Urban Outfitters (URBN) to Report Q2 Earnings: What to Expect

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We expect Urban Outfitters, Inc. (URBN Quick QuoteURBN ) to register year-over-year growth in its top and bottom-line performances when it releases second-quarter fiscal 2022 results on Aug 24, after market open. The Zacks Consensus Estimate for quarterly earnings currently stands at 79 cents, implying a significant improvement from 35 cents per share earned in the year-ago quarter. The consensus mark has been stable over the past 30 days.

A glance at this specialty lifestyle products retailer’s performance over the trailing four quarters shows that it delivered an earnings surprise of 129.2%, on average.
 
For quarterly revenues, the consensus estimate is currently pegged at $1,057 million, indicating a rise of about 31% from the year-ago period’s tally.

Key Aspects to Note

Urban Outfitters’ second-quarter performance is most likely to have benefited from its strategic efforts including technological advancements, store rationalization and merchandising improvements. The company has been strengthening its direct-to-consumer business, enhancing productivity in the existing channels, expanding product assortment and optimizing inventory level for a while now. It is also witnessing continued strength in the digital channel. The strategic growth initiative FP Movement to boost Free People brand appears encouraging. All these strengths might have aided the company’s performance in the to-be-reported quarter.

Management had earlier expected a steady sales improvement for the fiscal second quarter, indicating growth from the fiscal 2020 reading. It projected growth in the mid-teens range for the retail segment comp sales and a low double-digit increase in overall company sales. Management also cited that the Anthropologie brand’s positive momentum was sustained in the fiscal second quarter with store traffic and sales exhibiting substantial advancement.

Urban Outfitters anticipated gross margins for the quarter under review to grow above 100 b! asis points from the fiscal 2020 actuals on strong sales. Also, lower markdown rates on improving consumer demand, solid product performance and disciplined inventory control might have aided margins. On the flip side, the company forecasts SG&A for the fiscal second quarter to increase at a rate just below the sales growth rate. Higher marketing and creative spend to boost digital growth might have elevated SG&A.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Urban Outfitters this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Urban Outfitters, Inc. Price and EPS Surprise Urban Outfitters, Inc. Price and EPS Surprise

Urban Outfitters, Inc. price-eps-surprise | Urban Outfitters, Inc. Quote

Urban Outfitters currently has a Zacks Rank #3 and an Earnings ESP of +3.47%.

More Stocks With Favorable Combination

Here are a few other companies worth considering from the same sector as our model shows that these too have the right combination of elements to beat on earnings this season:

Burlington Stores (BURL Quick QuoteBURL ) currently has an Earnings ESP of +20.61% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie (ANF Quick QuoteANF ) presently has an Earnings ESP of +6.14% and is Zacks #1 Ranked.

Costco (COST Quick QuoteCOST ) has an Earnings ESP of +0.44% and a Zacks Rank of 3 at present.

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