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Urban Outfitters Boosts Q2 Earnings 24 Percent
PHILADELPHIA, Aug 9, 2007 (PrimeNewswire via COMTEX News Network) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced earnings of $31.9 million and $61.2 million for the three and six months ended July 31, 2007, respectively. Earnings per diluted share were $0.19 for the quarter and $0.36 for the six months.
As stated in the Company's previous sales release on August 7, 2007, net sales jumped during the quarter by 22% to $348.4 million. Total Company comparable store sales grew 5% driven by increases of 14% and 28% at Anthropologie and Free People stores, respectively. Direct-to-consumer sales leaped 35% and Free People Wholesale sales improved 28% for the quarter. Urban Outfitters comparable store sales decreased 3% for the quarter.
"We delivered excellent results this quarter driven by outstanding performances at the Anthropologie and Free People brands," stated Richard A. Hayne, Chairman and President. "The Urban Outfitters brand was less successful as its stores experienced gross margin pressure due to the de-leveraging of occupancy expenses and the need to take significant merchandise mark-downs. We feel confident that the recent personnel and structural realignments made at Urban NA will yield positive results in future quarters," concluded Mr. Hayne.
Net sales for the periods were as follows:
Three months ended Six months ended
July 31, July 31,
--------------------- ---------------------
2007 2006 2007 2006
-------- -------- -------- --------
(in thousands) (in thousands)
Urban Outfitters
store sales $140,931 $125,609 $270,839 $242,722
Anthropologie
store sales 137,558 107,740 256,157 207,668
Direct-to-consumer
sales 42,538 31,518 86,045 65,004
Free People sales 27,422 20,692 49,952 40,172
-------- -------- -------- --------
Total net sales $348,449 $285,559 $662,993 $555,566
======== ======== ======== ========
For the three and six months ended July 31, 2007, gross profit margins increased by 64 basis points and 33 basis points, respectively, versus the prior year's comparable periods. The increase for both periods were primarily due to a reduction in markdowns and a lower rate of fixed store occupancy expense leveraged by 'comp' store sales improvements.
As of July 31, 2007, total Company inventories grew by $37.1 million or 25% on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Total comparable store inventories rose by 3%.
For the three and six months ended July 31, 2007, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 62 and 41 basis points, respectively, versus the same periods last year. These increases related to non-comparable expenses to operate our new home office facility which starts to anniversary its phased opening in the third quarter of fiscal 2008 as well as certain non-recurring legal fees for intellectual property defense. The combination of these two items more than offset favorable rate reductions from controlling store related expenses.
During the six months ended July 31, 2007, the Company has opened 11 new stores and is scheduled to open a total of 38 new stores in the current 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 111 Urban Retail stores in the United States, Canada, and Europe, two Urban Outfitters web sites and an Urban catalog; 96 Anthropologie Retail stores; an Anthropologie web site and catalog, 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 11 Free People stores, a web site and catalog.
A conference call will be held today to discuss second quarter results and will be web cast at 11:00 a.m. EDT on: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1610866
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.
