Despite reports (just last week!) of how Anthropologie made out like bandits over Presidents' Day Weekend, it looks like Urban Outfitters needs to recover a bit after a weak 4th quarter. Sales were strong but profits dipped.
Says the AP via Forbes:
Demand for Anthropologie's eclectic and higher-priced home goods and clothes and Free People's hippy-chic attire remained strong last year but finally succumbed to consumer cutbacks in the fourth quarter, Urban Outfitters Inc. reported Thursday.
The apparel retailer said profit dropped 24 percent during the three months ended Jan. 31 as the company used clearance sales and markdowns to move excess inventory.
In some areas Anthropologie has been having terrific sales (Soho, anyone?). But other stores don't seem to be taking part, which I find odd. Overall investment analysts have changed their opinion from a "Buy" last quarter to a "Hold" in January and now just a hold off.
From Blogging Stocks:
Urban Outfitters stated in its press release that gross margin declined by well over 500 basis points as markdowns took their toll on profits. The mall shoppers are being extra careful with their wallets. They only want to bring out the cash or the plastic if there's a deal. How can a retailer based on fashions operate like this? It's difficult to near impossible for some. That's why the stock isn't that far from a 52-week low. I'd say that the low could be revisited at any time.
For the average consumer, this means that discounts will continue to come as Urban Outfitters works to maintain foot traffic. Getting people in the store will be key to keeping the brand strong in the weak economy. Also, some more established investment firms like KeyBanc still think Anthro is at less than 50% market penetration so there's room to play with the brand. Sales are great; I just want to make sure Anthro is around for the long haul.
