Urban Outfitters Earnings: Anthropologie and Free People Defy Slow Consumer Spending Concerns

No-moat Urban Outfitters beat our expectations in the third quarter as Anthropologie and Free People overcame women’s apparel industry challenges to post double-digit strong retail same-store sales. We think these two brands’ outperformance relative to peers is attributable to their success in meeting fashion trends and their relatively mature and affluent customer bases. We expect to raise our $39.50 fair value estimate for Urban Outfitters by a mid-single-digit percentage, leaving shares slightly undervalued.