By Carly Forster
Urban Outfitters (URBN, Financial) shares rose 7% in after-hours trading on Feb. 9 following the company’s impressive revenue and same-store sale results for the fourth-quarter ending Jan. 31. This revenue was a direct result of strong holiday sales. However, the sales were mostly from Anthropologie and Free People which consistently performed well over the past year, while Urban Outfitters has not seen the same positive results.
Highlights from the report include $1.01 billion in revenue, marking a 12% increase on a year-over-year basis. For the full year ending Jan. 31, 2015, sales rose 8% to $3.32 billion. The company’s Wholesale segment net sales also increased by 27%.
Richard A. Hayne, Chief Executive Officer said of the results, "I am pleased to announce record URBN sales for the fourth quarter of fiscal 2015 driven by positive comps at each of our brands with the direct-to-consumer channel continuing to outpace store sales…Although promotional activity was higher than planned, we are entering the spring selling season in a clean inventory position, and we are encouraged by the steady progress the Urban Outfitters brand is making in re-engaging its core customer.”
However, Urban Outfitters once again become the subject of controversy on Feb. 10 offering gray-striped tapestries with a pink triangle that many believe are reminiscent of uniforms gay male prisoners wore in Nazi concentration camps during the Holocaust. This is not the first time Urban Outfitters has faced scrutiny for selling something consumers found offensive. In September of last year, the retailer featured a Kent State University sweatshirt with what seemed to be fake bloodstains for sale on its website, which for many elicited instant associations with the tragic Kent State massacre of 1970. In 2012, Urban Outfitters was scrutinized for selling a T-shirt with what appeared to be a Star of David printed on the chest.
On Feb. 10, Brean Capital analyst Elizabeth Pierce weighed in on Urban Outfitters following the company’s Q4 results, reiterating a Buy rating on the stock with a price target of $42. The analyst noted, “In our opinion, Q4 comp sales results, which accelerated over the 2-month combined Holiday period, demonstrates the power of the URBN brands and that the Urban Outfitters (UO) brand has not lost its relevance with its target customer.”
Elizabeth Pierce has rated Urban Outfitters 13 times since March 2009, earning a 73% success rate recommending the stock and a +38.7% average return per recommendation. Overall, Pierce has a 57% success rate recommending stocks and a +11.9% average return per recommendation.
Similarly on Feb. 10, Wunderlich analyst Eric Beder reiterated a Buy rating on Urban Outfitters with a $42 price target. He reasoned, “While somewhat discount driven, we view the +6% 4Q same-store sales, with all divisions comping positive, as a key positive, positioning Urban Outfitters to begin to regain momentum and move back to its rightful price as a premium-multiple investment vehicle for specialty retail investors.”
Eric Beder has rated Urban Outfitters 15 times since December 2010, earning a 50% success rate recommending the company and a -6.3% average loss per recommendation. Overall, Beder has a 52% success rate recommending stocks and a +5.7% average return per recommendation.
On average, the top analyst consensus for Urban Outfitters on TipRanks is Hold.
