Why Urban Outfitters Is Getting Kicked Out Of A Major Stock Market Index

by MR Magazine Staff

The tough times continue for Urban Outfitters. Amid a bout of sales turmoil, the company has been booted from the S&P 500, after that index raised its market cap guidelines Friday afternoon. The change, set to go into effect before trading on March 20th, will relegate the retailer and its $2.87 billion market cap to the S&P MidCap 400, which as of that date will include companies that have a market cap between $1.6 billion and $6.8 billion. But while Urban Outfitters’ slide out of the S&P 500 is something to take note of, it’s just a symptom of the considerable problems that the company faces. Urban Outfitters’ sales have been sluggish as of late, causing an up-and-down stock performance over the last couple of years. After reaching an all-time high of $47.01 two years ago, shares of the company have fallen more than 48%, sitting at $24.34 in midday trading Monday. The price slump has brought the share price within a couple dollars of its lowest level since September 2011. Last week, Urban Outfitters released a disappointing quarterly earnings report. The company, which owns retailers Anthropologie and Free People as well as the chain that shares its name, generated $1.03 billion in revenue for the quarter, with earnings per share coming in at $0.55. Both figures slightly missed analysts’ expectations, and profit margins fell to 33% from 34.5% a year ago due to the company’s increasing reliance on discounting to keep customers coming into its stores. See more at Fortune.