Specialty apparel retailer Urban Outfitters Inc. (URBN), said Monday its profit for the second quarter increased from last year on strong growth across its mainstay brands. The company's earnings for the quarter breezed past Street estimates, with sales also coming in ahead of expectations.
The news had a significant impact on Urban Outfitters shares that reached a new high for the year. The stock is currently up 16.34 percent at $36.39 on the Nasdaq.
The positive results comes amid a pickup in retail activity as consumers splurge on their favorite brands even as concerns remain of the overall economic situation.
Urban Outfitters operate under its eponymous brand as well as those like Anthropologie, BHLDN, Free People, and Terrain. During the quarter, the company's net sales grew 11 percent year-over-year. Comparable retail segment net sales, which includes direct-to-consumer channel, increased 4 percent, while same-store net sales edged down 1 percent.
Nevertheless, high cost of sales somewhat impacted gross margin that fell 30 basis points from last year to 37.6 percent, hurt by the deleveraging of initial merchandise costs and store occupancy expenses.
Philadelphia, Pennsylvania-based Urban Outfitters reported second quarter net income of $61.3 million or $0.42 per share, up from $56.7 million or $0.35 per share last year.
On average, 30 analysts polled by Thomson Reuters expected earnings of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter totaled $676 million, compared to $609 million last year. Twenty-eight analysts estimated sales of $671.58 million.
Moving forward, CEO Richard Hayne said, "As we head into the second half of the year we plan for gradual year over year improvement in our business along with further tightening of our store inventories."
Among others in the industry, fashion retail giant Gap Inc. (GPS) last week reported a 29 percent rise in quarterly profit that topped Street estimates, helped by higher sales and improved gross margin. The company again raised its full year earnings outlook.
Smaller rival Abercrombie & Fitch Co. (ANF) recently recorded a lower profit in the second quarter, but above estimates, amid a modest growth in sales. The company also backed its full year earnings outlook.
URBN closed Monday at $31.28, down 0.38%, on a volume of 3.2 million shares on the Nasdaq. In after hours, the stock gained $5.11 or 16.34%. In the past year, the stock trended in a range of $21.47 - $31.81.
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