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
------------------------ ------------------------
July 31, July 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net sales $ 348,449 $ 285,559 $ 662,993 $ 555,566
Cost of sales,
including
certain buying,
distribution and
occupancy costs 218,422 180,807 420,351 354,046
----------- ----------- ----------- -----------
Gross profit 130,027 104,752 242,642 201,520
Selling, general
and administrative
expenses 82,756 66,043 159,355 131,260
----------- ----------- ----------- -----------
Income from
operations 47,271 38,709 83,287 70,260
Other income, net 2,037 1,750 3,840 3,162
----------- ----------- ----------- -----------
Income before
income taxes 49,308 40,459 87,127 73,422
Income tax expense 17,442 14,797 25,894 27,461
----------- ----------- ----------- -----------
Net income $ 31,866 $ 25,662 $ 61,233 $ 45,961
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.19 $ 0.16 $ 0.37 $ 0.28
=========== =========== =========== ===========
Diluted $ 0.19 $ 0.15 $ 0.36 $ 0.27
=========== =========== =========== ===========
Weighted average
common shares and
common share
equivalents
outstanding:
Basic 165,315,656 164,994,329 165,076,476 164,787,024
=========== =========== =========== ===========
Diluted 169,710,489 168,595,378 169,260,752 168,859,567
=========== =========== =========== ===========
AS A PERCENT OF NET SALES
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales,
including
certain buying,
distribution and
occupancy costs 62.7% 63.3% 63.4% 63.7%
----------- ----------- ----------- -----------
Gross profit 37.3% 36.7% 36.6% 36.3%
Selling, general
and administrative
expenses 23.7% 23.1% 24.0% 23.6%
----------- ----------- ----------- -----------
Income from
operations 13.6% 13.6% 12.6% 12.7%
Other income
(expense), net 0.6% 0.6% 0.6% 0.5%
----------- ----------- ----------- -----------
Income before
income taxes 14.2% 14.2% 13.2% 13.2%
Income tax expense 5.0% 5.2% 4.0% 4.9%
----------- ----------- ----------- -----------
Net income 9.2% 9.0% 9.2% 8.3%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
July 31, January 31, July 31,
2007 2007 2006
-------- -------- --------
(unaudited) (audited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 42,387 $ 27,267 $ 59,722
Marketable securities 130,748 132,011 92,809
Accounts receivable, net of
allowance for doubtful accounts
of $1,562, $849 and $1,014,
respectively 24,516 20,871 22,299
Inventories 185,619 154,387 148,528
Prepaid expenses, deferred taxes
and other current assets 18,988 31,869 37,419
-------- -------- --------
Total current assets 402,258 366,405 360,777
Property and equipment, net 468,972 445,698 394,706
Marketable securities 68,357 62,322 60,195
Deferred income taxes and other
assets 41,419 24,826 23,375
-------- -------- --------
$981,006 $899,251 $839,053
======== ======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 61,058 $ 57,934 $ 52,396
Accrued expenses, accrued
compensation and other current
liabilities 72,047 77,384 92,015
-------- -------- --------
Total current liabilities 133,105 135,318 144,411
Deferred rent and other liabilities 102,628 88,650 79,800
-------- -------- --------
Total liabilities 235,733 223,968 224,211
-------- -------- --------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
165,810,665, 164,987,463 and
165,536,017 issued and
outstanding, respectively 17 17 17
Additional paid-in capital 136,551 128,586 140,816
Retained earnings 602,977 542,396 472,151
Accumulated other comprehensive
income 5,728 4,284 1,858
-------- -------- --------
Total shareholders' equity 745,273 675,283 614,842
-------- -------- --------
$981,006 $899,251 $839,053
======== ======== ========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
July 31,
--------------------
2007 2006
-------- --------
Cash flows from operating activities:
Net income $ 61,233 $ 45,961
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 33,648 25,034
Excess tax benefits from stock-based
compensation (3,270) (4,685)
Stock-based compensation expense 1,631 1,574
Loss on disposition of property and
equipment, net 144 297
Changes in assets and liabilities:
Increase in receivables (3,569) (7,941)
Increase in inventories (30,977) (7,897)
Decrease in prepaid expenses and other
assets (3,615) (2,018)
Increase in payables, accrued expenses
and other liabilities 14,435 7,278
-------- --------
Net cash provided by operating activities 69,660 57,603
-------- --------
Cash flows from investing activities:
Capital expenditures (55,457) (105,701)
Purchases of marketable securities (60,716) (75,643)
Sales and maturities of marketable
securities 55,218 128,269
-------- --------
Net cash used in investing activities (60,955) (53,075)
-------- --------
Cash flows from financing activities:
Exercise of stock options 3,064 3,249
Excess tax benefits from stock-based
compensation 3,270 4,685
Share repurchases -- (2,928)
-------- --------
Net cash provided by financing activities 6,334 5,006
-------- --------
Effect of exchange rate changes on cash and
cash equivalents 81 276
-------- --------
Increase in cash and cash equivalents 15,120 9,810
Cash and cash equivalents at beginning of
period 27,267 49,912
-------- --------
Cash and cash equivalents at end of period $ 42,387 $ 59,772
======== ========
This news release was distributed by PrimeNewswire, www.primenewswire.comSOURCE: Urban Outfitters, Inc.
Urban Outfitters, Inc.
John Kyees, Chief Financial Officer
(215) 454-5500
