Urban Outfitters (NASDAQ:URBN) stock gained 6.5% in the extended trading session yesterday following the release of upbeat results for the first quarter. The company’s bottom-line growth was supported by strong demand for URBN’s Anthropologie and Free People clothing brands.
In addition, the company disclosed plans to expand its retail footprint by opening 57 new stores in Fiscal 2025. These new locations will include 25 stores dedicated to the Free People Movement brand, URBN’s athletic clothing brand. Also, Free People and Anthropologie brands will each receive 13 new store locations.
URBN’s Q1 Results Snapshot
The company reported adjusted earnings of $0.69 per share, which exceeded analysts’ estimates of $0.53 per share. Furthermore, the reported figure increased by 23.2% from the prior-year quarter. In the meantime, Q1 revenues of $1.2 billion rose by 7.8% year-over-year, surpassing the Street’s estimates of $1.18 billion.
Segment-wise, comparable net sales at the Retail unit increased 17.1% at Free People and 10.4% at Anthropologie. Furthermore, Nuuly segment net sales rose 51.4% with support from a 45% year-over-year jump in average active subscribers in Q1. The Wholesale segment also witnessed 3.4% sales growth due to higher demand from department stores.
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bullish on URBN believe that the strong performance of Anthropologie and Free People brands, along with Nuuly’s subscriber increase, could boost the company’s profitability.
Is URBN a Buy?
URBN’s growing consumer base and the strong demand for Free People and Anthropologie brands keep the company well-positioned for growth. However, rising expenses and efforts to clear out slower-moving inventory with discounts might continue to hurt bottom-line growth to some extent.
Overall, Wall Street analysts are sidelined on the stock. Urban Outfitters has a Hold consensus rating based on three Buy, seven Hold, and one Sell recommendations. The analysts’ average price target on URBN stock of $44.36 suggests an upside of 7.4%. Shares of the company have gained 15.8% so far in 2024.
