Shares of Urban Outfitters (URBN) dropped nearly 9% to $35.85 in after-hours trading on Tuesday after the company reported weaker-than-anticipated results for the 2016 third quarter and a decline in sales at its Anthropologie and Free People brands.
The Philadelphia-based retailer posted adjusted earnings of 40 cents per diluted share, below the consensus estimate compiled by FactSet of 44 cents per share. Revenue climbed 5% to $862.5 million year-over-year, but Wall Street had expected $869.2 million.
Comparable-store sales rose 5.2% at Urban Outfitters but slumped 2.7% at Anthropologie and fell 1.5% at Free People. Comparable retail segment sales, which includes its direct-to-consumer channel, increased 1%.
The company said markdowns were "favorable" during the period due to lower markdowns at the Urban Outfitters brand, which were partially offset by higher markdowns at Free People and Anthropologie.
As of Oct. 31, total inventory increased 3% year over year, or by $12 million. The higher inventory is primarily due to an increase in non-comparable inventory to support new and expanded stores, Urban Outfitters said.
More than 5.26 million of the company's shares traded Tuesday compared to its average 30-day volume of 2.34 million shares. The stock has run up more than 71% for the year to date.