Despite Shocking Losses in Revenues Urban Outfitters (NASDAQ:URBN) Online Department is Keeping the Company Stable
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After releasing its Q3 reports, the renowned Urban Outfitters (NASDAQ:URBN) saw a fall of almost 5% in their stocks. Analysts believe this decrease was due to the fall in profits and revenue for the 2015 financial year. The company reported a decrease of 33% during the 3rd quarter of fiscal 2015. Moreover, the multinational clothing corporation reported profits of nearly $0.35 per share, which was quite low to (earnings per share of $0.4) what the company had promised.
Urban Outfitters (NASDAQ:URBN) is one of the largest clothing retailer in the world and provides products from clothing, accessories, beauty products and apartment decorations. Urban Outfitters has 5 brands working under it and has more 400 store location across the world. Despite a growth of almost 15% at Urban Outfitters’ (NASDAQ:URBN) Free People Department, and a small but visible increment of 2% in sales at the Anthropologie, the company had to face an overall loss in sales of 1% when the namesake brand sector incurred losses of 7% in profits.
The decline is believed to be caused by a drop in transactions and drop of items per transaction. Luckily, the company did manage to get better revenues in the end. The retailer somehow managed to get revenues of 814.5 million dollars whereas the company was hoping to get only $813 million. This rise in revenues was made possible by addition of almost 14 new outlets. This brand new addition added some $34 million in (non-comparable) revenues with a rise in wholesale earnings through 26%.
Reports suggest this solid fall in net revenues and profits could be a result of elevated taxes decreased in overall margins and a rise in expenditures of SG&A. Moreover, the company (NASDAQ:URBN) had to make some allowances for lesser store traffic which eventually left its marks on the company’s overall growth. Moreover, the overall growth rates fell through 3% to almost $284 million whereas the rates had to experience a decrease of 295 points in comparison with last year’s third quarter.
Besides this, the tax rates also rose due to new tax adjustments which drafted an increase of more than 5% on the company’s taxes. Hence, rendering Urban Outfitters (NASDAQ:URBN) with an overall revenue of $47 million from $70 million. However, the online sector spelled good news for the retailer. The increase in web traffic and online transactions provided Urban Outfitters (NASDAQ:URBN) with some stability during this quarter.
Despite lower promotions and advertisements, the company somehow managed to gather more consumers towards its online sectors. Moreover, the company also saw an increasing trend towards the usage of its mobile site as a lot of traffic was witnessed shifting from desktop to mobile. This is interesting because the shifting rate from desktop to mobile is usually low, but Urban Outfitters (NASDAQ:URBN) somehow managed to outperform here too.
Moreover, as more and more consumers are shifting towards online shopping rather than traditional stores, Urban Outfitters (NASDAQ:URBN) would definitely benefit.