Shares of Urban Outfitters Inc. (URBN) gained roughly 3% following the strong holiday season performance of this specialty retailer of fashion apparel and accessories. This Zacks Rank #3 (Hold) company stated that sales for the months of November and December surged 10% to $785 million on the back of an impressive performance delivered by the Free People and Anthropologie brands. The company’s namesake brand, which has been struggling, also showed improvement.
Comparable retail segment net sales, including the comparable direct-to-consumer channel, jumped 4% for the two month period ended Dec 31, 2014. Comparable retail segment net sales rose 17% and 5% at Free People and Anthropologie, respectively, while increasing a marginal 1% at Urban Outfitters. Net sales at the Wholesale segment climbed 14%.
We believe that the rebounding economy, falling unemployment rate and gasoline prices, higher consumer confidence and improving consumer spending benefited retailers that did not miss a single opportunity to cash in on consumers’ buying power. Data compiled by ShopperTrak revealed that holiday sales increased 4.6%, faring better than its expectation of 3.8%. Retailers such as J. C. Penney Company, Inc. (JCP), Macy’s, Inc. (M), The Gap, Inc. (GPS), and Pacific Sunwear of California Inc. (PSUN), also delivered decent results.
J. C. Penney delivered impressive comparable-store sales (comps) performance for the crucial holiday season. Comps for the combined November and December period grew 3.7%. Gap’s comps increased 3% for the holiday season, while net sales rose 4%. Macy’s reported that comps on an owned plus licensed basis grew 2.7% for the period, while Pacific Sunwear of California registered 9% growth in comps for December.
Coming back to Urban Outfitters, net sales for the 11-month period ended Dec 31, 2014 rose 7% to $3.1 billion. Comparable retail segment net sales inched up 1%, whereas wholesale segment net sales grew 27%.
We believe that Urban Outfitters is trying all means to bring the brand back to the growth trajectory, and remains committed to improve comps performance, sustain investments in its direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize the inventory level. Going forward, the company intends to increase its store count, grow wholesale operations, enhance direct penetration and augment eCommerce activities.
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