Urban Outfitters shares dive on continued sales weakness

Shares in Urban Outfitters plunged on Friday after the American retailer warned the negative sales trend it reported in September has continued in the quarter to date.

The company, which also owns the Anthropologie and Free People brands, said the ongoing slump could hit its profit margin and negatively impact its quarterly results.

The stock plummeted 13 per cent to $29.99 in pre-market trading- the worst loser on the S&P 500. Morgan Stanley, Goldman Sachs and Janney Capital downgraded their ratings on the stock and slashed their price target.

The retailer has seen an improvement in sales at Anthropologie and Free People stores, but its teen-oriented Urban Outfitters brand continues to be the weak spot as it battles increased competition from fast fashion retailers Zara and H&M.

Urban Outfitters was recently subject to controversy for selling a 'blood stained' with a Kent State University logo on it. The university was the scene of a shooting in 1970 where four students were killed and another nine were wounded in a clash between demonstrators and the National Guard.

Urban Outfitters apologised for the incident, insisting the red stains, which appeared to be blood, were the result of discolouration, and removed the jumper from its online store.