<< Back
Urban Outfitters Q4 Earnings Increase 31 Percent
PHILADELPHIA, March 9, 2006 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced record earnings of $35.6 million for the fourth quarter ended January 31, 2006, a 31% increase over the comparable quarter last year. Fourth quarter diluted earnings per share rose to $0.21 this year versus $0.16 in the prior year.
As previously stated, net sales for the fourth quarter jumped by 27% to a record $318.6 million. The increase over the prior year was attributed to:
-- New and noncomparable store sales increases of $35.6 million -- An 8% increase in total Company comparable store sales -- A 28% rise in direct-to-consumer sales -- A 110% jump in wholesale sales
Comparable store sales at Anthropologie, Free People and Urban Outfitters were up 2%, 21% and 13%, respectively, for a combined 8% increase versus a combined 13% 'comp' increase for the same quarter last year.
"The final three months of the fiscal year continued our string of record-breaking quarters and capped-off what was easily our finest year to date," said Richard A. Hayne, Chairman and President. "We produced strong 'comp' store sales gains in every quarter of Fiscal '06, finishing the year with an annual combined 'comp' store sales gain of 11%. Operating margins for the year grew by more than 100 basis points. In addition, we opened thirty-three new stores and delivered exceptional growth in both our direct-to-consumer and wholesale channels of distribution."
"February, the first month in our new fiscal year, was a weak month for our stores, but strong for our direct businesses," Mr. Hayne added. "We remain cautious about our overall business until we navigate through the seismic shift in women's fashion that occurred late last year and customer feedback becomes more consistent. Thus far during the quarter, sales in comparable stores are running below our plan and the previous year, while the direct and wholesale businesses are running nicely ahead," Mr. Hayne concluded.
Three months ended Twelve months ended
January 31, January 31,
2006 2005 2006 2005
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters store
sales $ 144,205 $ 112,241 $ 508,106 $ 384,371
Anthropologie store
sales 115,837 98,814 395,157 320,621
Direct-to-consumer sales 42,665 33,434 130,581 93,913
Free People sales 15,882 7,134 58,263 28,845
---------- ---------- ---------- ----------
Total net sales $ 318,589 $ 251,623 $1,092,107 $ 827,750
========== ========== ========== ==========
For the quarter, gross profit margins decreased by 37 basis points versus the comparable quarter last year. This decrease was primarily due to higher markdowns to clear seasonal goods. This decrease more than offset increases in initial margins and favorable store occupancy costs resulting from last year's lease accounting adjustment. For the year, gross profit margins increased by 15 basis points as a result of favorable store occupancy costs which more than offset increases in merchandise markdowns when compared to the previous year.
As of January 31, 2006, total Company inventories grew by $41.4 million on a year-over-year basis. The acquisition of inventory to stock new retail stores and the growth demands in both the direct-to-consumer and wholesale channels were the primary factor for this increase. On a comparable store basis, inventories grew by 13.1% versus the prior year.
The Board has approved a stock repurchase program. The program authorizes the Company to repurchase up to 8,000,000 shares from time-to-time, based upon prevailing market conditions.
For the quarter and twelve months, selling, general and administrative expenses, expressed as a percentage of sales, were flat and decreased by 94 basis points, respectively, versus the same periods of the prior year. For the twelve months, the improvement was primarily a result of store-related cost control and leveraging of store and back-office expenses.
During the year ended January 31, 2006, the Company opened 14 new Anthropologie stores, 4 new Free People stores, and 15 new Urban Outfitters stores, or 33 new stores in total. The Company plans to open 35 to 38 new stores, including 3 to 5 new Free People stores, during 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 90 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 79 Anthropologie stores in the United States; an Anthropologie catalog and web site: and Free People, the Company's wholesale segment, which sells its product to approximately 1,500 specialty stores, department stores and catalogs, as well as through 6 Free People stores, a web site and catalog as of January 31, 2006.
