Morgan Stanley: Urban Outfitters Merchandising, Inventory Levels Are Better

In a report published Wednesday, Morgan Stanley analysts maintained an Equal-Weight rating on

, saying that the company's performance quarter-to-date was tracking in-line with expectations. The analysts estimate Urban Outfitters' comps at about 5 percent so far in the first quarter. "Strong e-commerce trends, as highlighted in 4Q, remain a robust comp driver across all three brands. In the report Morgan Stanley noted, "While investors expected last year's harsh weather to provide an easier weather compare, this year's intense cold in the Eastern half of the US led to higher regional comp differentials than even last year." In the early part of the first quarter last year, the company has indicated 7 percent to 10 percent weather-imposed comp differentials. "Despite fewer store closures this year, the weather-induced spread worsened," the analysts wrote. "While April faces a tougher comparison (as of 4/1/14 URBN comp ran–LSD but a positive April '14 yielded a flat comp for the quarter), we expect URBN remains in the 5% comp range as the brands have not yet fully benefitted from the Easter/Spring Break effect and (theoretically) warmer weather on the horizon should help stimulate spring apparel demand," the report added. Most of the Spring Break holidays should be between March 30 and April 10. This suggests that the latest data only partially captures the holiday related pickup. The analysts believe that Free People generated comps in the high teens, similar to the fourth quarter despite a 500bps tougher comparison, and continued to exhibit "clear demand for its bohemian aesthetic and desirable brand." Anthro is likely to have generated about 5 percent comp so far in the first quarter, "suggesting a still very healthy business." The analysts added, "Sustained strong comps provide evidence these concepts remain highly desirable to the shopper."