QUOTE AND NEWS
SeekingAlpha  Sep 30  Comment 
By Marshall Hargrave: Retail has been somewhat dead money for the last couple years. Shares of Urban Outfitters (NASDAQ:URBN) are flat for the last two years. Going forward, the focus will be on product expansion and revamping the customer...
SeekingAlpha  Sep 26  Comment 
By L&F Capital Management: Company Overview Urban Outfitters, Inc. (NASDAQ:URBN) is a lifestyle specialty retail company founded in 1970. It is currently based in Philadelphia, Pennsylvania. It is segmented into three fashion brands (Urban...
Market Intelligence Center  Sep 26  Comment 
Urban Outfitters Inc (URBN) presents a trading opportunity that offers a 3.73% return in just 57 days. A covered call on Urban Outfitters at the $37.00 level expiring on Nov. '14 offers an assigned return rate of 3.73% or 23.88% annualized. This...
Forbes  Sep 25  Comment 
Investors in Urban Outfitters, Inc. (NASD: URBN) saw new options begin trading this week, for the November 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the URBN options chain for the new November 22nd...
Forbes  Sep 25  Comment 
In case you didn’t know, vinyl is cool again, and if you needed proof, consider this—the world’s number one seller of records is none other than hipster mecca Urban Outfitters.
Benzinga  Sep 24  Comment 
On CNBC's Fast Money Halftime Report Final Trade, Josh Brown said that the sell-off in Transocean LTD (NYSE: RIG) is overdone. He wants to buy this weakness. Transocean LTD fell 1.23 percent and closed at $33.02 on Wednesday. Brown recommended the...
TheStreet.com  Sep 24  Comment 
NEW YORK (TheStreet) --aUrban Outfitters was gaining 2.3% to $38.15 Wednesday following comments at its annual investor day. During a presentation, the company said it plans to double its total sales by 2020. Urban Outfitters management said...
TheStreet.com  Sep 24  Comment 
NEW YORK (TheStreet) - Urban Outfitters asays it canadouble sales over the next five years, a proposition that analysts applauded at the specialty retailer's investor day in Philadelphia on Tuesday. Chief Executive Richard Hayne spent much of...
Benzinga  Sep 24  Comment 
In a report published Wednesday, Wunderlich Securities analyst Eric Beder reiterated a Buy rating and $42.00 price target on Urban Outfitters, Inc. (NASDAQ: URBN). In the report, Wunderlich Securities noted, “We are reiterating our Buy rating,...
Motley Fool  Sep 21  Comment 
Hipster retailer looks like it's grasping for attention to mask faltering sales.




 

Urban Outfitters (NASDAQ:URBN) is a clothing and accessories retailer that focuses on women between the ages of 18 and 45. URBN runs 4 different store brands: Urban Outfitters (39% of sales), Anthropologie (36% of sales), Free People and Terrain (8% of sales). In 2010, the remaining 17% of sales came from direct to consumer business.[1]

URBN has accomplished an increase in sales without excessive discounting through two key strategies: keeping its inventories lean and high product turnover (Urban Outfitters stores receive new inventory every two weeks). However, In a time when many retail companies are attempting to capitalize on new wealth growing in Asia, URBN's lack of an Asian presence can become a disadvantage. In addition, it's new retail concept, "Terrain" is a garden and home product line. As the amount of home construction has decreased due to the financial crisis it remains to be seen whether or not Terrain can stand on its own as a retail concept in this difficult environment.

Company Overview

Urban Outfitters is divided into separate business segments: retail stores, catalog, e-commerce and wholesale.

Retail Stores (89.3% of Fiscal 2010 Revenue)

The parent company operates four different store chains (revenue contribution in fiscal 2010 in parentheses)

  • Urban Outfitters (39.2%) is its eponymous store that targets 18-30 year olds. Stores average 9,500 square feet and carry between 35,000 to 40,000 different items.[2]
  • Anthropologie (26.4%) caters to 30 to 45 year old women with clothing, accessories and home furnishings. Stores average about 7,400 square feet and carry 40,000 to 45,000 different products.[3]
  • Free People (2.0%) targets women between 25 and 30 years old. URBN operates 34 of these stores, which carry 5,000 products on 1,400 square feet of space [4]
  • Terrain (<1%) sells garden equipment as well as live plants.[5]

Catalog and E-Commerce (16.7% of Fiscal 2010 Revenue)

Urban Outfitters sells directly to consumers via catalogs and online sites for each of its store brands.[6]

Wholesale (4.9% of Fiscal 2010 Revenue)

URBN sells its Free People products through wholesale channels to department stores such as Bloomingdales and Nordstrom (JWN). [7]

Business Growth

FY 2010 Results (ended January 31, 2011)

  • Compared to fiscal 2009, net sales increased 17.4% to $2.27 billion.[8]
  • URBN reported net income of $273 million which is an increase of 24.1% from last year.

