Urban Outfitters, Inc. (URBN) had a pretty impressive Wednesday. The retailer crushed third-quarter expectations, and Wall Street responded by sending shares up more than 13%.
The Numbers That Matter
Urban Outfitters delivered earnings per share of $1.28, beating analyst estimates of $1.18. Revenue came in at $1.52 billion, comfortably ahead of the $1.47 billion consensus. Those aren't just marginal beats—they're the kind that get analysts recalculating their models.
The company posted record quarterly net income of $116.4 million as total sales jumped 12.3% year-over-year. That growth wasn't concentrated in one area either. Retail segment net sales increased 9.6%, powered by an 8% rise in comparable sales with high single-digit gains in both digital and store channels.
Breaking it down by brand: comparable sales grew 12.5% at Urban Outfitters, 7.6% at Anthropologie, and 4.1% at Free People. All three moving in the right direction.
The subscription segment showed particularly strong momentum, with net sales climbing 48.7% on a 42.2% increase in average active subscribers. Wholesale segment net sales rose 7.6%, supported by an 8.4% increase in Free People wholesale sales.
Margins and Management
Gross profit dollars increased 13.3% to $563.3 million, and the gross profit rate improved by 31 basis points. That improvement came from lower markdowns and better leverage on store occupancy costs—basically, the company is managing inventory smarter and getting more efficient with its real estate.
Speaking of inventory, it rose 5.9% year-over-year, which sounds reasonable given the sales growth. Selling, general and administrative expenses increased 13.7% from last year, reflecting higher marketing and store payroll costs. The company also repurchased 3.3 million shares during the first nine months of the fiscal year.
What Analysts Are Saying
Following the earnings report, five analysts raised their price targets. Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating and raised the price target from $80 to $85. Morgan Stanley analyst Alex Straton maintained an Overweight rating and bumped the target from $85 to $91. UBS analyst Jay Sole maintained a Neutral rating with a new target of $80, up from $70. Wells Fargo analyst Ike Boruchow maintained an Equal-Weight rating and raised the target from $75 to $80. Barclays analyst Adrienne Yih maintained an Overweight rating and raised the target from $89 to $98—the most bullish call in the group.
At the time of reporting, Urban Outfitters stock was trading 13.45% higher at $77.50.
