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Urban Outfitters Reports a 76% Increase in Q3 Earnings
PHILADELPHIA--(BUSINESS WIRE)--Nov. 13, 2003--Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle consumer products company doing business under the Anthropologie, Free People and Urban Outfitters brands, today announced record earnings of $14.1 million for the third quarter ended October 31, 2003, a 76% increase over the comparable quarter last year. Third quarter earnings per diluted share rose to $0.35 this year versus $0.20 in the prior year.
As reported earlier, net sales for the quarter increased by 29% to
a record $142.3 million. This increase over the prior year was fueled
by:
-- A 23% increase in the number of stores in operation
-- A 17% increase in total Company comparable store sales
-- A 48% increase in direct-to-consumer sales
During the quarter, comparable store sales rose 15% at Urban Outfitters Retail and 19% at Anthropologie Retail, as compared to increases of 8% and 15%, respectively, for the same period in the prior year. New and noncomparable store sales increases for the quarter totaled $13.2 million.
"Our Retail brands and Direct businesses produced truly outstanding results in the third quarter," said Richard A. Hayne, Chairman and President. "Sales were strong in all regions where we operate stores; and Direct sales, particularly over the internet, continued their meteoric growth. Most gratifying, however, was delivering 16.5% operating margins. This is the highest quarterly rate in the last seven years."
Net sales for the periods were as follows:
Three months ended Nine months ended
October 31, October 31,
2003 2002 2003 2002
--------- --------- --------- ---------
(in thousands) (in thousands)
Urban Outfitters store sales $71,290 $57,660 $184,149 $154,590
Anthropologie store sales 52,865 37,547 141,693 112,577
Direct-to-consumer sales 12,690 8,583 31,421 22,374
Free People sales 5,486 6,316 14,975 15,640
--------- --------- --------- ---------
Total net sales $142,331 $110,106 $372,238 $305,181
========= ========= ========= =========
For the quarter and the nine months, the Company's gross profit margins increased by 434 and 263 basis points, respectively, versus the comparable prior year periods. These gains were due primarily to higher initial merchandise margins, decreased markdowns and the leveraging of occupancy expenses.
As of October 31, 2003, total Company inventories grew by $15.7 million on a year-over-year basis. This increase was almost entirely due to the acquisition of inventory to stock new retail stores. On a comparable store basis, inventories decreased by a modest 0.9% versus the prior year. Management believes that existing inventory, along with shipments of merchandise scheduled to arrive in November and early December, will be adequate to satisfy Holiday demand even though comparable store sales in early November continue to significantly exceed plan.
For the quarter and the nine months, selling, general and administrative expenses, expressed as percentages of net sales, decreased by approximately 27 and 29 basis points, respectively, versus the same periods in the prior year. The leveraging of store-related expenses more than offset additional costs associated with the distribution of approximately 1.7 million and 2.6 million copies of the newly launched Urban Direct catalog during the three and nine months, respectively.
Thus far this fiscal year, the Company has opened thirteen new stores - eight Anthropologie stores and five Urban Outfitters stores. Management plans to open seven or eight additional new stores during the remainder of Fiscal 2004.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler that offers a variety of lifestyle merchandise to highly defined customer niches through 58 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters web site and catalog; 47 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 one Free People store.
A conference call will be held today to discuss third quarter results and will be web cast at 11:00 a.m. EST at: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=URBN&script= 1010&item_id=803008 (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.)
Notes of the Company's conference call presentation will be available on: www.urbanoutfittersinc.com.
