Lifestyle specialty retailer Urban Outfitters, Inc. (URBN) said Monday after the markets closed that its first quarter profit fell 12% from last year amid deteriorating margins even as sales increased 9%.
The company's quarterly earnings per share came in above analysts' expectations, but its quarterly revenue fell short of analysts' estimate. Urban Outfitters shares are currently gaining 5.12% in after hours trading after closing the day's regular trading session at $26.16, up 54 cents or 2.11%. The shares trade in a 52-week range of $21.47 to $33.90.
The company operates lifestyle specialty retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, and BHLDN brands. It also engages in wholesale business under the Free People brand. Its main competitors are Abercrombie & Fitch Co. (ANF) and Gap, Inc. (GPS).
The company's comparable retail segment net sales, which include the direct-to-consumer channels, increased 2% for the first quarter, while comparable store net sales fell 1%.
Comparable retail segment net sales increased 6% at Urban Outfitters and 2% at Free People, but fell 2% at Anthropologie.
Direct-to-consumer comparable net sales rose 15% and wholesale segment net sales grew 2% for the quarter.
Gross margin for the quarter fell to 35.6% from 36.9% in the prior year quarter, mainly due to occupancy deleverage related to higher number of store openings as well as an increased number of new and non-comparable European stores.
Operating margin for the quarter declined to 9.3% from 11.2% a year earlier.During the first quarter, the company opened a total of 14 new stores including: 7 Free People stores, 4 Urban Outfitters stores, 2 Anthropologie stores and 1 BHLDN store.
For the first quarter ended April 30, 2012, the Philadelphia, Pennsylvania-based company reported net income of $34.0 million, compared to $38.6 million for the year-ago quarter.
Earnings per share for the quarter remained flat with last year at $0.23, as number of shares outstanding fell 12% from a year earlier.
On average, 28 analysts polled by Thomson Reuters expected the company to earn $0.20 per share for the first quarter.
Net sales for the fourth quarter rose 9% to $568.93 million from $524.02 million in the same quarter last year. Twenty-six analysts had a consensus revenue estimate of $579.33 million for the first quarter.
"We are pleased to announce record first quarter sales that were driven in part by positive regular price 'comp' sales," said Chief Executive Officer, Richard Hayne.
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