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Urban Outfitters Q1 Earnings Soar 164%
PHILADELPHIA--(BUSINESS WIRE)--May 13, 2004--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 $16.9 million for the three months ended April 30, 2004, a 164% increase over the comparable quarter last year. First quarter diluted earnings per share rose to $0.41 this year versus $0.16 in the prior year.
As previously stated, net sales for the first quarter increased by 59% to a record $170.3 million. Fueling this increase over the prior year was:
- a 32% jump in total Company comparable store sales
- a 24% increase in the number of stores in operation
- a 95% surge in direct-to-consumer sales
- a 47% rise in wholesale sales
Comparable store sales at Anthropologie, Free People and Urban Outfitters were up 32%, 54% and 33%, respectively; or a combined 32% versus a 2% combined increase during the comparable quarter last year. New and non-comparable store sales increases for the quarter totaled $22.1 million.
"Our teams produced an exceptional quarter," stated Richard A. Hayne, Chairman and President. "All of the performance metrics we look at were sharply positive. Sales and profits reached 'holiday-like' levels in the first quarter, with operating margins nearing 17%. We remain very optimistic about the summer season and even though sales comparisons become more difficult in this year's second quarter, 'comps' in the first few weeks of Q2 continue to run very significantly ahead of plan."
Net sales for the three months were as follows:
Three months ended
April 30,
2004 2003
--------- ---------
(in thousands)
Urban Outfitters store sales $78,566 $52,109
Anthropologie store sales 66,574 40,954
Direct-to-consumer sales 18,601 9,527
Free People sales 6,549 4,438
--------- ---------
Total net sales $170,290 $107,028
========= =========
For the three months, gross profit margins increased by 561 basis points versus the prior year's comparable quarter. These gains were primarily due to higher initial merchandise margins, decreased markdowns and the leveraging of occupancy expenses.
As of April 30, 2004, total Company inventories grew by $24.7 million on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. On a comparable store basis, the Company had planned to expedite shipment and receipt of summer merchandise earlier than last year and increase its modestly planned inventory buy to accommodate the current sales trends. These measures have resulted in an 18% increase of comparable store inventory over last year's levels. The Company believes its inventory levels are adequate to meet the current rate of customer demand.
For the three months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 110 basis points versus the comparable quarter last year. These improvements were primarily a result of the leveraging of store-related expenses.
Thus far this fiscal year, the Company has opened one new Anthropologie store and one new Urban Outfitters store. The Company plans to open approximately 10 additional new stores during the second quarter, and a total of 24 to 27 during the entire 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 62 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site (www.urbn.com); 53 Anthropologie stores in the United States; an Anthropologie catalog and web site (www.anthropologie.com); 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 one Free People store.
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://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=URBN&script= 1010&item_id=886598. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field. You may also need to remove an extra space in the URL if one exists.)
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,
----------------------------
2004 2003
-------------- -------------
Net sales $170,290 $107,028
Cost of sales, including certain buying,
distribution and occupancy costs 100,396 69,095
-------------- -------------
Gross profit 69,894 37,933
Selling, general and administrative
expenses 41,498 27,273
-------------- -------------
Income from operations 28,396 10,660
Other income (expense), net (44) 84
-------------- -------------
Income before income taxes 28,352 10,744
Income tax expense 11,483 4,351
-------------- -------------
Net income $16,869 $6,393
============== =============
Net income per common share:
Basic $0.42 $0.16
============== =============
Diluted $0.41 $0.16
============== =============
Weighted average common shares
outstanding:
Basic 40,147,971 38,819,574
============== =============
Diluted 41,472,332 39,532,440
============== =============
PERCENT OF NET SALES
Net sales 100% 100%
Cost of sales, including certain buying,
distribution and occupancy costs 59.0 64.6
-------------- -------------
Gross profit 41.0 35.4
Selling, general and administrative
expenses 24.3 25.4
-------------- -------------
Income from operations 16.7 10.0
Other income (expense), net - 0.1
-------------- -------------
Income before income taxes 16.7 10.1
Income tax expense 6.8 4.1
-------------- -------------
Net income 9.9% 6.0%
============== =============
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
April 30, Jan. 31, April 30,
2004 2004 2003
--------- --------- ---------
Assets
Current assets:
Cash and cash equivalents $72,547 $67,194 $57,632
Marketable securities 23,526 19,979 7,000
Accounts receivable, net of allowance
for doubtful accounts of $819,
$651 and $625, respectively 7,446 6,711 5,538
Inventories 78,399 63,247 53,739
Prepaid expenses, deferred taxes and
other current assets 16,959 18,704 15,222
--------- --------- ---------
Total current assets 198,877 175,835 139,131
Property and equipment, net 134,549 121,919 110,406
Marketable securities 58,547 52,315 28,672
Deferred income taxes and other assets 9,522 9,526 8,929
--------- --------- ---------
$401,495 $359,595 $287,138
========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $37,929 $27,353 $21,604
Accrued expenses, accrued
compensation and other current
liabilities 38,673 30,409 22,734
--------- --------- ---------
Total current liabilities 76,602 57,762 44,338
Deferred rent and other liabilities 11,882 11,703 10,740
--------- --------- ---------
Total liabilities 88,484 69,465 55,078
--------- --------- ---------
Commitments and contingencies
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized, none
issued - -- --
Common shares; $.0001 par value,
50,000,000 shares authorized,
40,193,971, 39,888,271 and
38,915,872 issued and outstanding,
respectively 4 4 4
Additional paid-in capital 89,864 83,283 68,623
Retained earnings 221,774 204,905 162,922
Accumulated other comprehensive
income 1,369 1,938 511
--------- --------- ---------
Total shareholders' equity 313,011 290,130 232,060
--------- --------- ---------
$401,495 $359,595 $287,138
========= ========= =========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
April 30,
------------------
2004 2003
-------- --------
Cash flows from operating activities:
Net income $16,869 $6,393
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,431 4,948
Tax benefit of stock option exercises 4,318 288
Changes in assets and liabilities:
Increase in receivables (740) (2,279)
Increase in inventories (15,206) (4,941)
Decrease (increase) in prepaid expenses and
other assets 1,732 (2,253)
Decrease in payables, accrued expenses and
other liabilities 12,515 703
-------- --------
Net cash provided by operating activities 25,919 2,859
-------- --------
Cash flows from investing activities:
Capital expenditures (11,858) (5,925)
Purchases of marketable securities (19,792) (24,228)
Sales and maturities of marketable securities 9,205 11,578
-------- --------
Net cash used in investing activities (22,445) (18,575)
-------- --------
Cash flows from financing activities:
Exercise of stock options 2,262 1,175
-------- --------
Net cash provided by financing activities 2,262 1,175
-------- --------
Effect of exchange rate changes on cash and cash
equivalents (383) 46
-------- --------
Increase (decrease) in cash and cash equivalents 5,353 (14,495)
Cash and cash equivalents at beginning of period 67,194 72,127
-------- --------
Cash and cash equivalents at end of period $72,547 $57,632
======== ========
CONTACT:
Urban Outfitters, Inc.
John E. Kyees, 215-564-2313
SOURCE: Urban Outfitters, Inc.
