Strong Balance Sheet
Urban Outfitters has cash and marketable securities of over $500 million. It is also debt-free, which is a testament to prudent management. The company’s liquidity should allow it to survive any downturn in the retail industry. Such a downturn could evolve into the battle of the balance sheets, which Urban Outfitters is poised to do well in.
Conclusion
Urban Outfitters’s operating income declined during the holiday season. This compares less favorably to Abercrombie & Fitch whose operating income just doubled. URBN is up over 55% Y/Y. The stock could be at an inflection point as I foresee more earnings declines going forward. URBN is a sell.
