By Mackenzie Tatananni
Urban Outfitters stock was sharply higher Wednesday on the heels of third-quarter earnings. But recent double-digit gains for other retailers cast the stock reaction in a new light.
Shares powered 13% higher in early trading, putting Urban Outfitters on pace for its largest same-day percentage increase since a 23% jump in May, according to Dow Jones Market Data.
Urban Outfitters was just the latest retailer to see steep gains on the back of earnings. Shares of Kohl's, the beleaguered department store chain, rallied more than 42% on Tuesday after the company posted quarterly results. Abercrombie & Fitch, the fashion retailer best known for its focus on young shoppers, closed up over 37%. These outsize gains were put in focus as Big Tech faltered on Tuesday.
They weren't the only retailers to fare well. Electronics chain Best Buy and apparel maker Gap ended Tuesday's session up 5.3% and 7.5%, respectively. While gains weren't comparatively as large, they, too, signaled a positive reaction to earnings.
It is true Wall Street has little else to focus on in a week dominated by retail earnings, with results from some of the biggest names in tech out of the way. But the particularly strong reaction to earnings from retailers in particular might give investors room for pause.
Concerns over tariffs and a possible drop-off in discretionary spending have weighed on retailers this year. Abercrombie, for example, has grappled with growth concerns within its banner brand, causing shares to plunge 40% in 2025.
While inflation and other economic concerns have done a number on confidence, "consumers remain strongly positioned on the whole," Yardeni Research specialists wrote in a briefing Wednesday. "They're largely employed, not overleveraged, benefiting from a three-year bull market, and expecting larger tax returns next year."
The year to date performance of Walmart stock in the Consumer Staples sector, where it has risen 15%, and the S&P 500 Apparel Retail industry index, where it has gained 21%, is indicative of consumers' strength, Yardeni posited.
Earnings from Urban Outfitters and the like are yet another vote of a confidence heading into the holiday shopping period. Adobe forecasts a particularly strong season this time around, with online holiday sales set to surpass $250 billion for the first time.
Urban Outfitters indicated that shoppers were still willing to pay full-price for items and wait for holiday deals to shake out. "We saw a very rapid progress in mid-to-late October in people putting items in their carts," CEO Richard Allan Hayne said on the earnings call. "And that signaled to us that this was the beginning of, okay, we know what we want, we know there are promotions coming; so, why not wait?"
The fiscal third-quarter print was all-around solid. Earnings of $1.28 a share beat the $1.19 Wall Street expected, while revenue grew 12% to $1.53 billion, topping the $1.49 billion consensus among analysts polled by FactSet.
Retail same-store sales increased 8%, higher than the 5.2% growth analysts estimated. Notably, the retailer saw growth across all its businesses: Same-store sales rose 12.5% at Urban Outfitters' namesake brand, 7.6% at Anthropologie, and 4.1% at Free People.
Other retailers made similar comments that talked to consumer spending trends. While shoppers are "deal focused," they will make pricier purchases when they need to or in response to a technology innovation, Best Buy indicated.
Those watching the space have a lot to digest. Kohl's emerged as a sort of meme stock earlier this year as retail investors crowded in, smelling blood in the water, amid concerns over frequent leadership shake-ups. The company swung to a profit in its latest third quarter and issued guidance that indicated a smaller drop in fiscal-year net sales than previously anticipated.
The stock's high degree of short interest appeared to be partly to blame. With 27.8 million shares sold short, that represents roughly 26% of its float. Compare that to another hot meme stock, Beyond Meat, which has 22% of float sold short. Tuesday's positive update likely forced investors who sell the stock short to buy more shares to limit their losses, driving the price higher.
Even with Tuesday's gains, Abercrombie stock is on pace for its worst year since 2016. Coming into Wednesday, the stock has slumped 40% in 2025. But the fiscal third-quarter print offered a glimmer of hope as the retailer broadly beat Wall Street forecasts and pointed to strength in its Hollister brand, which offset continued weakness in its namesake banner brand.
One thing is for sure: consumers are still spending, Yardeni Research wrote Wednesday. While the Consumer Confidence Index dropped 6.8 points to 88.7 in November, "the index has not been an accurate harbinger of stock market direction in recent years," the firm asserted. "It's been a watch-what-consumers-do, not-what-they-say kind of market."
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 26, 2025 10:16 ET (15:16 GMT)
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