Urban Outfitters Stock Jumps After Non-Namesake Brands Drive Earnings Beat

Urban Outfitters (URBN) shares jumped more than 6% in extended-hours trading Tuesday evening after the apparel retailer posted quarterly results that came in ahead of analysts’ expectations amid strength in the company’s non-namesake brands.

For the three month period ending April 30, the company reported adjusted earnings of 69 cents per shares, beating Wall Street forecasts of 53 cents a share. Revenue in the quarter increased 7.8% to $1.2 billion, edging past the Street expectation of $1.18 billion.

Free People, Anthropologie, Nuuly Brands Gain

Retail segment comparable net sales for the Free People and Anthropologie high-end women’s brands rose 17.1% and 10.4%, respectively, helping to offset weakness in its namesake Urban Outfitters brand, which reported a 13.7% sales decline from a year earlier. The retailer’s Nuuly clothing rental division also performed strongly in the quarter, posting a 51.4% year-over-year (YOY) jump in sales, driven by a surge of average active subscribers.

“We are pleased to report record first quarter sales and earnings driven by continued strength at the Anthropologie, Free People, FP Movement and Nuuly brands,” Urban Outfitters CEO Richard Hayne said in the company’s earnings statement.

Looking ahead, the company sees current-quarter net sales growth in the mid-single digits, with CFO Melanie Marein-Efron telling analysts on the post earnings call that consumer demand remains strong. “We are pleased that overall consumer demand has remained strong to start the quarter, and we are planning for this strength to continue throughout the second quarter,” she said.

Monitor This Level Amid Earnings-Related Buying

Since gaping above two prominent peaks in January, Urban Outfitters shares have traded within a chart pattern that closely resembles a descending triangle. More recently, the price has consolidated between the pattern’s top trendline and the 50-day moving average leading into the company’s quarterly results, indicating a lack of conviction among market participants. 

Given the stock looks set to move higher after the retailer’s better-than-expected report, investors should monitor the $43.80 level, an area where the shares may encounter selling pressure near a horizontal line connecting recent sideways price action. A decisive move through this level could see the stock retest its late February high at $47.29.

Urban Outfitters shares gained 6.5% to $43.99 in extended trading.

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As of the date this article was written, the author does not own any of the above securities.