Urban Outfitters Slips As Q3 Sales Forecast Disappoints

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Urban Outfitters Slips As Q3 Sales Forecast Disappoints
Credit: © Reuters.

By Dhirendra Tripathi

Investing.com – Urban Outfitters stock (NASDAQ: URBN ) fell 4% in Wednesday’s premarket trading after management said its third-quarter sales would grow in the low double-digit range while it also warned of freight and commodity price increases.

According to Chief Operating Officer Frank Conforti, retail sales growth could land in the mid-teens range, while the wholesale segment sales could decrease at a rate similar to the second quarter’s.

Urban’s wholesale segment sales for the second quarter declined 30% to $59 million, driven by a 34% erosion in Free People Group wholesale sales. This happened as the company cut down the brand’s sales to promotional wholesale customers.

The shift in strategy for Free People Group, muted sales growth forecast and commodity inflation all combined to overshadow the company’s second-quarter performance.

Second-quarter total sales at the retailer rose 20% year-on-year to $1.16 billion due to strong double-digit growth in digital channel sales. Average order value rose and so did conversion rate. Diluted earnings per share was $1.28. Both sales and earnings beat estimates.

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