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 BALANCE SHEETS
(amounts in thousands, except share and per share data)
Oct. 31, Jan. 31, Oct. 31,
2003 2003 2002
-------- -------- --------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 37,396 $ 72,127 $ 51,555
Marketable securities 21,544 7,379 3,755
Accounts receivable, net of allowance
for doubtful accounts of $705, $563
and $658, respectively 6,478 3,262 6,265
Inventories 72,213 48,825 56,518
Other current assets 14,771 12,991 8,940
-------- -------- --------
Total current assets 152,402 144,584 127,033
Property and equipment, net 123,023 108,847 111,841
Marketable securities 48,714 15,640 24,230
Deferred income taxes and other assets 8,863 8,925 9,077
-------- -------- --------
$333,002 $277,996 $272,181
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,260 $ 19,186 $ 26,214
Other current liabilities 28,004 23,886 23,488
-------- -------- --------
Total current liabilities 59,264 43,072 49,702
Deferred rent and other liabilities 11,190 10,539 9,418
-------- -------- --------
Total liabilities 70,454 53,611 59,120
-------- -------- --------
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized, none
issued -- -- --
Common shares; $.0001 par value,
100,000,000 shares authorized;
39,500,072, 38,763,272 and 38,525,472
shares issued and outstanding,
respectively 4 4 4
Additional paid-in capital 75,001 67,160 64,842
Retained earnings 186,476 156,529 148,152
Accumulated other comprehensive income 1,067 692 63
-------- -------- --------
Total shareholders' equity 262,548 224,385 213,061
-------- -------- --------
$333,002 $277,996 $272,181
======== ======== ========
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share and per share data)
(Unaudited)
Three months ended Nine months ended
October 31, October 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $142,331 $110,106 $372,238 $305,181
Cost of sales,
including certain
buying, distribution
and occupancy costs 85,520 70,932 231,846 198,080
----------- ----------- ----------- -----------
Gross profit 56,811 39,174 140,392 107,101
Selling, general and
administrative
expenses 33,333 26,082 90,753 75,293
----------- ----------- ----------- -----------
Income from operations 23,478 13,092 49,639 31,808
Other income, net 198 397 692 185
----------- ----------- ----------- -----------
Income before income
taxes 23,676 13,489 50,331 31,993
Income tax expense 9,589 5,463 20,384 12,957
----------- ----------- ----------- -----------
Net income $14,087 $8,026 $29,947 $19,036
=========== =========== =========== ===========
Net income per common
share:
Basic $0.36 $0.21 $0.77 $0.51
=========== =========== =========== ===========
Diluted $0.35 $0.20 $0.75 $0.50
=========== =========== =========== ===========
Weighted average common
shares and common
share equivalents
outstanding:
Basic 39,444,429 38,474,648 39,124,390 37,326,884
=========== =========== =========== ===========
Diluted 40,753,913 39,360,882 40,128,649 38,446,094
=========== =========== =========== ===========
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 60.1% 64.4% 62.3% 64.9%
----------- ----------- ----------- -----------
Gross profit 39.9% 35.6% 37.7% 35.1%
Selling, general and
administrative
expenses 23.4% 23.7% 24.4% 24.7%
----------- ----------- ----------- -----------
Income from operations 16.5% 11.9% 13.3% 10.4%
Other income, net 0.1% 0.4% 0.2% 0.1%
----------- ----------- ----------- -----------
Income before income
taxes 16.6% 12.3% 13.5% 10.5%
Income tax expense 6.7% 5.0% 5.5% 4.3%
----------- ----------- ----------- -----------
Net income 9.9% 7.3% 8.0% 6.2%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
Nine months ended
October 31,
2003 2002
---------- ----------
Cash flows from operating activities:
Net income $29,947 $19,036
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,055 13,264
Tax benefit of stock option exercises 1,945 1,607
Changes in assets and liabilities:
Increase in accounts receivable (3,213) (2,121)
Increase in inventories (23,355) (15,275)
Increase in other assets (1,709) (1,909)
Increase in accounts payable, deferred rent and
other liabilities 11,926 8,046
---------- ----------
Net cash provided by operating activities 31,596 22,648
---------- ----------
Cash flows from investing activities:
Capital expenditures (24,245) (16,918)
Purchases of marketable securities (74,056) (45,209)
Sales and maturities of marketable securities 25,945 17,100
---------- ----------
Net cash used in investing activities (72,356) (45,027)
---------- ----------
Cash flows from financing activities:
Exercise of stock options 5,896 3,819
Issuance of common shares, net of issuance costs -- 41,546
---------- ----------
Net cash provided by financing activities 5,896 45,365
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents 133 318
---------- ----------
(Decrease) increase in cash and cash equivalents (34,731) 23,304
Cash and cash equivalents at beginning of period 72,127 28,251
---------- ----------
Cash and cash equivalents at end of period $37,396 $51,555
========== ==========
CONTACT: Urban Outfitters, Inc.
Richard A. Hayne, 215-564-2313
SOURCE: Urban Outfitters, Inc.
