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Urban Outfitters Reports Q4 Earnings Jump 50 Percent
PHILADELPHIA, March 6, 2008 (PRIME NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced record earnings of $53.6 million and $160.2 million for the quarter and year ended January 31, 2008, respectively. Earnings per diluted share were $0.32 for the quarter and $0.94 for the year.
As stated in the Company's previous sales release on February 7, 2008, net sales surged 29% in the quarter to a record $465 million. Comparable store ('comp') sales at Anthropologie, Free People and Urban Outfitters rose by 18%, 19% and 6%, respectively, for a combined 11% increase. Direct-to-consumer sales increased by 39%, reflecting exceptional growth across all brands. Free People Wholesale also delivered an excellent performance for the quarter with sales increasing by a robust 34%. Total Company sales for the year ended January 31, 2008 increased by 23%, to a record $1.5 billion.
"We continued our string of record-breaking quarters this year as earnings grew 50% during the fourth quarter," said Glen T. Senk, Chief Executive Officer. "All brands and channels produced positive 'comp' period sales results which helped drive an outstanding 388 basis point improvement in operating margin for the quarter." Mr. Senk added, "During the year we opened 38 new stores and delivered exceptional sales and earnings growth in both our direct and wholesale channels. Despite the challenging retail environment, we remain optimistic for the spring season based on the positive feedback to our fashion assortment thus far this year."
Net sales for the periods were as follows:
Quarter ended Year ended
January 31, January 31,
-------------------- -----------------------
2008 2007 2008 2007
-------- -------- ---------- ----------
(in thousands) (in thousands)
Urban Outfitters
store sales $196,625 $161,615 $628,328 $547,847
Anthropologie store
sales 165,853 125,424 561,990 439,185
Direct-to-consumer
sales 72,920 52,638 205,742 153,712
Free People sales 30,013 21,119 111,664 83,973
-------- -------- ---------- ----------
Total net sales $465,411 $360,796 $1,507,724 $1,224,717
======== ======== ========== ==========
For the quarter and year ended January 31, 2008, gross profit margins increased by 287 basis points and 135 basis points, respectively, versus the prior year's comparable periods. The increase for both periods was primarily due to the combination of a lower rate of merchandise markdowns and leveraging of store occupancy expenses.
During the quarter, total company comparable store sales grew by 11%, while ending comparable store inventories decreased by 3%. Total company inventories grew by $17.5 million or 11% on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. The Company believes this inventory level is appropriate to sustain a healthy positive comp outlook for the first quarter of fiscal year 2009.
For the quarter ended January 31, 2008, selling, general and administrative expenses ("SG&A"), expressed as a percentage of net sales, decreased by 101 basis points, versus the same quarter last year. This favorable rate reduction was driven by leveraging of store costs related to the increase in 'comp' sales and a reduction of corporate expenses. For the year ended January 31, 2008, SG&A decreased by 18 basis points due to favorable rate reductions from controlling store support related expenses which were partially offset by non-comparable expenses to operate our new home office facility.
The Company's quarterly income tax rate increased to 36.0% of income from 28.4% of income in the prior quarter. The lower tax rate in the fourth quarter of fiscal year 2007 was due to the receipt of certification for work performed on the development of the Company's new offices that qualified for certain one-time federal tax incentives. The Company estimates its annual effective tax rate will range from 36% to 36.5% for fiscal year 2009.
During the year ended January 31, 2008 the Company opened 16 Urban Outfitters stores, 15 Anthropologie stores and 7 Free People stores or 38 new stores in total. The Company plans to open 45 to 49 new stores during fiscal year 2009.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 122 Urban Outfitters stores in the United States, Canada, and Europe, two Urban Outfitters web sites and an Urban catalog; 108 Anthropologie stores; an Anthropologie web site and a catalog, and Free People, the Company's wholesale division, which sells its product to approximately 1,500 specialty stores, department stores and catalogs, as well as through 15 Free People stores, a web site and a catalog as of January 31, 2008.
