Urban Outfitters Earnings: Strong Performance Based on Execution and Differentiated Offerings

Urban Outfitters defied economic and consumer spending concerns to post very solid results in fiscal 2024’s second quarter, including a 5% same-store sales growth number that eclipsed our 3% forecast. Moreover, the firm suggested that these trends have continued into the current quarter. As such, we expect to lift our $38 per share fair value estimate by a mid-single-digit percentage, leaving shares slightly undervalued. Although we view Urban Outfitters as a no-moat firm due to the intense competition in apparel and home goods retail, we believe it has strengths, including its stylish offerings and the appeal to higher-income consumers of its Free People and Anthropologie brands. In addition, the debt-free company has more than $6 per share in cash and investments.