Boston, MA 05/20/2014 (wallstreetpr) – Chain of retail store operator of lifestyle products, Urban Outfitters, Inc. (NASDAQ:URBN) announced 20% drop in net earnings for the first quarter, as the margin hurts the bottom line. However, the top line, which recorded 6% growth, came in above the expectations, whereas earnings per share fell shy of predictions.
1Q Results
The company reported net income of $37.48 million, down 20.4% from $47.06 million, while earnings per share dropped 18.8% to 26 cents from 32 cents in the previous year quarter. On average, Wall Street analysts expected earnings of 27 cents a share.
Net sales rose 6% to $686.31 million from $648.18 million in the year-ago quarter. Analysts estimated Urban Outfitters to generate revenue of $680.18 million. The company’s comparable store sales were flat with the last year quarter. However, comparable retail division sales rose 25% and 8 % at Free People and Anthropologie Group respectively, whereas it has dipped 12% at Urban Outfitters. Its wholesale division recorded a growth of 27%.
While retail segment sales grew 4.65% to $640.43 million from $611.97 million, wholesale segment sales advanced 26.7% to $45.88 million from $36.2 million in the year earlier quarter.
Margin Declines
Urban Outfitters’ gross margin witnessed 2.09 percentage points fall as a fall out of a deleverage in store possession expenses fueled by unfavorable comparable store sales besides pre-opening rent costs in connection with the new stores. Aside from these, weak merchandise margins due to poor performing product also dragged down the overall margins.
Selling, general and administrative costs, as a percentage to sales, dipped 50 basis points to 26.1% from 25.5% reducing the income from operations percentage to 8.7% from 11.3% in the year-ago quarter. The higher cost of sales and SG&A expenses has also cut down the net income percentage to sales to mere 5.5% from 7.3% in the previous year quarter.
Urban Outfitters, Inc. (NASDAQ:URBN) bought back 9.7 million shares worth about $353 million during the first quarter.
