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Reasons why Urban Outfitters’ stock price falls more than other retailers’ shares

Business |ANALYSIS

Reasons why Urban Outfitters’ stock price falls more than other retailers’ shares

By Angela Gonzalez-Rodriguez

7 Aug 2017

Urban Outfitters Inc.’s stock hit an eight-year low earlier this summer, barely securing 16 dollars a share. Market sources lay out the options for the teen apparel retailer in the short – medium term, considering options such a delisting or a change of management.

The Philadelphia-based retailer has recently reported dismal same-store sales, saying in their last 10-Q regulatory filing that “Thus far during the second quarter of fiscal 2018, comparable retail segment net sales are high single-digit negative.”

Although the stock has managed to fare better this last week, rebounding to a 19 dollars apiece price, investors are asking longer-term questions, according to Zacks’ analysis team: Will Urban Outfitters, whose critics say is in need of fresher leadership, go the way of Nordstrom and go private, paying shareholders a premium? Will the closely held public company be bought by a rival, as its market cap has dropped to 2 billion dollars?

“Executives have talked about opening up bigger stores, because if beauty and home and lingerie are where consumers are spending — not on apparel — they need a store catering to that. They might even put in a restaurant or a coffee bar to drive traffic,” summarized earlier this month in a market report RBC Capital Markets analyst Brian Tunick.

The retailer’s share price has fallen about 30 percent year-to-date, more than those of other apparel stores, badly hit by other re-commerce sites pressure (About 33 percent of Urban Outfitters’ sales are conducted online) and lower brick‐and‐mortar store traffic. Market experts point out other complimentary factors to this deterring: weaker‐than‐expected promotions; and poor first-quarter earnings and sales, as well as a lower outlook for the second quarter.

As of April 30, the company operated 242 Urban Outfitters stores, 225 Anthropologie Group stores, 130 Free People stores, and 12 restaurants.