* Q4 EPS $0.45 vs est $0.40
* Margins rise 771 bps
* To launch new brand next February
* To expand into Far East
* Shares rise as much as 4 pct
(Recasts; adds conference call details)
By Nivedita Bhattacharjee
BANGALORE, March 4 Urban Outfitters Inc's
(URBN.O) quarterly profit topped estimates for the fourth time
in a row as its bohemian styles sold well during the holiday
season, and the clothing and home goods retailer announced the
launch of a new brand, due next February.
The new brand would cater to brides and wedding shoppers,
Chief Executive Glen Senk said on a conference call with
analysts, and added that over the next 10 years, the company
will eventually run a coterie of six brands.
Shares of the company rose as much as 4 percent Thursday
morning on Nasdaq, before paring some of the gains and were up
2 percent at $34.18 Thursday afternoon.
The operator of the Urban Outfitters, Anthropologie and
Free People chains also said it will continue to improve and
invest in its direct-to-consumer channel, sales at which grew
28 percent in the latest quarter.
"We do not benchmark ourselves against legacy
brick-and-mortar retailers. We are benchmarking against
e-tailers," the CEO said.
"We are having a lot of conversations internally that talk
about the fact that the e-commerce is probably the best
representation of who we are as a brand," CEO Senk said.
Urban Outfitters also talked of strong comparable store
sales for February, reflecting trends at most other retailers
that reported sales on Thursday. [ID:nN04258755]
"The company noted that February sales trends exceeded 4Q
trend which posted a 4 percent rise in comp, so we think comps
for 1Q are likely running up 5 to 7 percent," Jefferies & Co
analyst Randal Konik said.
MARGINS ON THE RISE
Like many of its peers, the retailer discounted less during
this quarter, ensuring strong margins, and well-managed
inventories assured a quick turnaround at its stores.
Gross profit margins improved by 771 basis points in a
competitive retail environment.
The company, which also supplies to other retailers, said
total comparable store inventories fell by 3 percent at cost
for the fourth quarter.
"Urban Outfitters maintains a very disciplined approach to
inventory, flowing merchandise into its stores quicker than
others. So a positive comp indicates an efficiently run
operation and product that is selling," analyst Brian Sozzi of
Wall Street Strategies said in a note.
The Philadelphia-based company, which has stores in the
United States, Canada and Europe, said it plans to open about
45 new stores during fiscal 2011.
The company also said it began the groundwork to expand in
the Far East.
Urban Outfitters earned $77.7 million, or 45 cents a share,
for the fourth quarter ended Jan. 31, compared with $40.5
million, or 24 cents a share, a year earlier.
Last month, the company said sales for the quarter reached
$588.5 million, a rise of 16 percent over last year. Comparable
store sales jumped 9 percent.
Analysts on average had expected the company to earn 40
cents a share, on revenue of $585.4 million, according to
Thomson Reuters I/B/E/S.
During the quarter, sales at Anthropologie rose 23 percent,
while those at its namesake stores rose 7 percent.
"Anthropologie is on top of its game, Urban Outfitters
improving," analyst Roxanne Meyer of UBS said.
The analyst said an increasing private label mix and a
lower cost structure should help foster strong margin growth in
the first quarter.
Shares of company were up 2 percent at $34.19 in morning
trade. They touched a high of $34.75 in earlier in the day.
(Reporting by Nivedita Bhattacharjee; Editing by Aradhana
Aravindan and Gopakumar Warrier)