Urban Outfitters surprises in Q3 on strong earnings, sales

Urban Outfitters on Monday reported sales and earnings that blew past Wall Street estimates, fueled in part by a strong performance from its Free People brand and online sales.

Urban Outfitters earned $45.1 million, or 41 cents a share, in the quarter, compared with $47 million, or 40 cents a share, in the year-ago period. Analysts had expected per-share earnings of 33 cents a share

Sales rose 3.5% to $893 million, a record for the company, Urban Outfitters said. Analysts had expected sales of $861 million.

Same-store sales, which include the comparable direct-to-consumer channel, rose 1%. Excluding the estimated impact of the North American hurricanes in the quarter, comparable retail segment net sales increased 2%. By brand, comparable retail segment net sales increased 5% at Free People, 2% at the Anthropologie Group and 1% at Urban Outfitters.

“Record sales were driven by improved apparel execution across all channels and brands,” said Richard A. Hayne, CEO.

Neil Saunders, managing director of GlobalData Retail, said that despite the company's good quarter, there are still some weaknesses in Urban Outfitters' performance, including "over-reliance" on its Free People brand.

"Urban Outfitters, and to a lesser extent Anthropologie, are still dropping off the radar of some consumers," he said. "To remedy this, both brands need to develop a much clearer and more compelling handwriting that resonates with the core customer." For more, click here.