Urban Outfitters Warns Negative Comparable Retail Sales Could Hurt Q3 Profit

(RTTNews) - Lifestyle specialty retailer Urban Outfitters Inc. (URBN) said Thursday that its third-quarter earnings would be negatively impacted if gross profit margin for the quarter were to deleverage at a rate greater than during the first half of the year due to lower than expected sales. Shares of the company tumbled almost 13 percent in extended trades.

Philadelphia, Pennsylvania-based Urban Outfitters operates stores under its namesake brand as well as Anthropologie, Free People, Terrain, and BHLDN brands. It sells products such as apparel, footwear, gifts and apartment wares.

The company noted that third-quarter negative comparable retail segment sales, as reported in its Form 10-Q filed in early September, has continued to date. The lower than expected sales may deleverage its gross profit margin and hurt earnings.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.50 per share for the quarter on revenues of $835.22 million.

In mid-August, Urban Outfitters reported a lower profit for the second quarter, hurt by weak margins that offset growth in sales.

The company's net earnings for the second quarter were $67.5 million or $0.49 per share, down from $76.4 million or $0.51 per share in the same period last year. Sales for the quarter rose 7 percent to $811 million from $758 million in the year-ago period.

Results were hurt by gross margin that fell to 37.4 percent from 39.3 percent last year, hurt by under performance at Urban Outfitters and store occupancy deleverage. Comparable retail segment sales were flat for the quarter.

URBN closed Thursday's regular trading at $34.56, down $0.13 or 0.37 percent on a volume of 3.45 million shares. In after-hours, the stock further declined $4.46 or 12.91 percent to $30.10.