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May 27, 2021, 8:25 a.m. EDT

Urban Outfitters soars after fewer promotions drive record earnings

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Tonya Garcia

Urban Outfitters Inc. stock soared 10% in Wednesday trading after the apparel and lifestyle retail company reported record first-quarter sales and profit.

“The first quarter was one for the record books; record sales, a record low markdown rate, and record earnings per share,” said Richard Hayne, chief executive officer, in a statement.

Urban Outfitters /zigman2/quotes/208403734/composite URBN +1.95% reported  earnings per share of 54 cents, blowing past the FactSet consensus for 17 cents. And sales of $927.4 million beat the FactSet consensus for $899 million. Sales at the namesake chain were $349.7 million; at Anthropologie, sales totaled $353.6 million; and Free People rang up $212.8 million in sales. All sales totals for the core banners were up from the same period in 2020 and 2019.

See: Swimsuits and luggage are hot items as U.S. shoppers prepare for summer events with relaxed COVID restrictions

The Urban Outfitters chain reduced promotional activity by 69%, according to Hayne’s commentary on the earnings call. Full-price sales jumped 29% with women’s clothing and home goods the leading categories.

Same-store sales at the namesake banner have continued to rise from the first quarter for May-to-date, and Free People store sales are showing sequential improvement in May, Hayne said on the call.

Digital sales were up double digits across the company.

JPMorgan upgraded Urban Outfitters to neutral from underweight as post-COVID consumer activity including shopping for events like parties and weddings, back-to-school, return-to-the-office and global travel has the potential to continue driving business.

JPMorgan also raised its price target to $38 from $30.

Also: Ralph Lauren swings to a surprise profit and reinstates dividend

“Urban Outfitters is a prototypical example of the retail recovery dynamic right now – sequentially improving trends with a robust recovery in both top-line and gross margins,” wrote Wells Fargo.

Wells Fargo rates Urban Outfitters equal weight and raised its price target to $35 from $32.

“We were particularly impressed by Anthropologie, whose results underwhelmed in March but improved into positive territory in April and into double digits in May,” wrote MKM Partners.

“With the quarter only part of the way through, midteens comp guidance andexpectations for ongoing margin expansion signals confidence in the business.”

MKM rates Urban Outfitters stock neutral and raised its price target to $41 from $36.

Urban Outfitters stock has rallied 50.3% for the year to date while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.54% has gained 11.7% for the period.

/zigman2/quotes/208403734/composite
US : U.S.: Nasdaq
$ 37.18
+0.71 +1.95%
Volume: 1.17M
July 30, 2021 4:00p
P/E Ratio
19.01
Dividend Yield
N/A
Market Cap
$3.66 billion
Rev. per Employee
$181,566
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/zigman2/quotes/210599714/realtime
US : S&P US
4,395.26
-23.89 -0.54%
Volume: 2.25B
July 30, 2021 5:06p
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