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Urban Outfitters Announces Q1 Earnings
PHILADELPHIA, May 11, 2006 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced first quarter earnings of $20.3 million for the three months ended April 30, 2006 and first quarter diluted earnings per share of $0.12.
As previously stated in our sales release on May 4, 2006, net sales for the first quarter increased by 17% to $270 million. Fueling this increase over the prior year was:
-- a 22% increase in the number of stores in operation;
-- a 65% jump in Free People wholesale sales; and
-- a 17% gain in direct-to-consumer sales.
The combination of these factors more than offset a 3% decrease in total Company comparable store sales during the first quarter. By brand, 'comp' store sales decreased by 2% at Anthropologie and 4% at Urban Outfitters, and increased by 14% at Free People. In the prior year's first quarter, 'comps' at those brands increased by 9%, 13% and 45%, respectively, and total Company 'comps' rose by 11%.
"The recent seismic shift in women's fashion presents both challenges and opportunities for our Company," stated Richard A. Hayne, Chairman and President. "In order to better capitalize on future opportunities, we appropriately applied heavy markdowns during the first quarter to turn slower moving merchandise and rationalize our weeks of supply. Our 'comp' store inventories decreased by 1,000 basis points during the three months, ending the quarter up 3% -- a more appropriate number given the current sales trend. We continue to be cautious as the customers' response to our product offerings remains inconsistent," added Mr. Hayne.
Net sales for the three months were as follows:
Three months ended
April 30,
2006 2005
------ ------
(in thousands)
Urban Outfitters store sales $117,113 $104,109
Anthropologie store sales 99,928 87,307
Direct-to-consumer sales 33,486 28,722
Free People sales 19,480 11,187
-------- --------
Total net sales $270,007 $231,325
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For the three months, gross profit margins decreased by 636 basis points versus the prior year's comparable quarter. The two factors impacting this decline were the increase in markdowns to clear seasonal merchandise and the increase in store occupancy rates, as a percentage of net sales, compared to the comparable quarter last year as a result of the reduction in 'comp' sales.
As of April 30, 2006, total Company inventories grew by 24% or $27.2 million on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Comparable store inventories increased by 3%.
For the three months, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 125 basis points versus the comparable quarter last year. This increase was primarily a result of the de-leveraging of store-related and other fixed administrative expenses due to the decrease in the comparable store sales.
Thus far this fiscal year, the Company has opened five new Urban Outfitters stores and three new Anthropologie stores, including its newest store at Rockefeller Center in New York. The Company plans to open an additional 27 to 30 stores during the remainder of the fiscal year.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 95 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 82 Anthropologie stores in the United States; an Anthropologie catalog and web site; and Free People, the Company's wholesale division, which sells its product to approximately 1,500 specialty stores, department stores and catalogs, as well as through six Free People stores, a web site and a catalog.
A conference call will be held today to discuss first quarter results and will be web cast at 11:00 a.m. EDT on:
http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1308681
This news release is being made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Certain matters contained in this release may constitute forward-looking statements. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, overall economic and market conditions and the resultant impact on consumer spending patterns, including any effects of terrorist acts or war, availability of suitable retail space for expansion, timing of store openings, seasonal fluctuations in gross sales, the departure of one or more key senior managers, import risks, including potential disruptions and changes in duties, tariffs and quotas and other risks identified in filings with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.
