Urban Outfitters, Inc. Earnings: Margins Shrink as Costs Rise, Profit Falls

Rising costs did not help S&P 500 (NYSE:SPY) component Urban Outfitters, Inc. (NASDAQ:URBN) in the first quarter as profit dropped from a year earlier. Urban Outfitters Inc. is engaged in the general consumer product retail and wholesale business, selling to customers through various channels including retail stores, catalogs and web sites.

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Urban Outfitters Earnings Cheat Sheet for the First Quarter

Results: Net income for the apparel store fell to $38.6 million (23 cents/share) vs. $53 million (31 cents/share) a year earlier. A decline of 27.1% from the year earlier quarter.

Revenue: Rose 9.2% to $524 million YoY.

Actual vs. Wall St. Expectations: URBN fell short of the mean analyst estimate of 24 cents/share. Estimates ranged from 21 cents per share to 30 cents per share.

Quoting Management: “I am confident that we are on the right course to bring our business back to its high standards,” said Chief Executive Officer, Glen T. Senk. “I am encouraged by the progress each of the brands have made and anticipate improvements to occur gradually during the balance of this fiscal year,” finished Senk.

Key Stats:

Gross margin shrunk 4.9 percentage points to 36.9%. The contraction appeared to be driven by rising costs as the figure rose 18.4% from the year earlier quarter while revenue rose 9.2%.

Revenue has risen the past four quarters. Revenue increased 13.6% to $668.4 million in fourth quarter of the last fiscal year. The figure rose 13.4% in third quarter of the last fiscal year from the year earlier and climbed 20.4% in second quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the fourth quarter of the last fiscal year, net income fell 3.1% from the year earlier quarter.

Competitors to Watch: Abercrombie & Fitch Co. (NYSE:ANF), The Gap Inc. (NYSE:GPS), American Eagle Outfitters (NYSE:AEO), The Buckle, Inc. (NYSE:BKE), Pacific Sunwear of California, Inc. (NASDAQ:PSUN), Zumiez Inc. (NASDAQ:ZUMZ), Aeropostale, Inc. (NYSE:ARO), The Wet Seal, Inc. (NASDAQ:WTSLA), Stein Mart, Inc. (NASDAQ:SMRT), and The Walking Co. Hldgs., Inc. (WALK).

Stock Performance: Shares of URBN are up 0.5% after hours.

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