Urban Outfitters' Sluggish Sales Threatens Profit

NEW YORK, United States — Urban Outfitters Inc. shares plunged as much as 18 percent in late trading after the company said a sales slump has persisted in the third quarter, threatening to squeeze the retail chain's profit.

Lower-than-expected sales may put more pressure on Urban Outfitters’ gross margin than in the first half of the year, the Philadelphia-based company said today in a statement. If that happens, the third-quarter earnings will be affected, Urban Outfitters said.

“This is clearly a bad sign,” Jeffrey Toohig, a New York- based analyst at Investment Technology Group Inc., said in an interview. “There’s fair probability that this bodes poorly for the rest of the year, but that’s not definitive.”

The retailer reported a profit margin decline in August, citing weak results at its Urban Outfitters chain, where same- store sales declined 10 percent. The company has posted two straight quarters of shrinking earnings, though sales have continued to grow at its Anthropologie and Free People brands.

Urban Outfitters shares, already down 6.8 percent this year through the close in New York, declined as low as $28.50 in extended trading.

By Lindsey Rupp; editors: Nick Turner, John Lear.