Should You Scoop Up Shares of Urban Outfitters on the Dip? By

Apparel retailer Urban Outfitters’ (URBN) shares tumbled after the company reported its most recent quarterly results. The stock retreated due to the company’s update on supply chain and other issues it is facing. However, analysts expect strong earnings growth by URBN this quarter. So, should one scoop up shares of URBN on the dip? Let’s discuss. Read on.Shares of apparel retailer Urban Outfitters, Inc. (NASDAQ:) retreated last week despite the company’s upbeat third-quarter earnings report. Over the past five days, the stock has declined 11.9% to close its last trading session at $31.85. Investors were concerned about the company’s business update, which discussed how the company’s supply chain disruptions and elevated costs have negatively impacted its operations. URBN also highlighted the declines in its in-store sales. The company reported a 14% year-over-year increase in comparable retail segment net sales, driven by strong double-digit growth in digital channel sales. But it was partially offset by mid-single-digit negative retail store sales due to reduced foot traffic. URBN is headquartered in Philadelphia, Pa.

However, as the holiday season approaches, top apparel brand URBN will likely witness a spike in in-stores and online sales. According to the National Retail Federation, holiday sales during November and December are expected to rise between 8.5% and 10.5%, for a total of between $843.4 billion and $859 billion, marking an all-time high for holiday sales growth and topping last year’s record. In addition, URBN is expected to attract more in-person shoppers as solid progress on the vaccination front has allowed its stores to reopen.

The company’s stable top-line and bottom-line growth reflect URBN’s ability to maintain its growth trajectory. Also, the company ended its third fiscal quarter with inventories up 28.2% from the same period last year. So, as holiday shopping kicks into high gear, URBN should benefit.

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