Up to this point, analysts had a positive outlook on the company as there were signs of operating margin recovery, analysts stated.
Analysts now believe that the clothing company's Anthropologie division is "struggling to regain traction coming out of the second quarter and heading into fall," according to the firm's note.
The company still remains a compelling story long-term, with an improving macroeconomic backdrop, analysts added.
On Thursday, shares closed down 2.02% to $33.
Urban Outfitters, a lifestyle specialty retail company, engages in the retail and wholesale of general consumer products. The company operates in two segments: Retail and Wholesale.
Separately, TheStreet Ratings team rates URBAN OUTFITTERS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate URBAN OUTFITTERS INC (URBN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 7.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- URBN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- 38.09% is the gross profit margin for URBAN OUTFITTERS INC which we consider to be strong. Regardless of URBN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.43% trails the industry average.
- URBAN OUTFITTERS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, URBAN OUTFITTERS INC reported lower earnings of $1.70 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.70).
- You can view the full analysis from the report here: URBN Ratings Report