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Urban Outfitters Q2 Earnings Soar 117%
PHILADELPHIA--(BUSINESS WIRE)--Aug. 12, 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 earnings of $20.5 million for the three months ended July 31, 2004, a 117% increase over the comparable quarter last year. Second quarter diluted earnings per share rose to $0.25 this year from $0.12 in the prior year.
As previously stated, net sales for the second quarter increased by 54% to a record $189.5 million. Fueling this increase over the prior year was:
- a 26% jump in total Company comparable store sales
- new and non-comparable store sales of $27.7 million
- a 100% spike in direct-to-consumer sales
- a 28% surge in wholesale sales
Comparable store sales at Anthropologie, Free People and Urban Outfitters were up 25%, 41% and 27%, respectively for a combined 26% on top of an 11% combined sales increase during the comparable quarter last year. For the six months ended July 31, 2004, total Company comparable store sales jumped by 29%, and total Company sales increased to a record $359.8 million, a 56% increase over the first six months of the prior year and.
"We continued to deliver exceptional performance in the second quarter by producing 26% 'comp' store sales increases and 18% operating margins," said Richard A. Hayne, Chairman and President. Mr. Hayne also added that "we are optimistic about our fall fashion offerings based on initial customer response in stores and to the July catalog drops."
Three months ended Six months ended
July 31, July 31,
2004 2003 2004 2003
--------------------------------------
(in thousands) (in thousands)
Urban Outfitters store sales $90,841 $60,750 $169,407 $112,859
Anthropologie store sales 73,766 47,874 140,340 88,828
Direct-to-consumer sales 18,373 9,204 36,974 18,731
Free People sales 6,504 5,051 13,053 9,489
--------------------------------------
Total net sales $189,484 $122,879 $359,774 $229,907
======================================
For the three and six months, gross profit margins increased by 350 and 448 basis points, respectively, versus the prior year's comparable periods. These gains were primarily due to higher initial merchandise margins and the leveraging of occupancy expenses.
As of July 31, 2004, total Company inventories grew by $29.5 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 has continued to expedite shipment and receipt of merchandise earlier than last year and increase its modestly planned inventory buy to accommodate the current sales trends. These measures have resulted in a 10.4% 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 and six months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 189 and 152 basis points, respectively, versus the comparable periods last year. These improvements were primarily a result of the leveraging of store-related expenses.
As of July 31, 2004 of this fiscal year, the Company has opened six new Anthropologie stores and seven new Urban Outfitters stores. The Company plans to open 11 to 14 additional 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 68 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site (www.urbanoutfitters.com); 58 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, as of July 31, 2004.
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://www.corporate-ir.net/ireye/ir_site.zhtml
?ticker=URBN&script=1010&item_id=905402. -- (Due to the length of this URL, it may be necessary to copy and paste it 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.
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,
2004 2003 2004 2003
--------------------------------------------
Net sales $189,484 $122,879 $359,774 $229,907
Cost of sales, including
certain buying,
distribution and
occupancy costs 112,466 77,231 212,862 146,326
Gross profit 77,018 45,648 146,912 83,581
Selling, general and
administrative expenses 42,898 30,147 84,396 57,420
--------------------------------------------
Income from operations 34,120 15,501 62,516 26,161
Other income, net 346 410 302 494
--------------------------------------------
Income before income
taxes 34,466 15,911 62,818 26,655
Income tax expense 13,958 6,444 25,441 10,795
--------------------------------------------
Net income $20,508 $9,467 $37,377 $15,860
============================================
Net income per common
share:
Basic $0.25 $0.12 $0.46 $0.20
============================================
Diluted $0.25 $0.12 $0.45 $0.20
============================================
Weighted average common
shares and common share
equivalents outstanding:
Basic 80,554,025 78,195,568 80,421,047 77,925,640
============================================
Diluted 83,411,392 80,404,412 83,174,091 79,801,388
============================================
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 59.4% 62.9% 59.2% 63.6%
Gross profit 40.6% 37.1% 40.8% 36.4%
Selling, general and
administrative expenses 22.6% 24.5% 23.5% 25.0%
--------------------------------------------
Income from operations 18.0% 12.6% 17.3% 11.4%
Other income (expense),
net 0.2% 0.3% 0.1% 0.2%