A conference call will be held today to discuss fourth quarter and annual results and will be web cast at 11:00 a.m. EST on: http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1211796
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 filing 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)
Three Months Ended Twelve Months Ended
January 31, January 31,
------------------------ ------------------------
2006 2005 2006 2005
---- ---- ---- ----
Net sales $ 318,589 $ 251,623 $ 1,092,107 $ 827,750
Cost of sales,
including
certain buying,
distribution and
occupancy costs 192,687 151,243 643,501 489,000
----------- ----------- ----------- -----------
Gross profit 125,902 100,380 448,606 338,750
Selling, general
and
administrative
expenses 73,105 57,712 240,907 190,384
----------- ----------- ----------- -----------
Income from
operations 52,797 42,668 207,699 148,366
Other income, net 1,587 948 4,698 1,826
----------- ----------- ----------- -----------
Income before
income taxes 54,384 43,616 212,397 150,192
Income tax expense 18,791 16,540 81,601 59,703
----------- ----------- ----------- -----------
Net income $ 35,593 $ 27,076 $ 130,796 $ 90,489
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.22 $ 0.17 $ 0.80 $ 0.56
=========== =========== =========== ===========
Diluted $ 0.21 $ 0.16 $ 0.77 $ 0.54
=========== =========== =========== ===========
Weighted average
common shares
outstanding:
Basic 164,314,810 162,699,520 163,717,726 161,419,898
=========== =========== =========== ===========
Diluted 170,481,054 169,164,264 169,936,041 167,303,450
=========== =========== =========== ===========
PERCENT OF NET
SALES
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales,
including
certain buying,
distribution
and occupancy
costs 60.5 60.1 58.9 59.1
----- ----- ----- -----
Gross profit 39.5 39.9 41.1 40.9
Selling, general
and
administrative
expenses 22.9 22.9 22.1 23.0
----- ----- ----- -----
Income from
operations 16.6 17.0 19.0 17.9
Other income, net 0.5 0.4 0.4 0.2
----- ----- ----- -----
Income before
income taxes 17.1 17.4 19.4 18.1
Income tax expense 5.9 6.6 7.5 7.2
----- ----- ----- -----
Net income 11.2% 10.8% 11.9% 10.9%
===== ===== ===== =====
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
January 31,
----------------------
2006 2005
Assets ---- ----
Current assets:
Cash and cash equivalents $ 49,912 $ 29,731
Marketable securities 141,883 125,953
Accounts receivable, net of allowance
for doubtful accounts of $445 and
$586, respectively 14,324 8,364
Inventories 140,377 98,996
Other current assets 38,687 24,824
--------- ---------
Total current assets 385,183 287,868
Property and equipment, net 299,291 192,792
Marketable securities 64,748 63,457
Deferred income taxes and other assets 19,983 12,567
--------- ---------
$ 769,205 $ 556,684
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 41,291 $ 39,102
Other current liabilities 92,217 59,169
--------- ---------
Total current liabilities 133,508 98,271
Deferred rent 74,817 56,169
--------- ---------
Total liabilities 208,325 154,440
--------- ---------
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized; none
issued -- --
Common shares; $.0001 par value,
200,000,000 shares authorized;
164,831,477 and 162,894,888 issued and
outstanding, respectively 17 17
Additional paid-in capital 138,050 109,421
Unearned compensation (3,905) (5,058)
Retained earnings 426,190 295,394
Accumulated other comprehensive income 528 2,470
--------- ---------
Total shareholders' equity 560,880 402,244
--------- ---------
$ 769,205 $ 556,684
========= =========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Fiscal Year Ended January 31,
-----------------------------
2006 2005
---- ----
Cash flows from operating activities:
Net income $ 130,796 $ 90,489
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 39,340 31,858
Provision for deferred income taxes (6,870) (2,884)
Tax benefit of stock option exercises 13,399 13,468
Stock compensation 1,153 708
Net gain on disposition of property and
equipment (631) --
Changes in assets and liabilities:
Increase in accounts receivables (6,002) (1,635)
Increase in inventories (41,597) (35,651)
Increase in other assets (14,201) (6,231)
Increase in liabilities 33,805 59,873
--------- ---------
Net cash provided by operating activities 149,192 149,995
--------- ---------
Cash flows from investing activities:
Capital expenditures (127,730) (75,141)
Proceeds on disposition of property and
equipment 3,769 --
Purchases of marketable securities (416,018) (586,093)
Sales and maturities of marketable
securities 396,304 530,301
--------- ---------
Net cash used in investing activities (143,675) (130,933)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 15,229 6,917
--------- ---------
Net cash provided by financing activities 15,229 6,917
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (565) 433
--------- ---------
Increase in cash and cash equivalents 20,181 26,412
Cash and cash equivalents at beginning of
period 29,731 3,319
--------- ---------
Cash and cash equivalents at end of period $ 49,912 $ 29,731
========= =========
CONTACT: Urban Outfitters, Inc.
John Kyees
Chief Financial Officer
(215) 564-2313
