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Urban Outfitters Reports Record Earnings - a 45% Increase in Fourth Quarter Net Income
PHILADELPHIA--(BUSINESS WIRE)--March 13, 2003--Richard A. Hayne, Chairman of the Board and President of Urban Outfitters, Inc. (NASDAQ:URBN), today announced sales and earnings for the fourth quarter and the fiscal year ended on January 31, 2003.
Net income for the quarter increased by 45% to $8.4 million or $0.42 per diluted share versus $5.8 million or $0.33 per diluted share for the comparable quarter last year. Net income for the twelve months ended January 31, 2003 increased by 83% to $27.4 million or $1.41 per diluted share versus $15.0 million or $0.86 per diluted share for the comparable twelve months last year.
Net sales for the quarter totaled $117.6 million, a 13% increase compared to the same quarter last year. Of the $13.7 million increase, $11.4 million resulted from sales at noncomparable and new stores. Comparable store sales increased $1.2 million or 1% versus an 8% increase last year. Comparable store sales were up 4% at Urban Retail and were down 3% at Anthropologie Retail, as compared to increases of 3% and 17%, respectively, for the prior year. Direct-to-consumer sales increased $1.5 million or 18% for the quarter. Free People sales during the quarter decreased $0.4 million or 12%.
Net sales for the twelve months ended January 31, 2003, increased by 21% to $422.8 million from $349.0 million for the comparable twelve months last year. Over half of the $73.8 million increase resulted from sales at noncomparable and new stores. Comparable store sales increased $25.7 million or 9%: a 7% increase at Urban Retail and a 12% increase at Anthropologie Retail. Direct-to-consumer sales increased $6.9 million or 28%. Free People sales were flat for the twelve months.
"We are very pleased to have delivered an 83% increase in bottom line performance last year. All aspects of the income statement improved - sales were up nicely, margins improved significantly and expenses leveraged," said Mr. Hayne.
"We are pleased, but not complacent," Mr. Hayne continued, "We have a lot of room to post even better results this year. Our goal is to produce modest single digit 'comps' this year following last year's 9% gain. We expect most of the increase to come in the second half of the year."
Net sales were as follows:
Three months ended Twelve months ended
January 31, January 31,
(in thousands) (in thousands)
2003 2002 2003 2002
--------- --------- --------- ---------
Urban Outfitters store sales $59,400 $53,530 $213,990 $184,998
Anthropologie store sales 46,160 39,421 158,737 120,878
Direct-to-consumer sales 9,373 7,923 31,747 24,815
Free People sales 2,640 2,996 18,280 18,267
--------- --------- --------- ---------
Total net sales $117,573 $103,870 $422,754 $348,958
========= ========= ========= =========
During the fiscal year, the Company opened thirteen new retail stores: eight Anthropologie stores, four Urban Outfitters stores and the first Free People store.
Gross profit margins increased to 37.2% of net sales in the fourth quarter of fiscal 2003 versus 33.6% in last year's comparable period. For the full fiscal year, gross profit increased to 35.7% of net sales compared to 32.6% for the twelve months in fiscal 2002. For both the quarter and the year, initial margins improved, markdowns decreased and the rate of shrinkage abated. Total inventories at January 31, 2003 increased by 19%. Comparable store inventories increased by 6%, in line with the Company's plan. As of year end, total Company inventory was more current than the previous year.
Selling, general and administrative expenses, expressed as a percentage of net sales, increased to 25.6% for the fourth quarter of fiscal 2003 versus 24.3% for the fourth quarter of fiscal 2002. This increase was due to the timing impact of more new store openings and start-up costs of the new Free People retail store, as well as increased marketing costs related to the Direct businesses. Selling, general and administrative expenses, expressed as a percentage of net sales, decreased to 25.0% for the twelve months of fiscal 2003 versus
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25.3% for the twelve months of fiscal 2002. Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 53 Urban Retail stores in the United States, Canada, and Europe; an Urban catalog and web site (www.urbn.com); 39 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. The wholesale division sells its products under two labels: Free People and bdg.
