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Urban Outfitters (URBN - commentary - Cramer's Take) continues to impress me. The company managed to continue its strong growth despite the hesitant consumer. I was most impressed with management's ability to dramatically improve margins while reducing inventory and doing so without have to take drastic markdowns.
The stock is off a little bit today, but I believe that it is now in a period of digestion. The next step for Urban Outfitters is to get a round of analysts' upgrades, which will provide more motivation for buyers to step up to buying the shares. I bought a little stock at these levels and would be happy to add to my position if the stock backed off closer to $30. Urban Outfitters reported first-quarter 2009 EPS of 25 cents, bettering consensus estimates by 2 cents. Net sales of $394.3 million were a record for the company and were in line with the recent company's announcement and slightly ahead of analysts' estimates. Gross margins increased 444 basis points, to 40.2%. The company was able to achieve this by reducing markdowns. Comparable store inventory declined 3% in total. The company's tax rate rose from 22.2% to 35.7%. Excluding one-time federal income tax incentives, the rate would have been 36.2%. Same-store comps were 10% for the company and by concept were as follows:
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At the time of publication, Rothbort was long Urban Outfitters and Google, although positions can change at any time. Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site TheFinanceProfessor.com. Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities. Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University. For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.
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