URBN Down Sharply On Earnings

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Urban Outfitters, Inc. ( NASDAQ: URBN ) Down Sharply In After Hours

The Numbers, The Reasons

Urban Outfitters Inc., (Nasdaq:URBN) announced first quarter earnings today that came in well below expectations. Although sales for the quarter were at a record level they still fell well below what analysts had been discussing for their expectations. Shares fell a whopping 11% on Monday in after-hours trading when the company posted first quarter earnings of $0.25 per share when analyst’s estimates were higher at $0.30 per share according to Bloomberg. While sales posted a revenue record of 739 million they still fell well below expectations of 757 million. Other retailers in the same category have also been showing weaknesses, namely Macy’s and JCPenney to name a few common rivals. Retailers’ earnings reports have been mixed across the board as names like the aforementioned have shown similar chinks in their armor when they’ve reported as well. The most common theme in why some companies are missing their numbers is being attributed to the strong U.S dollar, however, Urban said it was weak margins that hurt their first quarter results.
Low cost trades, higher leverage

Shares of the popular youth crowd Urban Outfitters Inc. were down 11.63% or 4.75 to $36.10 in heavy aftermarket trading on Monday May 18, 2015.

 

The Demographics and How They Survive

Urban Outfitters is not your everyday mom and pop shop. URBN targets a very specific and narrowed customer base of clients whose main focus is the 18 to 28 year old age bracket described as being a hipster or bohemian like style- sometimes also called cat-like or kitschy.

 

While much of their clothing doesn’t contain wording they have been known to have t-shirts embroidered or printed with words such as “jive Turkey” for “Atari”. Clearly not attire that meets the average dressed employee or casual dresser. Some of the more humorous and controversial men’s and ladies shirts have said- “Vote For Vodka”, and “Eat Less”.

 Chart Screaming for a Rest?

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Please see above the monthly price chart of URBN’s stock price performance from 2009 until the present. Note the nearly 300% rise ($13.80-$47.25) from the low in 2009 to the peak in 2015. Clearly investors have done extremely well if they bought and held until now. So maybe it’s a time to take some profits off the table and buy in again after this earnings disappointment news fades.

 

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