--------------------------------------------
Income before income
taxes 18.2% 12.9% 17.4% 11.6%
Income tax expense 7.4% 5.2% 7.1% 4.7%
--------------------------------------------
Net income 10.8% 7.7% 10.3% 6.9%
============================================
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
July 31, January 31, July 31,
2004 2004 2003
----- ------- -----
Assets
Current assets:
Cash and cash equivalents $64,213 $67,194 $50,452
Marketable securities 38,073 19,979 9,501
Accounts receivable 10,420 6,711 6,402
Inventories 90,930 63,247 61,467
Prepaid expenses, deferred
taxes and other current assets 18,707 18,704 14,917
--------- --------- ---------
Total current assets 222,343 175,835 142,739
Property and equipment, net 141,065 121,919 110,993
Marketable securities 60,195 52,315 44,237
Deferred income taxes and other assets 9,555 9,526 8,868
--------- --------- ---------
Total assets $433,158 $359,595 $306,837
========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $37,214 $27,353 $26,664
Accrued expenses, accrued compensation
and other current liabilities 45,836 30,409 23,172
--------- --------- ---------
Total current liabilities 83,050 57,762 49,836
Deferred rent and other liabilities 12,164 11,703 11,047
--------- --------- ---------
Total liabilities 95,214 69,465 60,883
--------- --------- ---------
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized, none
issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
80,895,742, 79,776,542 and 78,742,344
shares issued and outstanding,
respectively 8 8 8
Additional paid-in capital 99,517 83,279 73,118
Unearned compensation (5,646) - -
Retained earnings 242,282 204,905 172,389
Accumulated other comprehensive income 1,783 1,938 439
--------- --------- ---------
Total shareholders' equity 337,944 290,130 245,954
--------- --------- ---------
Total liabilities and shareholders'
equity $433,158 $359,595 $306,837
========= ========= =========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
`
Six Months Ended
July 31,
2004 2003
Cash flows from operating activities:
----------------------------------------------------------------------
Net income $37,377 $15,860
----------------------------------------------------------------------
Adjustments to reconcile net income to net cash
provided by operating activities:
----------------------------------------------------------------------
Depreciation and amortization 13,635 10,510
----------------------------------------------------------------------
Tax benefit of stock option exercises 6,198 1,070
----------------------------------------------------------------------
Stock-based compensation expense 120 -
----------------------------------------------------------------------
Changes in assets and liabilities:
----------------------------------------------------------------------
Increase in receivables (3,708) (3,145)
----------------------------------------------------------------------
Increase in inventories (27,685)(12,674)
----------------------------------------------------------------------
Decrease in prepaid expenses and other assets (32) (1,953)
----------------------------------------------------------------------
Increase in payables, accrued expenses and
other liabilities 25,751 5,371
----------------------------------------------------------------------
Net cash provided by operating activities 51,656 15,039
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash flows from investing activities:
----------------------------------------------------------------------
Capital expenditures (31,466)(10,353)
----------------------------------------------------------------------
Purchases of marketable securities (42,846)(56,931)
----------------------------------------------------------------------
Sales and maturities of marketable securities 15,548 25,608
----------------------------------------------------------------------
Net cash used in investing activities (58,764)(41,676)
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash flows from financing activities:
----------------------------------------------------------------------
Exercise of stock options 4,272 4,892
----------------------------------------------------------------------
Net cash provided by financing activities 4,272 4,892
----------------------------------------------------------------------
----------------------------------------------------------------------
Effect of exchange rate changes on cash and cash
equivalents (145) 70
----------------------------------------------------------------------
----------------------------------------------------------------------
Decrease in cash and cash equivalents (2,981)(21,675)
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash and cash equivalents at beginning of period 67,194 72,127
----------------------------------------------------------------------
Cash and cash equivalents at end of period $64,213 $50,452
----------------------------------------------------------------------
CONTACT:
Urban Outfitters, Inc.
John E. Kyees, 215-564-2313
SOURCE: Urban Outfitters, Inc.
