In This Article:
What Happened?
Shares of clothing and accessories retailer Urban Outfitters (NASDAQ:URBN) jumped 21.9% in the afternoon session after the company reported strong first quarter 2025 results, which blew past analysts' sales, EBITDA, and earnings expectations.
Management attributed the outperformance to "positive sales growth and improved profitability across all brands" which suggested the company's strategy was resonating with customers. Zooming out, we think this quarter featured some important positives.
The shares closed the day at $73.33, up 23% from previous close.
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What The Market Is Telling Us
Urban Outfitters’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for Urban Outfitters and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 17.1% on the news that the company reported strong third quarter financial results.
Urban Outfitters beat analysts' sales expectations. The top line reflected strengths across retail, subscription, and wholesale segments. The company recorded a significant increase in gross profit margin, reflecting higher merchandise markups and lower markdowns in key brands. This enabled URBN to beat on profit and earnings. Zooming out, we think this was a solid quarter.
Following the results, Citi analyst Paul Lejuez upgraded the stock's rating from Neutral to Buy and raised his price target from $42 to $59. The analyst cited the reasons for the upgrade, adding that while 3Q's comparable sales were weak overall, there were several signs that the brand is moving in the right direction: 1. Profitability improved for the first time in many quarters. 2. Comps/traffic improved sequentially throughout 3Q and exited the quarter in better shape.
Urban Outfitters is up 28.8% since the beginning of the year, and at $73.21 per share, has set a new 52-week high. Investors who bought $1,000 worth of Urban Outfitters’s shares 5 years ago would now be looking at an investment worth $4,264.
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