The company shares of the Urban Outfitters, Inc are now bound to open down around 15 percent when the retailer of apparel mentioned that their third-quarter earnings may be hit by the sales which were lower than what they expected.
Janney Capital Markets, Goldman Sachs and Morgan Stanley downgraded the ratings they earned and had their price targets cut on Urban Outfitters’ shares. Additional 12 brokerages reduced the price targets they have set.
The said company, having main brands including Free People, Urban Outfitters and Anthropologie, made announcements on Thursday, saying that the current-quarter profit it has can possibly be affected by the lower-than-expected sales. This is because of the small single-digit percentage, which was persisting in decline when it comes to the sales growth of comparable retail.
Goldman reduced the rating it has on the stock from “buy” to “neutral.” In addition to this, it eliminated it from the Americas Buy List it has, mentioning that it is expecting a slower growth within the next quarters that are yet to come.
Analysts also say that the sales decline continuation may be blamed on the current weakness of the Urban Outfitters brand which is currently troubled. It is catering to customers, who are cash-constrained and young.
The said retailer has also been attempting to have the flagship brand it has overhauled by all-new stores, refining the company’s merchandise assortment and have it focused on their main target market, which are people from ages 18-28, as well as improvements in its marketing.
However, analysts say that the turnaround’s taking time that is longer than what they have been expecting.
According to Lindsay Drucker Man, an analyst from Goldman, they have expectations of the turnaround efforts towards the Urban Outfitters brand for the continuation of progress and for the display of more improvement signs when it comes to 3Q. However, trends during the entire quarter seem to be really flat.