Stock Story -
Clothing and accessories retailer Urban Outfitters (NASDAQ:URBN) announced better-than-expected results in Q1 CY2024, with revenue up 7.8% year on year to $1.20 billion. It made a non-GAAP profit of $0.69 per share, improving from its profit of $0.56 per share in the same quarter last year.
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Urban Outfitters (URBN) Q1 CY2024 Highlights:
- Revenue: $1.20 billion vs analyst estimates of $1.18 billion (1.8% beat)
- EPS (non-GAAP): $0.69 vs analyst estimates of $0.53 (29.8% beat)
- Gross Margin (GAAP): 34.4%, up from 33.3% in the same quarter last year
- Free Cash Flow of $17.46 million, up from $3.37 million in the same quarter last year
- Same-Store Sales were up 4.6% year on year
- Market Capitalization: $3.87 billion
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 5.8% over the last five years was weak , but to its credit, it opened new stores and grew sales at existing, established stores.
This quarter, Urban Outfitters reported solid year-on-year revenue growth of 7.8%, and its $1.20 billion in revenue outperformed Wall Street's estimates by 1.8%. Looking ahead, Wall Street expects sales to grow 5.4% over the next 12 months, a deceleration from this quarter.
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 4.1% 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.
In the latest quarter, Urban Outfitters's same-store sales rose 4.6% year on year. This performance was more or less in line with the same quarter last year.
Key Takeaways from Urban Outfitters's Q1 Results We were impressed by how significantly Urban Outfitters blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates, driven by same-store sales beats at its Anthropologie (10.4% SSS growth vs estimates of 8.9%) and Free People (17.1% SSS growth vs estimates of 12.5%) brands. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 8.1% after reporting and currently trades at $44.63 per share.
