Urban Outfitters Inc. (URBN), at its Investors day, outlined strategies that will help the company to double its sales by 2020.
These strategies include product expansion, improved omni-channel capabilities and enhanced customer experience. The company’s premium brands, Anthropologie, Urban Outfitters and Free People will be bolstered to boost revenues. Also, the company believes the home category to be an important driver followed by footwear, jewelry and intimate apparel.
Urban Outfitters goals have sparked mixed reaction from the analysts. Most of them argue that though the strategies appear to be simple their execution would pose a serious challenge for the company.
Majority of the analysts find these initiatives to be ambitious given the fact that the company is not quite well positioned at the moment. Its lack luster performance in the past couple of quarters resulted from higher operating expenses and fall in sales at its namesake brand.
While Anthropologie and Free People brands made positive contributions to the company’s performance, sales were affected to some extent by sluggish performance at the Urban Outfitters brand on account of weak product execution.
We believe these initiatives hold promise over the long-term if executed properly. The company is making every possible effort to bring the brand back on the growth trajectory. In absence of greater clarity, we prefer to be on the sidelines. For now, it remains a ‘wait and see’ story.
At present, Urban Outfitters is a Zacks Rank #3 (Hold) stock. Other retail stocks worth consideration include Citi Trends, Inc. (CTRN), Abercrombie & Fitch Co. (ANF) and Foot Locker, Inc. (FL). Citi Trends sports a Zacks Rank #1 (Strong Buy), while Abercrombie and Foot Locker are Zacks Rank # 2 (Buy) stocks.
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