The company reported net income of $47 million, or 35 cents a share, for the Oct. 31-ending quarter, below consensus expectations of 41 cents a share.
Net sales rose 5% to $814 million over last year's third quarter, however gross profit fell 295 basis points in the same time period. Comparable sales for the company as a whole decreased 1%. Within the company's flagship brand, comp sales dropped 7% for the quarter.
"While we are pleased with delivering record third quarter sales fueled by strong performances at our Anthropologie and Free People brands, I am disappointed by the results at the Urban Outfitters brand," CEO Richard Hayne said in the earnings statement. "There is much work to be done to improve the merchandise margins and store performance at the Urban brand, but I see positive signs as shown by strong results at the brand`s direct-to-consumer channel."
Shares were down 4.3% to $29.50 before market open. Here's what analysts had to say.
Anna Andreeva, Oppenheimer (Outperform, $35 PT)
Earnings estimates on URBN continue to come down ('14 est. down 30% since start of year), with $0.35 for 3Q14 the biggest quarterly miss in recent history (and below negative pre-announcement on 10/16). Anthro, while slower, remains resilient (two-year comp stack maintained, one of a few apparel retailers with margins up); UO recovery is taking longer (took four quarters to fix during '11 fashion miss), issues likely more structural than company anticipated. While turnarounds in retail usually take longer, UO is starting to lap significantly softer results (Jan comps down 20% LY, comps down DD 1H14), Anthro's stack eases. Our $0.53 for 4Q14E is predicated on comps flat to up LSD at UO (acceleration from current levels), which may be optimistic given environment.