Shares of Urban Outfitters Inc. fell more than 20 percent Thursday after the company revealed its November same-store sales were flat and could “further decelerate” during the holiday season.
The pessimistic assessment came in a Securities and Exchange Commission 10-Q filing on the firm’s third-quarter results, which included a 9.9 percent increase in comparable-store sales, led by a 17.1 percent rise in comps at Urban Outfitters and gains of 1.8 percent and 3.9 percent at the Anthropologie and Free People units, respectively. The statement contributed to a decline of $3.88, or 20.6 percent, dropping Urban’s shares to a $14.98 close on a day when the Standard & Poor’s Retail Index suffered a 4.6 percent decline to 273.37.
Uncertainty about the Big Three automakers’ bailout package’s chances of Senate passage and continued discouraging news about employment lowered all three major indices on Thursday, although none as much as the S&P Retail measure. The Dow Jones Industrial Average fell 2.2 percent to 8,565.09, the S&P 500 was down 2.9 percent to 873.59 and the Nasdaq Composite dropped 3.7 percent to 1,507.88.
Although Urban didn’t elaborate on its SEC filing, Sterne, Agee & Leach analyst Margaret Whitfield estimated that comps rose 7 to 8 percent at Urban Outfitters stores and fell about the same amount at Anthropologie, with Free People “also likely negative.” The retail calendar shift, which puts shopping days into December that last year fell after Thanksgiving in November, may help it recoup some business, she said, but “we note that they face a tough 9 percent comp for the month and even tougher 11 percent comp” for the fourth quarter. Last year, comps at Anthropologie rose 16 percent in December and 17 percent for the holiday season, while Urban’s were up 4 percent and 5 percent, respectively.
“While [the company] is clearly not immune to the current macro-environment, we have been very impressed with management’s ability to react quickly to current trends and manage the business accordingly,” the analyst wrote in a research note in which she maintained her “buy” rating on shares, but lowered her price target to $24 from $31.
The discouraging words about retail weren’t relegated to publicly held players. S&P downgraded Neiman Group Inc.’s credit rating one tick to “B-plus” from “BB-minus” based on credit analyst Diane Shand’s expectation that “credit measures will likely deteriorate more than we had originally projected as a result of a deepening spending pullback by consumers.” The BB class is the highest speculative category on S&P’s scale.
S&P retail analyst Pearl Wang lowered her rating of AnnTaylor Stores Corp. stock to “sell” from “hold” based on her expectations that the specialty retailer would be hurt by “rising unemployment and higher savings level into ’09, and increased bargains at traditional high-end luxury retailers as they siphon off shoppers from lower-priced stores.” The stock ended the day down 7.7 percent at $5.91.
A disappointing forward outlook contributed to large declines at Gildan Activewear, off 35.1 percent to $9.19, and Lululemon Athletic Inc., down 32.3 percent to $7.08. The day’s sharpest declines also included a number of real estate investment trusts such as Developers Diversified Realty Corp. (20.1 percent to $5.04), Taubman Centers (18.8 percent to $24.31), Glimcher Realty Trust (18.7 percent to $2.52) and Macerich Co. (18.3 percent to $11.81). Struggling General Growth Properties Inc. was off 11.1 percent to $1.44, a fraction of its 52-week high of $47.89, but six times the corresponding low of 24 cents.
Earlier in the day, Tokyo’s Nikkei 225 managed a 0.7 percent advance to 8,720.55, while Hong Kong’s Hang Seng Index creeped up 0.2 percent to 15,613.90. European stocks were mixed, with London’s FTSE 100 up 0.5 percent to 4,388.69 and the CAC 40 in Paris down 0.4 percent to 3,306.13.
Inditex Group staged a 4.5 percent rally after the Spanish firm reported a 1 percent advance in net income for the third quarter.
Among the stores and suppliers enjoying up days despite a down market were Gottschalks Inc. (up 41 percent to 43 cents), Hartmarx Corp. (13 percent to 13 cents), Caché Inc. (11.8 percent to $1.90), The Bon-Ton Stores Inc. (7.4 percent to $1.31) and Liz Claiborne Inc. (6.6 percent to $3.22).
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