Urban Outfitters Q2 Profit Tops View, Shares Up 6%

(RTTNews) - Apparel retailer Urban Outfitters Inc. (URBN), Monday reported an increase in second-quarter profit, driven mainly by double-digit sales growth and stronger margins. Earnings for the quarter easily beat analysts' estimates, but revenues failed to meet expectations. Following the news, shares of the company were up over six percent in the extended hours trading.

Urban Outfitters, which operates stores under its namesake brand as well as Anthropologie and Free People, has been able to post strong revenue growth and improved profits for the past few quarters, despite ongoing uncertain economic conditions.

Comparable retail segment net sales, which include comparable direct-to-consumer channel, increased 9 percent. Comparable retail segment sales increased 38 percent at Free People, 9 percent at Anthropologie and 5 percent at Urban Outfitters.

Urban Outfitters' sales for quarter grew 12 percent to $758.52 million from $676.27 million last year. Thirty analysts polled by Thomson Reuters expected revenues of $768.07 million for the period.

Gross margin, or percentage of revenues left after deducting sales costs, improved to 39.3 percent from 37.6 percent last year, reflecting a reduction in merchandise markdowns primarily driven by improvements at the Anthropologie brand.

Philadelphia, Pennsylvania-based Urban Outfitters' second-quarter profit rose to $76.36 million or $0.51 per share from $61.29 million or $0.42 per share last year. Analysts expected earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

"I am pleased with the strong results we delivered this quarter," said Richard Hayne. "They were driven by a favorable customer response to our product offerings, improved merchandise margins, the opening of additional stores, and better creative and marketing initiatives in our direct-to-consumer channel."

URBN closed Monday at $39.92, up $0.18 or 0.45%, on the Nasdaq. The stock further rose $2.40 or 6.01% in after hours trade.