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Urban Outfitters Q1 Earnings Jump 63 Percent
PHILADELPHIA, May 12, 2005 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Urban Outfitters and Free People brands, today announced record first quarter earnings of $27.4 million for the three months ended April 30, 2005, a 63% increase over the comparable quarter last year. First quarter diluted earnings per share rose to $0.32 this year versus $0.20 in the prior year.
As previously stated in our sales release on May 5, 2005, net sales for the first quarter increased by 36% to a record $231.3 million. Fueling this increase over the prior year was:
- an 11% jump in total Company comparable store sales
- a 29% increase in the number of stores in operation
- a 54% gain in direct-to-consumer sales
- a 69% surge in wholesale sales
Comparable store sales at Anthropologie, Free People and Urban Outfitters were up 9%, 45% and 13%, respectively; or a combined 11% versus a 32% combined increase during the comparable quarter last year. New and non-comparable store sales increases for the quarter totaled $30.8 million.
"All of our Brands produced excellent results in the first quarter," stated Richard A. Hayne, Chairman and President. "Strong sales, improved initial merchandise margins and tight expense control combined to drive operating margins above 19%. Given the current response to our product offerings, we remain optimistic about results for the summer season as well," added Mr. Hayne.
Net sales for the three months were as follows:
Three months ended
April 30,
2005 2004
---- ----
(in thousands)
Urban Outfitters store sales $104,109 $ 78,566
Anthropologie store sales 87,307 66,574
Direct-to-consumer sales 28,722 18,601
Free People sales 11,187 6,549
-------- --------
Total net sales $231,325 $170,290
======== ========
For the three months, gross profit margins increased by 116 basis points versus the prior year's comparable quarter. These gains were primarily due to higher initial merchandise margins that more than offset a modest increase in markdowns to clear seasonal merchandise. Store occupancy costs, as a percentage of net sales, were flat compared to the comparable quarter last year due to the change in accounting treatment of lease related expenses.
As of April 30, 2004, total Company inventories grew by $35.1 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 10%, in line with the Company's plan.
For the three months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 153 basis points versus the comparable quarter last year. These improvements were primarily a result of the leveraging of store-related and other fixed administrative expenses due to the increase in the comparable store sales.
Thus far this fiscal year, the Company has opened two new Anthropologie stores and two new Urban Outfitters stores. The Company plans to open an additional 26 to 28 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 77 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 67 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 1,100 specialty stores, department stores and catalogs, as well as through 2 Free People stores and a web site.
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=1017232
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
April 30,
----------------------
2005 2004
------ ------
Net sales $ 231,325 $ 170,290
Cost of sales, including
certain buying,
distribution and
occupancy costs 133,708 100,396
------------ ------------
Gross profit 97,617 69,894
Selling, general and
administrative expenses 52,839 41,498
------------ ------------
Income from
operations 44,778 28,396
Other income (expense),
net 764 (44)
------------ ------------
Income before income
taxes 45,542 28,352
Income tax expense 18,102 11,483
------------ ------------
Net income $ 27,440 $ 16,869
============ ============
Net income per common
share:
Basic $ 0.34 $ 0.21
============ ============
Diluted $ 0.32 $ 0.20
============ ============
Weighted average common
shares outstanding:
Basic 81,678,227 80,295,942
============ ============
Diluted 84,634,170 82,944,664
============ ============
PERCENT OF NET SALES
Net sales 100% 100%
Cost of sales, including
certain buying,
distribution and
occupancy costs 57.8 59.0
------ ------
Gross profit 42.2 41.0
Selling, general and
administrative expenses 22.8 24.3
------ ------
Income from
operations 19.4 16.7
Other income (expense),
net 0.3 --
------ ------
Income before
income taxes 19.7 16.7
Income tax expense 7.8 6.8
------ ------
Net income 11.9% 9.9%
====== ======
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
April 30, January 31, April 30,
2005 2005 2004
--------- --------- ---------
Assets
Current assets:
Cash and cash
equivalents $ 22,124 $ 29,731 $ 25,597
Marketable
securities 132,681 125,953 70,476
Accounts
receivable, net of
allowance for
doubtful accounts
of $621, $586 and
$819, respectively 13,754 8,364 7,446
Inventories 113,477 98,996 78,399
Prepaid expenses,
deferred taxes and
other current
assets 21,820 24,824 16,959
--------- --------- ---------
Total current assets 303,856 287,868 198,877
Property and
equipment, net 203,163 192,792 158,976
Marketable
securities 68,622 63,457 58,547
Deferred income
taxes and other
assets 12,581 12,567 9,522
--------- --------- ---------
$ 588,222 $ 556,684 $ 425,922
========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 38,846 $ 39,102 $ 37,929
Accrued expenses,
accrued
compensation and
other current
liabilities 52,140 59,169 38,673
--------- --------- ---------
Total current
liabilities 90,986 98,271 76,602
Deferred rent and
other liabilities 57,609 56,169 36,309
--------- --------- ---------
Total liabilities 148,595 154,440 112,911
--------- --------- ---------
Shareholders'
equity:
Preferred shares;
$.0001 par value,
10,000,000 shares
authorized, none
issued -- -- --
Common shares;
$.0001 par value,
200,000,000 shares
authorized,
81,847,376,
81,447,444 and
80,387,942 issued
and outstanding,
respectively 8 8 8
Additional paid-in
capital 119,061 109,430 89,860
Unearned
compensation (4,777) (5,058) --
Retained earnings 322,834 295,394 221,774
Accumulated other
comprehensive
income 2,501 2,470 1,369
--------- --------- ---------
Total shareholders'
equity 439,627 402,244 313,011
--------- --------- ---------
$ 588,222 $ 556,684 $ 425,922
========= ========= =========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
April 30,
-----------------
2005 2004
---- ----
Cash flows from operating
activities:
Net income $ 27,440 $ 16,869
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 8,799 7,241
Tax benefit of stock
option exercises 2,932 4,318
Stock-based
compensation expense 281 --
Changes in assets and
liabilities:
Increase in
receivables (5,384) (740)
Increase in
inventories (14,440) (15,206)
Decrease in prepaid
expenses and other
assets 3,006 1,732
(Decrease) increase
in payables, accrued
expenses and other
liabilities (5,898) 12,035
--------- ---------
Net cash provided by
operating activities 16,736 26,249
--------- ---------
Cash flows from investing
activities:
Capital expenditures (18,451) (12,188)
Purchases of
marketable securities (157,835) (135,967)
Sales and maturities
of marketable
securities 145,145 142,305
--------- ---------
Net cash used in
investing activities (31,141) (5,850)
--------- ---------
Cash flows from financing
activities:
Exercise of stock
options 6,699 2,262
--------- ---------
Net cash provided by
financing activities 6,699 2,262
--------- ---------
Effect of exchange rate
changes on cash and cash
equivalents 99 (383)
--------- ---------
(Decrease) increase in
cash and cash
equivalents (7,607) 22,278
Cash and cash equivalents
at beginning of period 29,731 3,319
--------- ---------
Cash and cash equivalents
at end of period $ 22,124 $ 25,597
========= =========
CONTACT: Urban Outfitters, Inc.
John E. Kyees
Chief Financial Officer
(215) 564-2313
