Why Urban Outfitters, Inc. Stock Dropped Today

Markets Motley Fool

What happened

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Shares of Urban Outfitters Inc. (NASDAQ: URBN) were down 5.1% as of 1:20 p.m. EDT Thursday despite no company-specific news. Rather, the move appears to be in response to disappointing quarterly reports from several of the clothing retailer's peers.

So what

Urban Outfitters won't report second-quarter earnings until next Tuesday, Aug. 15. But if discouraging results from Macy's, Kohl's, and Dillard's are any indication -- shares of the three department store chains are down nearly 10%, 6%, and more than 17% so far today, respectively, in response to their own reports -- it's hard to blame Urban Outfitters shareholders for fearing it may follow suit in today's difficult retail climate.

Now what

Urban Outfitters is a unique concept and may not be directly susceptible to the same headwinds that are hurting those department stores, so there's always a chance it has found a way to deliver relative outperformance. And the bar is set low; when Urban Outfitters reports next week, Wall Street will be looking for a 3.2% year-over-year decline in revenue to $862 million, which should translate to earnings of $0.37 per share (down from $0.66 per share in the same year-ago period).

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For now, Urban Outfitters investors can only hurry up and wait for their company to report. But in the meantime, if it manages to beat expectations, today's pullback could be a great chance to open or add to a position.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.