Executive Summary

• Urban Outfitters reported fiscal 1Q18 EPS of $0.10, below the consensus estimate of $0.16. Total revenues were $761.2 million, below the consensus estimate of $769.8 million and down 0.2% from the year-ago quarter.
• Total comps, including e-commerce, decreased by 3.1% versus the consensus estimate of a 2.5% decline. By brand, comps increased by 1.5% at Free People, decreased by 3.1% at Urban Outfitters and decreased by 4.4% at Anthropologie. Retail comps were driven by double-digit growth in the company’s direct-to-consumer channel, which was offset by negative store comps. Net sales for the wholesale segment increased by 14%.
• Management noted that the gross margin could see a larger decline in the second quarter than it did in the first quarter, reflecting projected markdowns. The company also believes that SG&A could grow by 2% in the second quarter and by 1% in the full fiscal year. Regarding store space, management commented that while store count may decrease in North America, overall square footage may grow.