NEW YORK (TheStreet) - Urban Outfitters (URBN) says it can double sales over the next five years, a proposition that analysts applauded at the specialty retailer's investor day in Philadelphia on Tuesday. Chief Executive Richard Hayne spent much of the day explaining that the owner of the Urban Outfitters brand along with the Free People and Anthropologie shops plans to bolster growth, particularly at its flagship stores which have lost much of their shine in recent years to newer entries such as Uniglo.
Urban Outfitter executives talked about building new stores, testing a larger Anthropologie prototype, expanding product lines into areas such as as beauty and home furnishings. Overarching themes focused on enhancing the customer experience both in stores and online, initiatives that are arguably long overdue.
Shareholders have been waiting for this overhaul for a while. Urban Outfitters stock has gained just 1.8% over the past two years compared to a 22% advance for the S&P 500
Urban Outfitters warned two weeks ago that retail comps, which includes both same-store sales and e-commerce sales, across all its brands had declined and were "low single digit negative." Last week, the retailer has been embroiled in controversy after denying that a $130 Kent State University sweatshirt doused in faux blood was a knock on the 1970 shooting massacre at the college.
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Urban Outfitters stock is up just 1.3% over the past 12 months. Shares rose 1.1% to $37.74 on Wednesday. Here's what analysts said.
Eric Beder, Wunderlich Securities (Buy; $42 PT)
We are reiterating our Buy rating, estimates, and $42 price target after attending Urban Outfitters' (URBN) Investor Day. The overall theme was the company's numerous growth levers, which appeared in everything from category development, square footage enlargement, international expansion, or even product additions. Further, Urban Outfitters laid out a 5-year plan that included prudent yet accelerated augmentation in category and product offerings, allowing each brand to be differentiated, yet completely holistic lifestyle brands. In the nearer term, management acknowledged (again) that the UO segment needed revitalization and refocus on product; they believe they are back on track. We continue to view Urban Outfitters as poised for a 2HFY15 comeback, and we remain buyers of URBN shares.
Urban Outfitters remains an organic growth story. Domestically, it will continue to expand through square footage, which will allow for further expansion of categories and products. And Urban Outfitters will be able to achieve three differentiated holistic lifestyle brands. Finally, management is determined to get the UO segment back on track through refocus on quality product and core customer emphasis. As such, we believe the company is on the right track to return to top and bottom line growth, and we remain buyers of URBN shares.