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Urban Outfitters' Earnings Surge 79 Percent in Q2
PHILADELPHIA, Aug. 14, 2008 (PRIME NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Terrain and Urban Outfitters brands today announced earnings of $57 million and $100 million for the three and six months ended July 31, 2008, respectively. Earnings per diluted share were $0.33 for the three and $0.58 for the six months.
Key elements of the results are as follows:
* net sales jumped 30%;
* comparable store net sales rose 13%;
-- 7%, 10% and 19% at Anthropologie, Free People and Urban
Outfitters, stores, respectively;
* Direct-to-consumer net sales rose 42% and Free People Wholesale
net sales increased 14%;
* gross profit improved 43%;
* operating margin leaped 75%; and
* earnings surged 79%.
"All of our brands and channels produced exceptional results during the period," said Glen T. Senk, Chief Executive Officer. "The Company executed superbly throughout the quarter, and we believe we are appropriately positioned for the second half of the year," finished Mr. Senk.
Net sales for the three and six month periods were as follows:
Three Months ended Six months ended
July 31, July 31,
2008 2007 2008 2007
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters stores $189,812 $140,931 $349,602 $270,839
Anthropologie stores 165,615 137,558 311,211 256,157
Free People stores 7,759 3,300 13,618 5,990
Terrain garden center 2,608 -- 3,225 --
-------- -------- -------- --------
Net store sales 365,794 281,789 677,656 532,986
-------- -------- -------- --------
Direct-to-consumer 60,498 42,538 118,746 86,045
-------- -------- -------- --------
Retail segment net sales 426,292 324,327 796,402 619,031
-------- -------- -------- --------
Wholesale 28,003 24,122 52,185 43,962
-------- -------- -------- --------
Total net sales $454,295 $348,449 $848,587 $662,993
======== ======== ======== ========
For the three and six months ended July 31, 2008, gross profit margins increased by 373 and 408 basis points, respectively, versus the prior year's comparable periods. Improvements in initial merchandise cost, reductions in markdowns and leverage of store occupancy costs helped achieve this growth for both periods.
As of July 31, 2008, inventories grew by $25.6 million or 14%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable store inventories increased by 3%.
For the three and six months ended July 31, 2008, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 95 and 55 basis points, respectively, versus the comparable periods last year. This rate improvement was led by the leverage of direct store related costs and was driven by the increase in comparable store net sales.
The Company's second quarter tax rate improved to 33.2% from 35.7% in the first quarter of this fiscal year. Management estimates an annual effective tax rate of 35% for the full fiscal year. The prior year's unusually low annual effective tax rate was primarily impacted by the receipt of one-time federal tax incentives for work performed on the development of our new home offices.
During the six months ended July 31, 2008, the Company has opened a total of 24 new stores including: 10 Urban Outfitters stores, 7 Anthropologie stores, 6 Free People stores and 1 Terrain garden center. The Company expects to open 45 new stores during the full fiscal year.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 132 Urban Outfitters stores in the United States, Canada, and Europe, two web sites and a catalog; 115 Anthropologie stores, a web site, catalog and Leifsdottir, Anthropologie's recently launched wholesale concept; Free People Wholesale, which sells its product to approximately 1,700 specialty stores and select department stores; 21 Free People stores, a web-site and catalog; and 1 Terrain garden center as of July 31, 2008.
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://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1908465
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,
-------- --------
2008 2007 2008 2007
---- ---- ---- ----
Net sales $ 454,295 $ 348,449 $ 848,587 $ 662,993
Cost of sales,
including certain
buying,
distribution and
occupancy costs 267,785 218,422 503,397 420,351
----------- ----------- ----------- -----------
Gross profit 186,510 130,027 345,190 242,642
Selling, general
and administrative
expenses 103,590 82,756 199,328 159,355
----------- ----------- ----------- -----------
Income from
operations 82,920 47,271 145,862 83,287
Other income, net 2,445 2,037 5,665 3,840
----------- ----------- ----------- -----------
Income before
income taxes 85,365 49,308 151,527 87,127
Income tax expense 28,377 17,442 51,982 25,894
----------- ----------- ----------- -----------
Net income $ 56,988 $ 31,866 $ 99,545 $ 61,233
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.34 $ 0.19 $ 0.60 $ 0.37
=========== =========== =========== ===========
Diluted $ 0.33 $ 0.19 $ 0.58 $ 0.36
=========== =========== =========== ===========
Weighted average
common shares and
common share
equivalents
outstanding:
Basic 166,698,963 165,315,656 166,412,217 165,076,476
=========== =========== =========== ===========
Diluted 171,687,530 169,710,489 171,148,661 169,260,752
=========== =========== =========== ===========
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 58.9% 62.7% 59.3% 63.4%
------ ------ ------ ------
Gross profit 41.1% 37.3% 40.7% 36.6%
Selling, general
and administrative
expenses 22.8% 23.7% 23.5% 24.0%
------ ------ ------ ------
Income from
operations 18.3% 13.6% 17.2% 12.6%
Other income
(expense), net 0.5% 0.6% 0.7% 0.6%
------ ------ ------ ------
Income before
income taxes 18.8% 14.2% 17.9% 13.2%
Income tax expense 6.2% 5.0% 6.1% 4.0%
------ ------ ------ ------
Net income 12.6% 9.2% 11.8% 9.2%
====== ====== ====== ======
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
July 31, January 31, July 31,
2008 2008 2007
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 160,391 $ 105,271 $ 42,387
Marketable securities 76,905 80,127 130,748
Accounts receivable, net of
allowance for doubtful accounts
of $2,395, $972 and $1,562,
respectively 32,468 26,365 24,516
Inventories 211,205 171,925 185,619
Prepaid expenses, deferred taxes
and other current assets 47,762 49,922 28,981
---------- ---------- ----------
Total current assets 528,731 433,610 412,251
Property and equipment, net 507,399 488,889 468,972
Marketable securities 191,129 188,252 68,357
Deferred income taxes and other
assets 41,130 32,040 31,426
---------- ---------- ----------
Total Assets $1,268,389 $1,142,791 $ 981,006
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 88,521 $ 74,020 $ 61,058
Accrued expenses, accrued
compensation and other current
liabilities 83,478 93,358 72,047
---------- ---------- ----------
Total current liabilities 171,999 167,378 133,105
Deferred rent and other liabilities 128,252 121,982 102,628
---------- ---------- ----------
Total Liabilities 300,251 289,360 235,733
---------- ---------- ----------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
167,164,738, 166,104,615 and
165,810,665 issued and
outstanding, respectively 17 17 17
Additional paid-in capital 160,615 144,204 136,551
Retained earnings 801,520 701,975 602,977
Accumulated other comprehensive
income 5,986 7,235 5,728
---------- ---------- ----------
Total Shareholders' Equity 968,138 853,431 745,273
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $1,268,389 $1,142,791 $ 981,006
========== ========== ==========
CONTACT: Urban Outfitters, Inc.John Kyees, Chief Financial Officer
(215) 454-5500
