The earnings for the company of 25 cents per share were 1 cent less that the same quarter one year ago and missed estimates on Wall Street by 30 cents.
Increased general, administrative and selling expenses along with a higher cost of sales impacted negatively on the net income.
Net sales for Urban Outfitters were up 7.7% to end the quarter at $739 million. The improvement was attributable to a jump of $20 million in sales of non-comparable stores, new openings of stores, a growth of double digits in is wholesale operations along with an increase in its comparable retail net sales.
However, strong headwinds from the U.S. dollar hurt its sales growth. Wall Street was expecting sales to reach $760 million.
Net sales by its brands were the following: Urban Outfitters increased 6.5% to end the quarter at $295.6 million, Anthropologie increased by 3.8% to end the quarter at $311.4 million and Free People was up 21.4% to end the quarter at $132 million. Net sales at its retail segment ended at $685 million an increase of 7%, while they were up 17.5% to over $54 million in its wholesale sector.
Gross Profit during the quarter was up 3.3% to end the quarter at $246.5 million, while its gross margin shrank by 141 basis points to 33.2% because of lower margins initially at its namesake brand plus increased fulfillment and delivery costs.
Management expects its gross margin to increase by 25 to 50 basis points in its fiscal 2016 year.
For its second quarter, management said that gross margin might contract year to year at a similar rate to that of the most recently ended quarter.
Operating income was down 11.2% to end the quarter at $53 million, while its operating margin shrank by 150 basis points to reach 7.2%.