Urban Outfitters Reports Higher Sales, Driving Profit and Margins

Urban Outfitters Inc.'s sales rose 3% in the first quarter, helping the retailer post higher profit and improved margins.

The Philadelphia retailer's results were a departure from recent trends in a sector that has largely reported falling sales, with data suggesting consumers are increasingly taking their money to the Web as Internet and catalog sales rise.

Urban Outfitters' shares, down 40% over the past 12 months, rose 7.4% to $26.40 in after-hours trading.

The Philadelphia-based retailer, which opened its first store in 1970 near the University of Pennsylvania campus, has expanded into a multinational clothing company with more than $3 billion in sales a year under the Urban Outfitters, Free People, Anthropologie, BHLDN and Terrain brands.

But sales at its two largest brands—Urban Outfitters and Anthropologie Group, which also includes BHLDN and Terrain—had slowed in recent quarters, and the retailer has reported lower profit on a year-over-year basis in seven of the past nine quarters.

In the latest period, the retailer reported comparable retail sales at Anthropologie were flat from the year-ago period while Urban Outfitters' sales rose 2%. Sales at Free People, however, fell 2%.

The company defines comparable retail sales as online sales and sales at stores open for at least 12 months.

Over all, for the period ended April 30, Urban Outfitters reported a profit of $29.6 million, or 25 cents a share, compared with $32.8 million, or 25 cents a share, a year earlier. The most recent results are based on 11% fewer shares outstanding.

Sales rose 3% to $762.6 million, while comparable retail sales rose 1%.

Analysts surveyed by Thomson Reuters had projected 25 cents a share on $760.1 million in sales.

Gross profit margin—the percentage of sales the retailer makes after accounting for production costs—improved to 34.3% from 33.3% a year earlier as the company discounted fewer items.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

May 18, 2016 18:25 ET (22:25 GMT)

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