Urban Outfitters Downgraded To Sell At MKM Because Anthropologie Is 'too Edgy' And Expensive

By Tomi Kilgore Markets MarketWatch Pulse

Shares of Urban Outfitters Inc. fell 0.9% in morning trade Monday, after MKM Partners turned bearish on the apparel and accessories retailer because of concerns over sales and margin declines at its Anthropologie stores. Analyst Roxanne Meyer cut her rating to sell, after being at neutral since September 2015. She slashed her stock price target to $20, which is 25% below current levels, from $25. "Our negative thesis is primarily based on our view that sales and margins will deteriorate meaningfully in 2017 at Anthropologie, though we also see risk at Urban Outfitters as it laps reductions in markdowns and as key brands widen distribution," Meyer wrote in a note to clients. "We believe Anthropologie is too edgy, lacks diversity (i.e., over-exposed to bare and cold-shoulder looks) and generally has prices that are too high." Urban Outfitter's stock has tumbled 21% over the past three months, while the SPDR S&P Retail ETF has lost 6.1% and the S&P 500 has climbed 7%.

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