Urban Outfitters' Profit Slips

Urban Outfitters Inc.'s fiscal second-quarter profit edged down as higher marketing and technology expenses eroded margins and offset higher sales across brands.

Shares, down nearly 8% this year, rose nearly 6% to $34.05 in late trading.

Discounts and sales promotions have helped retailers boost sales, but they have also taken a toll on margins. In the latest quarter, Urban Outfitters' gross margin narrowed to 36.7% from 37.4%, tied in part to its moving its wholesale and online operations to Pennsylvania to speed up deliveries on the East Coast.

The Philadelphia chain opened its first store in 1970 near the University of Pennsylvania campus. It has grown into a multinational clothing company with $3.32 billion in sales as of Jan. 31, the end of its fiscal year. It expects to double sales by 2020.

In addition to its namesake brand, Urban Outfitters is the parent company of Free People and Anthropologie Group, which includes the Anthropologie, BHLDN and Terrain brands.

Overall, for the period ended July 31, Urban Outfitters reported a profit of $66.8 million, compared with $67.5 million a year earlier.

On a per-share basis, with 6.6% fewer shares outstanding for the latest period, profit rose to 52 cents from 49 cents.

Sales, less returns, rose nearly 7% to $867.5 million.

Analysts surveyed by Thomson Reuters projected earnings of 49 cents a share on $881.2 million in sales.

Sales at stores open for at least a year, including online sales, rose 4%. That included a 4% increase at its namesake brand, an increase of 2% at Anthropologie and 14% at Free People. It is the third consecutive quarter that all brands reported increases. The namesake brand had ended the previous fiscal year with a 5.6% decline.

Wholesale net sales, meanwhile, rose 21%.

Inventory rose by $22 million, or 6%, from a year earlier, as the retailer entered the back-to-school shopping season.

Historically, the last five months of the year account for most of Urban Outfitters' sales.

Write to Maria Armental at [e-mail]

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(END) Dow Jones Newswires

August 17, 2015 17:05 ET (21:05 GMT)

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