Urban Outfitters Inc. (URBN) has decided to optimize its shareholders’ return by employing its available free cash to buyback shares.
The recently announced share repurchase program, which has no set time limit, authorizes the company to buy back up to $10 million shares of its common stock. The company added that it expects to buyback the shares through open market or private transactions. Further, the company also completed its previous share repurchase program authorized on November 16, 2010.
Share repurchases not only enhances shareholders’ return but also lifts the market value of the stock.
Earlier, the company posted better-than-expected results for the second quarter ended July 31, 2011. The quarterly earnings of 35 cents a share beat the Zacks Consensus Estimate of 32 cents, but dropped 16.7% from 42 cents earned in the prior-year quarter.
Despite registering growth in top line, the company witnessed a drop in its bottom line due to a rise of 19.1% in the cost of sales and an increase of 11.9% in selling, general and administrative expenses.
Total net sales climbed 10.3% to $609.2 million, and came ahead of the Zacks Consensus Estimate of $605 million. Net sales increased 10.5% to $577.3 million at the retail segment and 6.6% to $31.9 million at the wholesale segment.
Urban Outfitters eclectic product assortments coupled with the stores' unique shopping atmosphere will continue to differentiate it from other retailers to drive traffic into the stores.
Moreover, Anthropologie is set to drive long-term growth for URBN through International expansion and merchandise extensions. The company’s broad mix of product across men's and women's apparel, accessories, footwear, lingerie, home and gifts should help to insulate it better than other retailers with one more dimensional product offering.
Currently, Urban Outfitters holds a Zacks #3 Rank, which translates into a short-term Hold rating.
URBAN OUTFITTER (URBN): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment