NEW YORK (TheStreet) -- Retail sector stocks were mixed on Wednesday.
Urban Outfitters (URBN) shares were surging 4.3% to $37.27. The Philadelphia-based retailer disclosed Tuesday in a 10-Q filing that fourth-quarter comparable sales for the retail segment, which includes its online sales, are "mid single-digit positive" so far.
The comps are in line with Wall Street's expectations of 4% to 5% quarterly growth.
Urban Outfitters saw a 7.1% rise in comparable sales for the third quarter. Urban Outfitters sells merchandise through its flagship brand, as well as Free People and Anthropologie brands, both of which experienced double-digit comps of 30.3% and 13%, respectively, in the third quarter. Flagship Urban Outfitters comps declined 1.2% last quarter. Urban Outfitters also noted the "continued growth" of direct-to-consumer channel for all brands.
The fourth-quarter comp growth is "being driven by further weakening at the Urban brand offsetting strength at Anthropologie," Sterne Agee analyst Ike Boruchow wrote in a Wednesday note. "We believe the key to this stock's performance will be whether Urban recovers before Anthro slows. Until we receive some clarity regarding a recovery at Urban, we remain Neutral on the stock." Boruchow pointed out that sales comparisons will be tougher for the rest of quarter, especially at the Urban brand.
"We believe the Urban brand may have decelerated further, though aggressive promotions may limit the decline," the note said. "The brand operates in the most competitive segment of the mall (teen/young adult apparel), and the fashion has been off-trend recently (too 'Goth'). We continue to believe, however, that Anthropologie is one of the strongest apparel concepts out there, benefiting from a strengthened bench, on-trend fashion and efficient inventory management." In addition, Anthropologie was one of the few retailers that was less promotional for both Black Friday and Cyber Monday, Boruchow writes. He expects gross margin to be flat for the quarter as the improvement by Anthropolgie will be "completely offset" by margin deterioration at Urban.