URBN - Urban Outfitters: Store Growth Doesn't Fix Underlying Issues

2024-03-13 06:35:58 ET

Summary

• Urban Outfitters has achieved strong revenue growth but its stock has performed poorly in the past decade.
• The company's margins have been steadily declining, leading to stagnant operating income, despite increased sales likely being the main reason for the poor stock performance.
• The brand image of some of Urban Outfitters' main brands is deteriorating, which seems to drive the poor store performance.
• The current valuation still has room down unless the company can fix the underlying issue of a poor brand image, which I don't see happening yet.

Urban Outfitters ( URBN ) retails and wholesales apparel. The company operates retail stores under brands such as Anthropologie, Free People, and Urban Outfitters, mostly offering apparel to young people. In addition, the company operates menus & venues, offering a handful of restaurants and event venues. As of Q4/FY2024, the company operates a total of 706 locations, excluding franchising locations....

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