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UPDATE 4-Urban Outfitters Q4 beats view, to unveil bridal brand
March 4, 2010 / 11:15 AM / 8 years ago

UPDATE 4-Urban Outfitters Q4 beats view, to unveil bridal brand

* 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 (Reuters) - 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.

UPBEAT RESULTS

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)

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