Market Insider

Urban Outfitters shares drop 12% after weak quarterly sales

Pedestrians pass in front of an Urban Outfitters store in New York.
Scott Mlyn | CNBC

Shares of Urban Outfitters fell more than 12 percent Wednesday, as disappointing sales results from two of its three apparel brands snapped a recent run-up in its stock.

During the quarter ended Oct. 31, the specialty retailer's comparable sales rose 1 percent, falling short of analysts' estimate for a 1.9 percent lift, according to research firm Consensus Metrix.

The Anthropologie and Free People chains weighed on the company's results, with comparable sales falling 2.7 percent and 1.5 percent at those brands, respectively. Analysts had expected a 1 percent decline at both chains.

Urban Outfitters has been adding restaurants and hair salons to its stores, in an effort to attract online shoppers. But those customer recruitment and retention programs were not enough to stave off the larger crunch the retailer has experienced across its brands.

Overall traffic to the company's stores fell by mid single-digits in the third quarter, CEO Richard Hayne said on a conference call with analysts.

"Despite well-controlled inventory, Anthropologie was not able to hold their markdowns flat this quarter due to their challenging women's apparel performance," CFO Frank Conforti said on the call.

In a press statement released by the company, officials said its third-quarter gross profit rate decreased by 15 basis points versus the prior year's comparable period, as more of its shoppers complete their transactions online.

Despite Wednesday's dip, Urban Outfitters' stock is up more than 55 percent year to date, after receiving a big boost post-election.

Reuters contributed to this report

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