. I am incredibly proud of our teams for their hard work, dedication and resilience over the last two months. The actions we’ve taken during the quarter to strengthen our balance sheet and help preserve liquidity provides us with financial flexibility during this difficult period,” said Hayne.

“I’m confident our proven ability to execute our multi-channel, multi-brand, and multi-category strategy will ensure our future success,” he added.

The disappointing results sent shares down nearly 6% to $16.95 in extended trading. The stock has a 52-week high of $31.41 and a 52-week low of $12.28.

Analyst sentiment towards Urban Outfitters is lukewarm, with 3 Buys and 11 Holds making for a Hold consensus and a $19 12-month price target, representing 6% upside potential. (See URBN stock analysis on TipRanks).

“Overall, our initial take on Q1 (Apr.) results suggests that, while URBN has gone to great lengths to control expenses and solidify its balance sheet, sales and profits at the chain are apt to suffer for the foreseeable future” commented Oppenheimer analyst Brain Nagel, who has a Hold rating on the stock.

The analyst says he is hard-pressed to envision shoppers returning aggressively to URBN stores or re-prioritizing spending toward clothing and accessories until well into a broader post-COVID-19 recovery.