Urban Outfitters Inc. (URBN), the operator of its namesake, Anthropologie and Free People brands, declined the most in two months after reporting fourth-quarter earnings that trailed analysts’ estimates.
Urban fell 5.3 percent to $27.95 at the close in New York for the biggest decline since Jan. 11. The Philadelphia-based company’s shares have gained 1.4 percent this year.
Net income in the three months ended Jan. 31 fell 48 percent to $39.3 million, or 27 cents a share, from $75.2 million, or 45 cents, a year earlier, Urban said yesterday in a statement. The average estimate of 33 analysts surveyed by Bloomberg was 29 cents.
Chief Executive Officer Richard Hayne, who co-founded the company, is working to reverse the retailer’s profit decline after taking the post from Glen Senk in January. Net income has now dropped for five straight quarters as the chain has boosted discounts to clear inventory.
The company plans to open 55 to 60 stores in its fiscal 2013, with 13 planned for the first quarter, Eric Artz, Urban’s CFO, said yesterday on a conference call.
“We are disappointed, but not really surprised, that new management continues to think the only real answer to problems is to increase store count through thick and thin, even when the product is not providing the answers,” Eric Beder, an analyst at Brean Murray Carret & Co. in New York, said today in a note to investors. “Store expansion in the face of continued weak operating results strikes us as a desperate play to grow and maintain face with investors,” said Beder, who recommends investors sell the shares.
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