Urban Outfitters falls as profit miss, slowing margin gains overshadow sales beat

Shares of apparel retailer Urban Outfitters (URBN.O) were down about 2% at $81.16 in extended trade after the company reported adjusted second-quarter EPS of $1.72, a cent below analysts' estimates.

Adjusted net income as a percentage of net sales slipped to 9% from 9.6% a year earlier.

Quarterly net sales rose 10.4% to $1.66 billion, with sales increasing across all segments and brands, topping analysts' estimate of $1.63 billion, according to data compiled by LSEG.

However, adjusted year-over-year gross profit rate increased 4 basis points, compared with a 113-basis-point increase a year earlier.

"Investors may increasingly focus on how much more margin opportunity there is from here," Jefferies analysts said, adding the company continues to execute well to offset rising costs.

Up to the last close, the stock was up about 10% year to date.