A conference call will be held today to discuss fourth quarter results and will be web cast at 11:00 a.m. EST on: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1716517
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)
Quarter Ended Fiscal Year Ended
-------------- -----------------
January 31, January 31,
----------- ------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net sales $ 465,411 $ 360,796 $ 1,507,724 $ 1,224,717
Cost of sales,
including
certain buying,
distribution
and occupancy
costs 281,219 228,343 930,952 772,796
----------- ----------- ----------- -----------
Gross profit 184,192 132,453 576,772 451,921
Selling, general
and
administrative
expenses 103,861 84,188 351,827 287,932
----------- ----------- ----------- -----------
Income from
operations 80,331 48,265 224,945 163,989
Other income, net 3,459 1,642 9,450 6,169
----------- ----------- ----------- -----------
Income before
income taxes 83,790 49,907 234,395 170,158
Income tax
expense 30,175 14,176 74,164 53,952
----------- ----------- ----------- -----------
Net income $ 53,615 $ 35,731 $ 160,231 $ 116,206
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.32 $ 0.22 $ 0.97 $ 0.71
=========== =========== =========== ===========
Diluted $ 0.32 $ 0.21 $ 0.94 $ 0.69
=========== =========== =========== ===========
Weighted average
common shares
and common share
equivalents
outstanding:
Basic 165,629,648 164,440,611 165,305,207 164,679,786
=========== =========== =========== ===========
Diluted 170,099,923 168,585,418 169,640,585 168,652,005
=========== =========== =========== ===========
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 60.4% 63.3% 61.7% 63.1%
----------- ----------- ----------- -----------
Gross profit 39.6% 36.7% 38.3% 36.9%
Selling, general
and
administrative
expenses 22.3% 23.3% 23.3% 23.5%
----------- ----------- ----------- -----------
Income from
operations 17.3% 13.4% 15.0% 13.4%
Other income, net 0.7% 0.4% 0.6% 0.5%
----------- ----------- ----------- -----------
Income before
income taxes 18.0% 13.8% 15.6% 13.9%
Income tax
expense 6.4% 3.9% 4.9% 4.4%
----------- ----------- ----------- -----------
Net income 11.6% 9.9% 10.7% 9.5%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
January January
31, 31,
2008 2007
---------- --------
Assets
Current assets:
Cash and cash equivalents $ 105,271 $ 27,267
Marketable securities 94,377 132,011
Accounts receivable, net of allowance
for doubtful accounts of $972 and
$849, respectively 26,365 20,871
Inventories 171,925 154,387
Prepaid expenses, deferred taxes and
other current assets 49,922 31,869
---------- --------
Total current assets 447,860 366,405
Property and equipment, net 488,889 445,698
Marketable securities 174,002 62,322
Deferred income taxes and other assets
32,040 24,826
---------- --------
Total Assets $1,142,791 $899,251
========== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 74,020 $ 57,934
Accrued expenses, accrued compensation
and other current liabilities 93,358 77,384
---------- --------
Total current liabilities 167,378 135,318
Deferred rent and other liabilities 121,982 88,650
---------- --------
Total Liabilities 289,360 223,968
---------- --------
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized, none
issued -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
166,104,615 and 164,987,463 issued
and outstanding, respectively 17 17
Additional paid-in capital 144,204 128,586
Retained earnings 701,975 542,396
Accumulated other comprehensive income 7,235 4,284
---------- --------
Total Shareholders' Equity 853,431 675,283
---------- --------
Total Liabilities and Shareholders'
Equity $1,142,791 $899,251
========== ========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Fiscal Year Ended
------------------------
2008 2007
--------- ---------
Cash flows from operating activities:
Net income $ 160,231 $ 116,206
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 70,017 55,713
Provision for deferred income
taxes (6,561) (4,959)
Excess tax benefits from
stock-based compensation (7,341) (5,394)
Stock-based compensation expense 3,277 3,497
Loss on disposition of property
and equipment, net 317 1,393
Changes in assets and liabilities:
Increase in receivables (5,462) (6,371)
Increase in inventories (17,430) (13,416)
(Increase) decrease in prepaid
expenses and other assets (18,662) 6,848
Increase in payables, accrued
expenses and other liabilities 75,967 33,600
--------- ---------
Net cash provided by operating
activities 254,353 187,117
--------- ---------
Cash flows from investing activities:
Cash paid for property and equipment (115,370) (212,029)
Cash paid for marketable securities (293,633) (182,653)
Sales and maturities of marketable
securities 220,101 193,274
--------- ---------
Net cash used in investing activities (188,902) (201,408)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 5,000 6,351
Excess tax benefits from stock-
based compensation 7,341 5,394
Share repurchases -- (20,801)
--------- ---------
Net cash provided by (used in)
financing activities 12,341 (9,056)
--------- ---------
Effect of exchange rate changes on
cash and cash equivalents 212 702
--------- ---------
Increase (decrease) in cash and cash
equivalents 78,004 (22,645)
Cash and cash equivalents at beginning
of period 27,267 49,912
--------- ---------
Cash and cash equivalents at end of
period $ 105,271 $ 27,267
========= =========
CONTACT: Urban Outfitters, Inc. John Kyees, Chief Financial Officer
(215) 454-5500
