Urban Outfitters Is Latest Retailer to Post Disappointing Holiday Sales

Sales at Urban Outfitters rise just under 3% during the 2019 holiday season, below analysts' expectations.
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Shares of Urban Outfitters (URBN) - Get Report fell sharply Friday, extending the retailer's losses for the second day, after it reported holiday sales that came in below analysts' expectations.

Urban Outfitters' stock price tumbled 5.62% to $26.14 a share after healthy sales numbers at Free People and Anthropologie failed to offset lower-than-expected sales at its name-sake stores.

The retailer's overall sales rose just under 3% during the 2019 holiday season, below analysts' expectations.

Same-store sales fell 1% at Urban Outfitter stores, even as they rose 8% at Free People and 5% at Anthropologie.

Friday's declines come on the heels of a 9.3% drop in Urban Outfitters' stock price on Thursday, when the company initially reported its lower-than-expected sales.

Urban Outfitters also cautioned that its profit margins for the fourth quarter may be thinner than expected. The retailer noted higher markdown activity, a rise in labor and logistics costs, and lower margins as well in its wholesale business.

Higher promotional activity in apparel particularly took a toll on profit margins in the company's flagship Urban Outfitters' and Anthropologie stores.

"The weaker-than-anticipated margins came as a surprise with the consensus view being that URBN was the 'best house on a bad block' this holiday season," Citigroup analyst Paul Lejuez wrote in a research note.

Still, Urban Outfitters is just the latest retailer to dash investor expectations by reporting lower than expected holiday sales for the 2019 season. Others include Victoria's Secret owner L Brands (LB) - Get Report and Kohl's (KSS) - Get Report.