Photo: Jennyyym via Flickr
Urban Outfitters is down around 15% after posting earnings for the fourth quarter that came in way below expectations after the bell yesterday.Its net profits dropped to $75.2 million from $77.7 million in 2010.
Pretty much every retail analyst on the street had something to say about the retailer.
“We think top-line recovery could be 2-3 quarters away and that the stock is unlikely to recover until that point. While we believe improving sales are the clear positive catalyst here, we note there appears to be strong investor demand to own the name in the low 30’s.”
“The gross margin was down 208 bp due mainly to markdowns to clear fashion that did not resonate. Inventories grew faster than sales (total inventory +23% and comp retail including e-commerce +10%), and management warned that the gross margin could be under greater pressure in 1H11 as fashion issues linger and compares get tougher.”
“Great long-term growth story but we are still more guarded on the near-term, given uncompelling valuation, difficult compares over the next few quarters, risks of higher sourcing costs, and potential difficulty navigating through fashion shifts. We need to see earnings stability in the near term and cheaper valuation to get more positive on the shares.”
“We continue to believe Urban Outfitters is a compelling long-term growth story, however we remain on the sidelines for now, as operating margin gains will likely be limited by slower sales, thus weighing on earnings growth.”