Why Urban Outfitters Shares Are Diving Premarket Wednesday

Urban Outfitters, Inc. URBN shares are trading lower after the company reported fourth-quarter FY23 results.

Revenue of $1.486 billion, up 7.3% Y/Y, missed the consensus of $1.495 billion.

Total Retail segment net sales rose 6.2% Y/Y, with comparable Retail segment net sales increasing 4.9% Y/Y, aided by high single-digit growth in digital channel and low single-digit growth in retail store sales.

Wholesale segment net sales rose 3.3%, led by a 7.8% Y/Y increase in Free People wholesale sales primarily aided by sales to department stores, partially offset by a $1.9 million decrease in Urban Outfitters wholesale sales. 

Adjusted gross margin expanded 293 basis points Y/Y, with adjusted gross profit rising 19.6% Y/Y to $451.8 million, aided by higher initial merchandise markups primarily on lower inbound transportation costs. 

Adjusted EPS of $0.69 missed the consensus of $0.74.

During the year, the company opened a total of 26 new retail locations including 11 Free People stores (including 7 FP Movement stores), 7 Urban Outfitters stores, 7 Anthropologie stores and 1 Menus & Venues restaurant; and closed 20 retail locations.

In the year, the company did not repurchase any common shares, and Urban Outfitters had 19.2 million common shares remaining under the program as of January 31, 2024.

As of January 31, 2024, the company held cash and cash equivalent of $465 million.

Price Action: URBN shares are down 9.41% at $42.74 premarket on the last check Wednesday.

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