Urban Outfitters, Inc. (NASDAQ:URBN) Store Sales Are Affected in the Quarter

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Urban Outfitters, Inc. (NASDAQ:URBN) stock fell 11.83% (As on Nov 23, 11:54:09 AM UTC-4, Source: Google Finance) though the company beaten the earnings estimates for the third quarter of FY 22. Comparable retail segment net sales increased 14 percent, driven by strong double-digit growth in digital channel sales, partially offset by mid-single-digit negative retail store sales primarily due to reduced store traffic. Retail segment sales increased by 16%. Comp store sales declined in the mid-single digit range, but improved throughout the quarter with October coming in only slightly negative. Lack of inventory in the first half of the quarter had negatively impacted store sales. Total store traffic versus LLY was mid-teens negative but healthy AUR gain partially offset that deficit. By region, traffic in the Southeast, Southwest and Midwest continue to outperform the major metro markets in New York, California and Canada. In Europe, traffic levels were stronger than the trends seen in North America. Total Wholesale sales decreased by 15% versus LLY. Lower sales at Free People wholesale partially offset by an increase in UO Wholesale sales. Anthropologie brand delivered a 9% retail segment comp versus LLY. Like the Urban brand, Anthropologie entered the quarter with tight apparel inventory levels and like Urban, supply chain disruptions stunted apparel sales. Retail segment comp sales accelerated each month in the quarter, fueled by strong double-digit digital sales which more than offset negative comp store sales. Sales were driven solely by full price selling with regular price comps jumping by more than 50%. This led to a reduction in markdowns almost 300 basis points improvement in MMU and low teens operating profit margin. The brand proactively planned to receive holiday home product early this year, leading to elevated home inventory throughout the quarter.

URBN in the third quarter of FY 22 has reported the adjusted earnings per share of 89 cents, beating the analysts’ estimates for the adjusted earnings per share of 84 cents. The company had reported the adjusted revenue growth of 14.6 percent to $1.13 billion in the third quarter of FY 22, which is inline with the analysts’ estimates for revenue of $1.13 billion.

Capital expenditures for the fiscal year are planned at approximately $285 million. The spend is mainly related to providing increased distribution and fulfillment capacity to support the growing digital business and secondarily to opening new stores. The company is planning on opening approximately 56 new stores and closing 21 stores for the entire fiscal year.

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