Urban Outfitters Beat Good For Specialty Retail

A better-than-expected quarterly earnings from Urban Outfitters, Inc.

is a net positive for specialty retail sector, according to FBR's Susan Anderson. Urban Outfitters adjusted earnings of 61 cents topped Street view of 56 cents, driven by a shift toward higher-margin merchandise that enabled the company to offset underperforming apparel sales. "In general I think it is positive for specialty retail. The trend this earnings season seems to be that spec retailers are doing a little bit better than expected QTD, likely driven by very favorable weather and easy compares to LY. So URBN is no outlier," Anderson told in an email interview to Benzinga. Total net sales for the fourth quarter of fiscal 2016 were flat at $1.01 billion. Comparable Retail segment net sales fell 2 percent. Comparable Retail segment net sales rose 2 percent at Free People and decreased 2 percent at the Anthropologie Group and 3 percent at Urban Outfitters. "The weather has been very favorable. Currently, along the east coast you are looking at temperatures in the 70s, also we are cycling the port pressures from LY, so sales have been better than expected across the board," Anderson told Benzinga. Urban Outfitters operate 240 stores in the United States, Canada, and Europe, catalogs and websites; 218 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 114 Free People stores in the United States and Canada, catalogs and websites; and Free People wholesale, which sells its product to about 1,800 specialty stores and select department stores worldwide, as of Jan. 31, 2016. "At the UO brand I think price points are a bit high so those could be brought down a bit. They are constantly on fashion trends but sometimes they do have a fashion miss like everyone else, so I think continued refinement of their process. International will be the big growth vehicle for them as the US has become saturated," Anderson added. As of Jan.31, 2016, inventories stood at $330.22 million, compared to $358.24 million in the same period last year. A lean inventory level should help drive additional margin expansion. Brean Capital's Liz Pierce continues to believe that "with its 3 unique brands, considerable top-line growth potential, a strong balance sheet and its omni-channel focus, URBN remains a Best of Breed retailer." Pierce has a Buy rating on URBN. Related Link: http://www.benzinga.com/analyst-ratings/analyst-color/16/03/7624776/urban-outfitters-still-a-best-of-breed-retailer-says-bre Anderson said though URBN is at the fore front of omni-channel versus their competitors, they need to continue to invest to differentiate and remain up to date. FBR has a Market Perform rating on URBN shares, which climbed 16 percent at $32.73. They have gained 45 per cent this year.