URBN: Small Piece of the Puzzle

It just so happens that URBN dominates the age category where we’re seeing the greatest improvements in unemployment. There’s much more to this story than a simple change in employment for 16-24 year olds. But the modest tailwind can’t hurt.

 

BLS unemployment trends released last week show that the unemployment rate for Americans ages 16-24 now stands at 16.4% as of March, down 10bps vs. February. Despite only a modest sequential improvement last month, the rate improved 110bps year over year – the most significant improvement across all age groups (see chart 2/3).

 

Next step…check out who has the greatest exposure to that age group.

Winner…URBN.

 

While URBN’s greatest individual exposure is in the 25-34 year old age group, no other retailer out of the 100+ we evaluated has more exposure to the 16-24 yr old demographic. On average within the online retail channel, 19% of sales come from consumers below the age of 25 and 25% come from ages 25-34. URBN’s exposure to these demographics is significantly higher at 26% & 33% respectively. Because we’re looking at demographics for E-Commerce consumers and company-direct online sales are only a minority of total sales for most companies, the analysis is all relative. URBN stands out regardless. 

 

LET’S BE CLEAR…WE’RE NOT SAYING THAT URBN WILLL BE CURED BY BETTER EMPLOYMENT AND SPENDING LEVELS WITH ITS CORE CUSTOMER. There are much bigger issues there. But on the margin a macro factor turning into a tailwind could only help URBN at this point in its turnaround.  URBN remains one of our a top longs.

 

Below, we’ve included links to recent notes outlining our view on URBN across multiple durations:

 

"URBN: Strong Start for Top Long" (4/3/12)

 

"Retail Sentiment: URBN, LIZ, HBI, GIL, JNY, PVH, JCP" (3/27/12)

 

"URBN: A Winner in 2012" (3/22/12)

 

URBN: Small Piece of the Puzzle - earnings growth chart 

 

URBN: Small Piece of the Puzzle - unemployment rate chart

 

URBN: Small Piece of the Puzzle - employment rate chart

 

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