Shares of Urban Outfitters Inc. fell more than 13 percent in after-hours trading on Thursday, when the Philadelphia-based retailer noted the persistence of the negative comparable-sales trends experienced earlier in the third quarter.
The ongoing softness threatens to send the company’s third-quarter gross margins down at a faster rate than the 200 basis-point reduction — to 36.2 percent of sales from 38.2 percent — experienced during the first half of the year.
“If this were to occur, the company’s third-quarter earnings would be negatively impacted,” the company said in one of its periodic business updates.
Weighed down by weakness at its Urban Outfitters division, third-quarter comparable sales in its retail segment were down in the low single digits on Sept. 9, when Urban filed its Form 10-Q for the second quarter with the Securities and Exchange Commission.
The company didn’t provide third-quarter guidance. Analysts, on average, had expected the firm to report earnings of 50 cents a share for the third quarter, which concludes this month, versus year-ago EPS of 47 cents.
In the second quarter, retail comps were flat overall but fell 10 percent at Urban while rising 6 percent and 21 percent, respectively, at Anthropologie and Free People.
Gross margin in last year’s third quarter was 37.7 percent of sales.
After falling 0.4 percent, to $34.56, during regular trading, shares descended 13.5 percent, to $29.90, following after-hours trading after the announcement. Their 52-week low, set on May 22, is $32.23.