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Pedestrians pass an Urban Outfitters store in New York.
Scott Mlyn | CNBC
The second quarter results of Urban Outfitters will be remembered as one of his "best", acknowledged his CEO on Tuesday, after the edgy retailer reported a profit down 35% on weaker sales than planned by Wall Street.
After the markets closed, the company's shares climbed 4% before falling by about 2%.
Here's how the company compared its expectations to those of Wall Street, according to analysts surveyed by Refinitiv:
- Adjusted earnings per share: $ 0.61 vs. $ 0.58 estimated
- Sales: $ 962 million, compared to an estimated $ 980.6 million
Net income decreased 35% to $ 60.3 million, or 61 cents per share, compared to $ 92.8 million, or 84 cents a share a year earlier. Sales of all Urban Outfitters product lines decreased 3% in the three months ended July 31st to $ 962 million, down from $ 992.5 million a year earlier than the 2% decline estimated by analysts surveyed by FactSet. It also missed analysts' expectations of $ 980.6 million.
"The second quarter of this year will not be considered one of the best in Urban.We have generated sales and margins below our expectations.The customer acceptance has been less good than expected, "said General Manager Richard Hayne, during a conference call. "This has resulted in higher markdowns from year to year and lower margins." The decrease in store traffic has accentuated the negative performance of the stores and weighed on the stores. overall results. "
Store sales that have been open for at least a year are down 3% in the second quarter compared to the same period last year, which is worse than the 2% decline expected by Wall Street analysts surveyed by FactSet. . Leaders said the sales declines were due to the underperformance of women's clothing, with "product and performance failures".
Hayne has been more optimistic about the company's third fiscal quarter, which began Aug. 1, citing promising sales in comparable stores up to now.
"I am pleased to report that our customers' response to our early fall clothing mix has improved significantly over our second quarter results," Hayne said in a statement. announcement announcing the results. Third-quarter comparable store sales were positive for all three brands of Urban Outfitter – its Urban Outfitters, Free People and Anthropology clothing line, he said.
Earlier this month, the company launched a rental service called Nuuly. This is an attempt to enter a rental sector that is expected to grow by more than 20% a year and reach a value of $ 2.5 billion in 2023, according to the company. GlobalData data analysis.
But Urban is also facing fierce competition as companies such as Banana Republic and Bloomingdale have announced plans to launch their own rental services this month. He also has to face giants of rental services such as Rent the Runway and The Tote.
The company's shares have fallen 37% since January, bringing the company to a market value of about $ 2 billion.
Correction: This article has been updated to correct the fact that the company has not met Wall Street's estimates of comparable store sales.
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