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: www.companyboardroom.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 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 Twelve Months Ended
January 31, January 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $117,573 $103,870 $422,754 $348,958
Cost of sales,
including certain
buying, distribution
and occupancy costs 73,883 68,971 271,963 235,311
----------- ----------- ----------- -----------
Gross profit 43,690 34,899 150,791 113,647
Selling, general and
administrative
expenses 30,099 25,265 105,392 88,149
----------- ----------- ----------- -----------
Income from
operations 13,591 9,634 45,399 25,498
Other income (expense),
net 489 65 674 (276)
----------- ----------- ----------- -----------
Income before
income taxes 14,080 9,699 46,073 25,222
Income tax expense 5,703 3,928 18,660 10,215
----------- ----------- ----------- -----------
Net income $8,377 $5,771 $27,413 $15,007
=========== =========== =========== ===========
Net income per common
share:
Basic $0.43 $0.33 $1.45 $0.87
=========== =========== =========== ===========
Diluted $0.42 $0.33 $1.41 $0.86
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 19,351,426 17,295,714 18,888,228 17,268,615
=========== =========== =========== ===========
Diluted 19,745,653 17,737,070 19,388,452 17,438,457
=========== =========== =========== ===========
PERCENT OF NET SALES
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales,
including certain
buying, distribution
and occupancy costs 62.8 66.4 64.3 67.4
----------- ----------- ----------- -----------
Gross profit 37.2 33.6 35.7 32.6
Selling, general and
administrative
expenses 25.6 24.3 25.0 25.3
----------- ----------- ----------- -----------
Income from
operations 11.6 9.3 10.7 7.3
Other income (expense),
net 0.4 -- 0.2 (0.1)
----------- ----------- ----------- -----------
Income before
income taxes 12.0 9.3 10.9 7.2
Income tax expense 4.9 3.8 4.4 2.9
----------- ----------- ----------- -----------
Net income 7.1% 5.5% 6.5% 4.3%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
January 31,
2003 2002
Assets ---- ----
Current assets:
Cash and cash equivalents $72,127 $28,251
Marketable securities 7,379 32
Accounts receivable, net of allowance for
doubtful accounts of $563 and $562,
respectively 3,262 4,129
Inventories 48,825 41,086
Prepaid expenses and other current assets 8,633 5,870
Deferred taxes 4,358 2,781
--------- ---------
Total current assets 144,584 82,149
Property and equipment, net 108,847 105,505
Marketable securities 15,640 --
Deferred taxes and other assets 8,925 7,448
--------- ---------
$277,996 $195,102
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $19,186 $20,838
Accrued compensation 5,197 3,928
Accrued expenses and other current liabilities 18,689 16,064
--------- ---------
Total current liabilities 43,072 40,830
Deferred rent and other liabilities 10,539 8,384
--------- ---------
Total liabilities 53,611 49,214
--------- ---------
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, 19,381,636 and 17,352,886
issued and outstanding, respectively 2 2
Additional paid-in capital 67,162 17,872
Retained earnings 156,529 129,116
Accumulated other comprehensive income (loss) 692 (1,102)
--------- ---------
Total shareholders' equity 224,385 145,888
--------- ---------
$277,996 $195,102
========= =========
URBAN OUTFITTERS, INC.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Fiscal Year Ended
January 31,
2003 2002
---- ----
Cash flows from operating activities:
Net income $27,413 $15,007
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18,208 15,462
Provision for deferred income taxes (3,079) (1,274)
Tax benefit of stock option exercises 2,247 323
Reserve for bad debts 1 62
Changes in assets and liabilities:
Decrease (increase) in receivables 886 (753)
Increase in inventories (7,554) (6,348)
(Increase) decrease in prepaid expenses and
other assets (2,718) 1,120
Increase in payables, accrued expenses and
other liabilities 6,386 9,141
-------- --------
Net cash provided by operating activities 41,790 32,740
-------- --------
Cash flows from investing activities:
Capital expenditures (22,247) (22,309)
Purchases of marketable securities (43,585) --
Sales and maturities of marketable securities 20,230 307
-------- --------
Net cash used in investing activities (45,602) (22,002)
-------- --------
Cash flows from financing activities:
Exercise of stock options 5,496 1,281
Issuance of common shares, net of issuance costs 41,546 --
-------- --------
Net cash provided by financing activities 47,042 1,281
-------- --------
Effect of exchange rate changes on cash and cash
equivalents 646 (54)
-------- --------
Increase in cash and cash equivalents 43,876 11,965
Cash and cash equivalents at beginning of period 28,251 16,286
-------- --------
Cash and cash equivalents at end of period $72,127 $28,251
======== ========
--30--DES/ph*
| CONTACT: | Urban Outfitters, Inc. |
|---|---|
| Stephen A. Feldman, 215/564-2313 | |
