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Urban Outfitters shares soar as analysts cheer profit beat
March 8, 2016 / 5:26 PM / 2 years ago

Urban Outfitters shares soar as analysts cheer profit beat

A customer enters the Urban Outfitters store in Denver May 14, 2015. REUTERS/Rick Wilking

(Reuters) - Shares of Urban Outfitters Inc (URBN.O) rose nearly 18 percent on Tuesday, a day after the apparel retailer topped analysts’ quarterly profit estimates, helped by strong sales of its bohemian-inspired Free People brand.

The company, which also operates the Anthropologie brand, believes it can drive gross profit margin growth by lowering mark-downs in the Urban Outfitters brand in the first quarter.

At least 10 brokerages raised their price target on the retailer’s stock. Analysts said the company’s well managed costs and improvement in its Anthropologie brand in the current quarter were big positives.

Sales at Anthropologie stores open at least a year fell 2 percent, its first decline in 15 quarters, but it was a smaller fall than analysts had expected, according to Consensus Metrix.

“We’re encouraged by several gross margin tailwinds, tighter cost management, and early signs of improvement at Anthropologie,” Baird analyst Mark Altschwager wrote in a research note.

Altschwager raised the price target to $35 from $29. The median price target is $33, up from $25 a month ago.

Sales at Free People brand continued its strong performance in the holiday quarter luring women with its popular bohemian apparel and accessories.

The company’s sales were also helped by non-apparel categories such as home, intimates, accessories, shoes and beauty, Chief Executive Richard Hayne said on a post-earnings conference call.

The company’s net income fell to $72.9 million from $80.3 million, a year earlier. On a per share basis earnings rose to 61 cents from 60 cents, due to fewer shares outstanding.

Analysts on average had expected earnings of 56 cents per share, according to Thomson Reuters I/B/E/S.

Shares of the retailer were up 16.6 percent at $32.83. Up to Monday’s close, the stock had fallen about 28 percent in the last 12 months.

Reporting by Subrat Patnaik in Bengaluru; Editing by Shounak Dasgupta

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