Holidays End on High Note for Retailers, but Comeback May Not be Enough, Says Analyst (URBN) (M) (JCP) (M)

Retailers likely performed well in the final week before Christmas, thinks Wells Fargo analyst Paul Lejuez. However, in his view, gains are unlikely to make up for recent weakness. Broadly, he thinks margins will be more of an issue this year than sales.

"Following a not so great start to the holiday season on Black Friday weekend and a lull at the start of December, we believe things finished up relatively well in the final weekend before Christmas. However, we believe the weekend had a lot to make up for, especially with bad weather in the Northeast during the prior week, and promotions were very high. Generally, we believe weaker merchandise margins will end up being more of an issue than weak sales. We expect the final two weeks of the month to be more promotional than most companies expected," said Lejuez.

"Mall traffic data indicate declines during the first two weeks of December, on top of declines last year [down 9% through 12/14 compared to down 7% last year (LY)]. We believe the shift to online shopping was even more pronounced this year, with bad weather and mall violence adding to reasons for consumers to shop from their sofas," he said.

For an analyst ratings summary and ratings history on Urban Outfitters, Inc. click here. For more ratings news on Urban Outfitters, Inc. click here.

Shares of Urban Outfitters, Inc. closed at $36.48 yesterday.

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