Urban Outfitters clocks in with strong sales, shares fly

Urban Outfitters's wares flew off the hangers during its second fiscal quarter, driving improved margins and better than expected sales.

In June the company warned that like-for-likes were trending lower at a mid-single digit rate in the second quarter.

Net sales at the fashion retailer were up by 2.7% to a record $890.6m (consensus: $886.8m) and by 1% in like-for-like terms if the company’s direct-to-consumer channel, or what the company calls its comparable retail segment, were included.

Analysts had projected a 1.1% drop in the company’s LFLs.

That drove quarterly net earnings of $77m or $0.66 in terms of earnings per share (consensus: $0.56), up from $66.8m and $0.52 one year ago.

The company’s namesake brand saw LFL sales jump 5%, offsetting weakness at its Anthropologie Group and flat sales at Free People.

"These results were driven by a positive Retail segment 'comp' and substantial improvement in merchandise margins," the company’s boss Richard Hayne said in a statement.

Gross margins were substantially fatter, rising from 36.7% to 38.5%.

During the six months to 31 July the company bought back and retired a total of 15.0m, of that amount 2.3m corresponded to the share buy-back authorisation approved in 2014, which had now been completed, and the remainder to a 2015 authorisation to buy-back 20.0m shares.

As of 16:07 BST shares in the firm were gaining 16.39% to $36.71.