(Tables follow)
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)
Three Months Ended
April 30,
-----------------------
2006 2005
------ ------
Net sales $ 270,007 $ 231,325
Cost of sales, including certain
buying, distribution and occupancy
costs 173,239 133,708
----------- -----------
Gross profit 96,768 97,617
Selling, general and administrative
expenses 65,217 52,839
----------- -----------
Income from operations 31,551 44,778
Other income, net 1,412 764
----------- -----------
Income before income taxes 32,963 45,542
Income tax expense 12,664 18,102
----------- -----------
Net income $ 20,299 $ 27,440
=========== ===========
Net income per common share:
Basic $ 0.12 $ 0.17
=========== ===========
Diluted $ 0.12 $ 0.16
=========== ===========
Weighted average common shares
outstanding:
Basic 164,576,157 162,956,454
=========== ===========
Diluted 168,020,879 169,057,896
=========== ===========
PERCENT OF NET SALES
Net sales 100% 100%
Cost of sales, including certain
buying, distribution and occupancy
costs 64.2 57.8
------ ------
Gross profit 35.8 42.2
Selling, general and administrative
expenses 24.1 22.8
------ ------
Income from operations 11.7 19.4
Other income, net 0.5 0.3
------ ------
Income before income taxes 12.2 19.7
Income tax expense 4.7 7.8
------ ------
Net income 7.5% 11.9%
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URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
April 30, January 31, April 30,
2006 2006 2005
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $ 28,106 $ 49,912 $ 22,124
Marketable securities 146,725 141,883 134,681
Accounts receivable, net of
allowance for doubtful
accounts of $753, $445
and $621, respectively 23,686 14,324 13,754
Inventories 140,726 140,377 113,477
Prepaid expenses, deferred
taxes and other current assets 38,299 38,687 21,820
-------- -------- --------
Total current assets 377,542 385,183 305,856
Property and equipment, net 335,307 299,291 203,163
Marketable securities 63,711 64,748 66,622
Deferred income taxes and
other assets 22,375 19,983 12,581
-------- -------- --------
$798,935 $769,205 $588,222
======== ======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 57,468 $ 41,291 $ 38,846
Accrued expenses, accrued
compensation and other
current liabilities 77,641 92,217 52,140
-------- -------- --------
Total current liabilities 135,109 133,508 90,986
Deferred rent and other
liabilities 78,017 74,817 57,609
-------- -------- --------
Total liabilities 213,126 208,325 148,595
-------- -------- --------
Shareholders' equity:
Preferred shares; $.0001
par value, 10,000,000
shares authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
165,137,317, 164,831,477 and
163,694,752 issued and
outstanding, respectively 17 16 16
Additional paid-in capital 138,054 134,146 114,276
Retained earnings 446,489 426,190 322,834
Accumulated other
comprehensive income 1,249 528 2,501
-------- -------- --------
Total shareholders' equity 585,809 560,880 439,627
-------- -------- --------
$798,935 $769,205 $588,222
======== ======== ========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
April 30,
--------------------
2006 2005
------ ------
Cash flows from operating activities:
Net income $ 20,299 $ 27,440
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 11,937 8,799
Stock-based compensation expense 693 281
Loss on disposition of property
and equipment, net 275 --
Excess tax benefits from
stock-based compensation (1,808) --
Changes in assets and liabilities:
Increase in receivables (9,330) (5,384)
Increase in inventories (146) (14,440)
Decrease in prepaid expenses
and other assets 2,007 3,006
Increase (decrease) in payables,
accrued expenses and
other liabilities 11,113 (2,966)
--------- ---------
Net cash provided by operating activities 35,040 16,736
--------- ---------
Cash flows from investing activities:
Capital expenditures (55,692) (18,451)
Purchases of marketable securities (35,607) (157,835)
Sales and maturities of marketable
securities 31,061 145,145
--------- ---------
Net cash used in investing activities (60,238) (31,141)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 1,409 6,699
Excess tax benefits from
stock-based compensation 1,808 --
--------- ---------
Net cash provided by financing activities 3,217 6,699
--------- ---------
Effect of exchange rate changes on
cash and cash equivalents 175 99
--------- ---------
Decrease in cash and cash equivalents (21,806) (7,607)
Cash and cash equivalents at beginning
of period 49,912 29,731
--------- ---------
Cash and cash equivalents at end of period $ 28,106 $ 22,124
========= =========
CONTACT: Urban Outfitters, Inc.
John Kyees
Chief Financial Officer
(215) 564-2313
