Urban Outfitters Inc. is coming into the end of the year with some holiday cheer.
Although the company ended summer with some caution, Richard Hayne, chief executive officer, touted record third-quarter sales and said he was “optimistic about the outlook for holiday demand.”
The company’s third-quarter net income rose 24 percent to $102.9 million, or $1.10 a share, from $83 million, or 88 cents, a year earlier. That put earnings per share at 25 cents ahead of the 85 cents analysts forecast, according to Yahoo Finance.
Investors responded by driving shares of the retailer up 6.5 percent to $42.75 in after-market trading on Tuesday.
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Sales for the quarter ended Oct. 31 increased 6.3 percent to $1.4 billion from $1.3 billion a year earlier. Comparable sales advanced 5.8 percent at Anthropologie and 5.3 percent at Free People, but those increases were offset by an 8.9 percent drop at Urban Outfitters, which is still seeing a disappointing performance in North America.
Company executives prepped Wall Street for something else in August, when the group was seeing softer demand.
But Frank Conforti, copresident and chief operating officer, told analysts on a conference call that consumers made a healthy return, with October proving to be the company’s strongest month of the quarter.
“Although it is still early in the holiday season with a big shift in the holiday calendar, based on our current results, we are optimistic for the entire holiday season,” Conforti said. “We anticipate that total sales growth in the fourth quarter will mirror that of the third quarter, driven by a single-digit increase in retail segment comps. Strong revenue growth from newly and continued double-digit sales growth in the wholesale segment.”
The company’s overall comparable sales inched up 1.5 percent during the third quarter in the retail business, which has been buttressed lately by the other divisions.
Nully — the company’s rental business, which draws about half of its inventory from the company’s own brands — saw sales increase 48.4 percent to $97.2 million, with a 51 percent gain in the service’s average active subscribers.
And the firm’s wholesale business increased by 17.4 percent, driven by gains at Free People.
Conforti said the Urban Outfitters brand showed “nice improvements in store comps as the quarter progressed, driven by improving regular price sales.”
“We have full confidence in the brand team and the strategies they are implementing,” he said. “While we acknowledge that progress may be gradual, we believe their efforts will yield meaningful results over time. Based on our current plans, we believe the brand could deliver a midsingle-digit comp decline in the fourth quarter.”
