According to the news report by MarketWatch, Urban Outfitters Inc.’s shares went up by more than 3% in late trading after the company released its quarterly earnings report. However, in the last one year the company’s stocks have dropped by 16.2%, in contrast to the S&P 500, which has gained 2.6% in the same time period.
Urban Outfitters reported that its quarter 4 net income had been at $86.4 million, which comes to $0.80 per share. One year ago, the company’s net income was at $1.3 million, which came to about 1 penny per share.
After adjusting for the changes that took place in the United States tax code and other items, earnings per share were at $0.83.
Revenues went up from $1.09 billion to $1.13 billion. Market consensus targets for earnings per share were at $0.79, while revenue had been pegged at $1.14 billion. So, the company narrowly missed revenue targets for the fourth quarter.
According to the Chief Executive Officer of Urban Outfitters Richard A Hayne, the fourth quarter finished what had been an enormously successful year for the URBN as well as the company’s other brands.
CNBC reported that despite having beaten earnings targets, Urban Outfitters’ shares dropped after the earnings conference call. This was because there had been comments made that caused investors a lot of concern. The company’s shares, after rising in initial after-hours trading, fell by 4.5% to trade at $28.55 per share.
Urban Outfitters’ Chief Financial Officer Frank Conforti stated that the company’s sales had started out the year on a weaker footing than they had anticipated. He also said that their retail segment’s same-store sales revenues would either remain flat or could even drop down and be negative in the low single-digit in the first quarter of 2019.
Conforti also noted that Urban Outfitters’ in-store traffic was in the negative for the last quarter of 2018 in North America and Europe. He noted that Europe had experienced stronger challenges in traffic than North America had.
For the fourth quarter, the company reported that same-store sales had gone up by 3%. However, that figure was below the market consensus target of 4.5%.
Forbes also reported on Ross Stores’ results for its fourth quarter. The discount retail company, which has over 1,400 stores across the US, reported that it had recorded an earnings per share of $1.20. This was higher than the market expectation of $1.12 per share.
The company also reported that revenues were at $4.1 billion and same-store sales had gone up by 4% when compared to the same time the last year.
The Chief Executive Officer of Ross Stores Barbara Rentler stated that these results had been achieved despite the fact that they had been faced with challenges in multi-year comparisons, as well as weakness in the company’s Ladies’ apparel division during the holiday quarter.
Ross shares were down by 2% in after-hours trading.
In the last one year, Ross Stores’ shares have gone up by 20%, while Urban Outfitters have seen a 16% drop. This diametrically opposing performance is a reflection of the struggle the retail industry has been facing.
According to CFRA’s investment strategist Lindsey Bell, discount retailers have generally done much better than the department stores, especially during the holiday season.
This earnings season, retailers started out with disappointing results, with concerns raised about a weaker-than-normal holiday season. However, now, analysts feel that things may be improving. This is because the first retailers to report their earnings, such as Target, Walmart and Kohl’s, had raised a red flag that sales were down.