Dive Brief:

• Despite slower traffic, Philadelphia-based retail company Urban Outfitters Monday reported record Q3 sales. But net sales of $825 million, and same store sales that missed analyst expectations sent shares down.

• Same-store sales rose 1% overall, while the Bloomberg consensus expectation was for 3.4%. Free People same-store sales rose 3%, Urban Outfitters same-store sales rose 1%, and Anthropologie same-store sales were flat for the quarter, the company said.

• The company Monday also announced it plans to acquire The Vetri Family group of restaurants, including its popular Pizzeria Vetri, a Philadelphia-based chain of Italian restaurants.

Dive Insight:

Slowing store traffic has beset retailers this quarter, whacking Macy’s and Nordstrom department stores hard in particular in Q3. Urban Outfitters has been struggling in recent quarters, helped by the superior performance of its Free People and Anthropologie brands, with Free People recently emerging as its strongest brand.

But the retailer has steadied itself recently, which has raised expectations. The Q3 results that spooked Wall Street Monday were probably not helped by the company’s announcement of a restaurant acquisition, which puzzled many. Shares were down 13% early Tuesday. But Urban Outfitters says the quarter saw record sales, and that the diversification of its merchandise, including a move to include more home goods at its Anthropologie stores, is pleasing its customers.

"I am pleased we delivered sales, margin and profit growth in the third quarter despite weaker customer traffic," CEO Richard A. Hayne said in a statement. "I believe the strong customer response to expanded category offerings at each brand bodes well for our future growth.”