Urban Outfitters, Inc. (URBN – Free Report) looks quite appeasing on its strategic initiatives like store-expansion efforts, increase in direct penetration growing wholesale operations, technology advancements and merchandising improvements, among others.
Recently, the company delivered upbeat holiday sales, where all its three brands reported rise in comparable store sales (comps) for the month of November and December. In addition, management is making all possible efforts to enhance the performance of brands through store refurbishment and by bringing in more compelling assortments.
We believe there is still momentum left in this Zacks Rank #1 (Strong Buy) stock, which is evident from its long-term earnings growth rate of 12% and a Value Score of B.
Let's Delve Deeper
Being a multi-brand and multi-channel retailer, Urban Outfitters offer flexible merchandising strategy. Additionally, the company's significant global presence with rapidly expanding e-commerce activities remains impressive. We believe better product execution and effective inventory management will help augment performance. Meanwhile, it seems to strategically invest in shop-in-shops.
Though the company reported lower-than-expected comps for the holiday period, it witnessed growth in all of its three brands driven by double-digit growth in the direct-to-consumer channel. Its comparable retail segment net sales, including the comparable direct-to-consumer channel, also gained 2%. Furthermore, net sales for the combined November and December period jumped 3.6% year over year.
Interestingly, the company bounced back with respect to its brands' comps performance. The big take away from the last reported third quarter fiscal 2018 was the rise in comps at all of the company's three brands for the first time in two years. The trend continued in the holiday period, signaling to continue this in the fiscal fourth quarter as well. The company remains committed to improve comps performance, sustain investments in direct-to-consumer business, enhance productivity in existing channels, add new brands and optimize inventory level.
