By Elizabeth Martinez,
Money and Investing Writer
The popular American clothing store Urban Outfitters Inc. (NASDAQ:URBN) fell to the bottom of the S and P 500 last week after it was stated late on Friday the 10 of this month that they would be bumped to the S and P 400 by March 20.
As a result, the company’s stock has since dropped below its lowest point within the last year, to a price of 23.75 as of 1 pm on Tuesday the 14.
This unfortunately is consistent with the downward trend the company has seen for the past few months, despite the company’s fluctuations over the past year.
Somewhat surprisingly, Credit Suisse Group AG reissued their hold rating on Urban Outfitters shares last Sunday the 12. Their current price target on Urban Outfitters stock is $28.00, which is much higher than where the company currently stands today.
Meanwhile, MKM Partners reiterated a sell rating and issued a price objective for the company at only $20.00 in a report made last Friday the 17.
That said, these targets may be meaningless for the company’s success when considering that only less than two quarters ago, the company saw a fairly high price of 39.37, which was the highest it had been for that year.
What seems to be more relevant as to the success of Urban Outfitters in reaching their target profit may be based on the fact that they saw a drop in their market capitalization from 2.9 billion down to 2.8 billion as of Friday the 10 of this month.
On top of this, the company reported a net income of 218 million on 3.5 billion dollars in sales in 2017.
When comparing this to their competitors such as American Eagle Outfitters Inc. (NYSE: AEO) who saw a net income of 212.45 million from a total of 3.61 billion in sales revenue in 2017, Urban Outfitters seems to be right around the same financial state as its competitors, if not doing slightly better.
It has been speculated that this consistent downfall of the majority of retail stores even including giants such as Macys (NYSE:M), may in fact be due to the takeover of online shopping.
Companies originally introduced themselves to the world of online shopping with the hopes of gaining more customers, but unfortunately, this has stolen some of their retail customers. This is because of the convenience offered from online shopping.
Now, there is less incentive for people to go to malls and stores which are out of the way, especially when considering that these retail stores offer the majority of their sales online as well as in stores.
This means that even on days such as Black Friday when all retail stores are supposed to be flooded with customers, they are seeing lower sales than previous years.
The decrease in retail sales may also be related to the increased popularity of Amazon.com, which was entirely online based, until they introduced amazon bookstores, which offer much lower prices than their competitors such as Barns and Nobles (NYSE:BKS).
At the end of the day, the retail sector may be in danger if they don’t modify their sales tactics, or figure out a way to better distribute their costs to consumers.
This shift towards online shopping is an inevitable source of conflict for retailers especially, but appears to have reached even into sales sectors where this previously seemed impossible, including the food industry.
A version of this article appeared in the Tuesday, March 21st, 2017 print edition.
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