Urban Outfitters Inc. reported weaker-than-anticipated March sales in its 10-K filing, released Friday, setting up the likelihood of lower-than-expected first-quarter sales.
“Thus far, during the first quarter of fiscal 2012, comparable retail segment net sales are low single-digit negative,” the company said.
Following the retailer’s filing with the Securities and Exchange Commission, several analysts published research notes lowering their first-quarter estimates. Stifel, Nicolaus & Co. retail analyst Richard Jaffe said comparable retail segment sales will be up 1 percent in the first quarter, given the 4 percent increase in February, the negative 5 percent estimated for March and the mid-single digit gain that appears likely for April. “This is below our original estimate of a 5 percent increase for the quarter,” Jaffe wrote.
Adrienne Tennant, an analyst at Janney Capital Markets, said in a research note, “With a softer start to the quarter, we are lowering our first-quarter profit estimate to 28 cents a share from 30 cents [the Street consensus was 29 cents] based on a 2 percent comp [previously 4 percent].”
Urban cited a continuing increase in markdown levels until it successfully navigates a fashion shift to Seventies-inspired styles, challenging comparisons from last year’s “superb” first -half performance and margin pressure that could be higher than what was experienced in the fourth quarter. Results could also be impacted by an Easter shift and the stubborn cold weather, given that about 70 percent of Urban’s stores are in outdoor locations.
“It’s difficult to predict when the Urban consumer will adopt the new fashion trend,” Tennant said. “Historically, the transition period has averaged 12 to 18 months. The company is eight to nine months into the current cycle, leading us to believe adoption will occur in the second half. In the meantime, we continue to see solid evidence of inventory control.”
Both Jaffe and Tennant reiterated “buy” ratings, citing the company’s successful international expansion, addition of new brands, increased impact from the direct business and one of the highest quality management teams in the industry.
A proxy statement on Friday said total fiscal 2011 compensation for Glen Senk, Urban’s chief executive officer, was slightly more than $2.5 million. The breakdown was $1,003,846 in salary, $5,000 in bonus, $1.5 million in non-equity incentive plan compensation and $4,272 in other compensation, including life insurance premiums. Senk in the previous year received stock awards worth $26,931,904. The awards are contingent on performance measures, time vesting, and market conditions. Based on 164,420,238 shares outstanding as of Feb. 28, Senk owns 2 million shares of common stock beneficially or 1.2 percent of common stock. Also noted in the proxy is Keith Johnson’s compensation of $136,319 in fiscal 2011. Johnson is Senk’s domestic partner and is employed by Urban.
Urban’s stock on Friday closed at $30.34, up 51 cents, on the New York Stock Exchange.