Key Trends and Forces

Retail industry's focus on Asia can leave URBN in the dust

Growth at Urban Outfitters depends on the company's ability to expand and open new retail centers (it has opened more than 25 stores annually for the past three years). In recent years, URBN has opened retail locations in Europe. Many retailers have started to establish a presence in Asia in order to profit from new wealth developing in that region. H&M, one of URBN's competitors, has 13 stores in China and 2 in Japan.[9] Urban Outfitters, however, has no plans to establish a presence in Asia meaning it is missing out on a chance to capitalize on a developing market. Although URBN is already well-established in America, its lack of an Asian presence can be a disadvantage, especially since its competitors already have a head start.

Increases in Commodity Prices Will Raise Clothing Retailer Prices

Cotton consumption exceeded cotton production for the fifth year in the row, making cotton prices increase by 80.5% from last year.[10] [11] Natural disasters also severely damaged crops in many large cotton producer countries, such as China, India, and Pakistan. This led to decreases in cotton exports from these countries and increases in cotton imports as these countries sought to supplement their supply of cotton. [12][13] With limited cotton supplies and rising prices, retailers will either have to absorb these higher material costs, restructure the composition of their clothing to have less cotton, or pass these higher costs to its consumers. Higher clothing prices or lower quality clothing could discourage consumer spending, resulting in decreased net sales. However, adult or teen clothing retailers may not be too adversely affected as their clothing (which is usually 30-40% cotton based) has more flexibility in their composition and thus, costs. In addition, raising commodity prices in other areas will also raise costs for retailers. While premium price and established brands may be able to pass their higher costs to their consumers, value based companies may not fare as well and may suffer from lower profit margins.[10]

Competition

Urban Outfitters sets itself apart from most other clothing and accessory retailers with its boutique-like atmosphere and its focus on fashion (none of its store brands sell basic items).

  • Guess? (GES) primarily targets men and women between the ages of 18 and 32.[14] Outside that key demographic, URBN also has Guess? Kids, targeted to boys and girls ages 6 to 12; and Guess by Marciano. Guess's pricing is similar to that of Urban Outfitter's clothing brands and is also focused on trends. Urban Outfitters also has a wholesale segment under the Free People brand, selling Free People products to department stores such as Nordstrom (JWN). Guess? also has a wholesale segment where its products are sold to Macy's Inc. (M) and Dillard's (DDS). Guess? is an international brand like URBN, but unlike URBN it has established a presence in Asia.
  • Abercrombie & Fitch Company (ANF): Abercrombie & Fitch is the leader of the youth apparel retail market by nearly all measures. Abercrombie & Fitch also operates four brands: Abercrombie & Fitch, Hollister, abercrombie; all of which target different subsets of the 8-30 age range.
  • Gap (GPS): GPS targets customers (15-25 year-old males and females). Gap has clothing lines for the 25-40 year-old age group and a strong Baby Gap clothing line for toddlers. It has a much more extensive store network throughout the U.S. and has been an established player in the market for many years.

[15] [16] [17] [18]


References

  1. URBN Financials Hoovers
  2. Urban Outfitters 2010 Annual Report - 10k
  3. Urban Outfitters 2010 Annual Report - 10k
  4. Urban Outfitters 2010 Annual Report - 10k
  5. Urban Outfitters 2010 Annual Report - 10k
  6. Urban Outfitters 2010 Annual Report - 10k
  7. Urban Outfitters 2010 Annual Report - 10k
  8. http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-newsArticle&ID=1536569&highlight=
  9. HMB 2008 Annual Report pg. 21  
  10. 10.0 10.1 http://seekingalpha.com/article/238731-more-evidence-of-inflation-retailers-report-escalating-commodity-prices
  11. Gap, Wal-Mart Clothing Costs Rise on ‘Terrifying’ Cotton Prices
  12. http://www.thegovmonitor.com/world_news/asia/recession-drought-hail-reduce-cotton-acreage-in-china-12256.html
  13. CNN Money - Cotton Shortage Could Inflate Clothing Prices
  14. GES 2008 Annual Report pg. 1  
  15. Abercrombie and Fitch Annual Report 2009 10k
  16. Urban Outfitter Annual Report 2009 10k
  17. Guess Annual Report 2009 10k
  18. Gap Annual Report 2009 10k
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