Urban Outfitters (NASDAQ:URBN) Misses Q4 Revenue Estimates, Stock Drops

Max Juang /
2024/02/27 4:28 pm EST

Clothing and accessories retailer Urban Outfitters (NASDAQ:URBN) missed analysts' expectations in Q4 FY2024, with revenue up 7.3% year on year to $1.49 billion. It made a non-GAAP profit of $0.69 per share, improving from its profit of $0.34 per share in the same quarter last year.

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Urban Outfitters (URBN) Q4 FY2024 Highlights:

  • Revenue: $1.49 billion vs analyst estimates of $1.50 billion (1% miss)
  • EPS (non-GAAP): $0.69 vs analyst expectations of $0.74 (7.3% miss)
  • Gross Margin (GAAP): 29.9%, up from 27.3% in the same quarter last year
  • Same-Store Sales were up 4.9% year on year (miss vs. expectations of up 5.4% year on year)
  • Market Capitalization: $4.26 billion

“We are pleased to report record fourth quarter sales driven by strength at the Anthropologie, Free People, FP Movement and Nuuly brands,” said Richard A. Hayne, Chief Executive Officer.

Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ:URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.

Apparel Retailer

Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on.

Sales Growth

Urban Outfitters is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the other hand, it has an edge over smaller competitors with fewer resources and can still flex high growth rates because it's growing off a smaller base than its larger counterparts.

As you can see below, the company's annualized revenue growth rate of 6.6% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new stores and grew sales at existing, established stores.

Urban Outfitters Total Revenue

This quarter, Urban Outfitters's revenue grew 7.3% year on year to $1.49 billion, missing Wall Street's expectations. Looking ahead, Wall Street expects sales to grow 5.3% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Urban Outfitters's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 4.9% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Urban Outfitters is reaching more customers and growing sales.

Urban Outfitters Year On Year Same Store Sales Growth

In the latest quarter, Urban Outfitters's same-store sales rose 4.9% year on year. This growth was an acceleration from the 3% year-on-year increase it posted 12 months ago, which is always an encouraging sign.

Key Takeaways from Urban Outfitters's Q4 Results

We struggled to find many strong positives in these results. Its same store sales, revenue, and gross margin missed analysts' expectations, leading to a bottom-line EPS miss vs. Wall Street's estimates. No guidance was given. Overall, this was a mixed quarter for Urban Outfitters. The company is down 6.3% on the results and currently trades at $44.2 per share.

Urban Outfitters may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.