If Urban Outfitters Inc. (URBN) misses its upcoming second-quarter earnings estimates, one wonders whether the sometimes-activist investor lurking on its cozy, over-tenured board will strike.
Urban Outfitters is expected to report second-quarter results on Aug. 15, when analysts surveyed at FactSet expect the retailer to post earnings of 39 cents a share on revenue of $867 million. But, the outlook on Urban Outfitters is grim as it has missed profit expectations for the past three consecutive quarters.
In its recent first quarter, the retailer reported earnings of 10 cents a share on revenue of $761 million, badly missing Wall Street's estimates for earnings of 15 cents a share on revenue of $769 million.
Scott Galloway, a professor at the Leonard N. Stern School of Business at New York University and the founder and chairman of activist investment firm Firebrand Partners LLC, joined the board of Urban Outfitters as an independent director last May.
As of April 3, Galloway owned a less-than 1% stake in the Philadelphia-based company, but could boost his position in order to launch an activist campaign, if he chooses. Back in 2008, Galloway increased his stake in the New York Times Co. (NYT) , to 19%, to launch a campaign to shake up its board. He ended victorious, landing a board seat for himself for two years at the company.
Galloway did not return a request for comment.
Although not drawing ire from an activist hedge fund yet, a number of other groups have called upon the apparel retailer, behind the Urban Outfitters, Anthropologie and Free People brands, to overhaul its over-tenured board. For example, in May, Washington D.C.-based CtW Investment Group, which works with union-sponsored pension funds, urged shareholders to vote against re-electing directors Robert Strouse and Harry Cherken Jr., the longest-sitting board members, at the company's May 23 meeting.
"The company has suffered from years of stagnant revenue growth and a slumping stock price," CtW wrote at the time. "While the retail and apparel sector, more generally, has also suffered from falling stock prices, Urban's stock price has fallen more dramatically than peers."