Stifel Nicolaus Comments on Below Expectation Results For Urban Outfitters

In a report published by Stifel Nicolaus, Urban Outfitters' URBN below expectation results are driven by increased markdowns.

Stifel Nicolaus said that Urban Outfitters reported 4Q EPS of $0.45 (flat to LY), $0.07 below its estimate and consensus as increased markdowns necessary to clear merchandise negatively impacted results. “URBN's 4Q results were below expectation as gross margin deteriorated and SG&A as a percentage of sales increased versus LY. The company is in the process of better aligning its inventory assortment with the new fashion shift (it takes the company time to gain clarity on what consumers want in regards to the new fashion trend), negatively impacting merchandise margins. In addition, in 4Q, consumers focused more on the non-apparel categories: accessories, jewelry, loungewear and shoes. This shift, while recognized by management, was not optimally pursued, which we believe could provide some near term upside as the company increases the penetration of non-apparel items in 1Q.”

Urban Outfitters closed yesterday at $37.99.