Things
are actually starting to look up for some US fashion retailers, which
can be interpreted as a good sign for the economy. Clothes, while
generally seen as essential items, can also be viewed as a
discretionary category depending on their price. Urban
Outfitters, which offers a diversified range of
consumer goods, recently came out with a very solid earnings beat.
However, the stock is trading at a significant premium to the
industry and peers such as Gap
and Abercrombie &
Fitch . Is it worth the money?
Urban
Outfitters' most recent numbers look good. The company reported
earnings of $0.47 per share for the third quarter, up from $0.40 a
year ago and beating by $0.02. Revenue of $774 million was up 12%
year-over-year and beat the consensus by around $3 million. The news
sent shares up about 1.3% in after-hours trading on Nov. 18.
Much
of the 18% rise in quarterly profit was due to a strong performance
from the Anthropologie and Free People chains. Free People recorded a
very impressive 30% increase in comparable-retail-segment net sales,
with Anthropologie's figures up 13%. Overall, comps were up 7%, which
is fairly impressive in the current spending environment.
Aside
from these record earnings, the profit rate is also looking pretty
good. The gross profit rate increased 11 basis points for the
quarter, and by 99 basis points for the nine-month period ended Oct.
31. Management attributed this increase primarily to a reduction in
markdowns and improved margins at Free People and Anthropologie in
particular. Contrary to many of its competitors, Urban Outfitters
seems to be having a better time navigating the tough teen market at
the moment.
Source:fool
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