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Urban Outfitters Shares Drop After In-Store Sales Slide

Urban Outfitters' in-store sales fell in the mid-single digits while online sales jumped double digits. Same-store sales rose 14%, trailing estimates.
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Urban Outfitters  (URBN) - Get Urban Outfitters, Inc. Report shares dropped on Tuesday after the apparel retailer’s in-store sales fell and comparable sales lagged analysts’ expectations.

In-store sales fell in the mid-single digits, while online sales jumped in double digits. Same-store sales rose 14% against the FactSet analyst consensus calling for 15.2%.

Urban Outfitters stock recently traded at $32.26, down 13%. It had soared 46% year to date through Monday amid strong consumer spending. The shares had eased 1% in the three months through Monday.

To be sure, the company posted better-than-expected profit and revenue for the fiscal third quarter ended Oct. 31.

Net income registered $88.9 million, or 89 cents a share, up from $76.7 million, or 78 cents a share, in the year-earlier quarter. Analysts estimated 84 cents for the latest period.

Revenue climbed 17% to $1.13 billion in the third quarter from $969.6 million a year ago. Analysts anticipated $1.12 billion for the latest quarter.

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Morningstar analyst David Swartz likes the Philadelphia company’s performance.

“Continuing its string of impressive results, no-moat Urban Outfitters’ fiscal 2022 third-quarter results slightly exceeded our expectations,” he wrote in a commentary Monday.

The stock dropped “possibly due to concerns over the supply-chain issues that have bedeviled home and apparel retailers” Swartz said.

“While the firm did acknowledge some lost sales in the first part of the quarter, the situation has improved, and it ended the period with inventory up 28% from last year.

“Thus, we believe it has enough available product and sales momentum to reach our forecast of fourth-quarter sales growth of more than 10% as compared with two years ago.

“We expect to raise our fair-value estimate of $33 by a low-single-digit percentage, leaving [the] shares fully valued.”