Urban Outfitters' New Share Repurchase Program - Analyst Blog

With a view to continue its shareholder-friendly moves, Urban Outfitters Inc. URBN recently announced a share repurchase program of 10 million shares. Prior to this, the company completely exhausted its 10 million share buyback program authorized in August last year by its board of directors.

Probably, this step will help win back investors' confidence in the stock, after a dismal bottom-line performance in the recently concluded quarter.

A week before this announcement, Urban Outfitters came out with its first-quarter fiscal 2015 results. The company posted earnings of 26 cents a share that missed the Zacks Consensus Estimate by a penny, and dropped 18.8% from the year-ago period, hurt by higher operating expenses. Since then the shares of this lifestyle specialty retailer have fallen roughly 10%.

As a result, the Zacks Consensus Estimate witnessed a downtrend in the last 30 days as analysts became less constructive on the stock's future performance. The Zacks Consensus Estimate for both fiscal 2015 and 2016 tumbled 2.9% to $1.98 and $2.31 per share, respectively.

However, what redeemed the stock was its top-line growth. Total net sales climbed 5.9% to $686.3 million, attributable to a $29 million jump in non-comparable store sales, new store openings and double-digit growth at its wholesale operations.

While Anthropologie and Free People brands contributed to the company's performance, sales were affected to some extent due to sluggish performance of the Urban Outfitters brand on account of weak product execution. Total revenue fell short of the Zacks Consensus Estimate of $688 million.

Currently, Urban Outfitters carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Until any further upgrade in Urban Outfitters' Zacks Rank, other well performing stocks in the retail sector include Hanesbrands Inc. HBI, Genesco Inc. GCO and American Apparel, Inc. APP all sporting a Zacks Rank #2 (Buy).