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Urban Outfitters Reports Record Q4 Sales and Earnings
PHILADELPHIA, March 8, 2007 (PRIME NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced earnings of $35.7 million and $116.2 million for the quarter and year ended January 31, 2007, respectively. Earnings per diluted share were $0.21 for the quarter and $0.69 for the year.
As stated in the Company's previous sales release on February 6, 2007, total sales for the fourth quarter increased 13% to a record $360.8 million. Comparable store sales at Urban Outfitters and Anthropologie were down 4% and 7%, respectively and increased 4% at our Free People stores. Total Company comparable store sales decreased 5% versus a combined 8% increase during the same quarter last year. Direct-to-consumer sales rose 23% and Free People Wholesale sales jumped 29% for the quarter.
Sales for the year ended January 31, 2007 increased 12%, to a record $1.22 billion. Total comparable store sales for the period decreased by 6% versus an 11% increase last year. Direct-to-consumer sales rose by 18% while Free People Wholesale sales surged 39%.
"We have seen steady improvement in the reaction to our fashion offerings over the past few months," stated Richard A. Hayne, Chairman and President. "Both the Anthropologie and Free People brands delivered positive 'comp' store sales for the month of February and since we will anniversary negative 'comps' each quarter this fiscal year, we feel guardedly optimistic about achieving our modest sales plans for the year," finished Mr. Hayne.
Net sales for the periods were as follows:
Quarter ended Year ended
January 31, January 31,
2007 2006 2007 2006
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters
store sales $161,615 $144,205 $ 547,847 $ 508,106
Anthropologie
store sales 125,424 115,837 439,185 395,157
Direct-to-
consumer sales 52,638 42,665 153,712 130,581
Free People sales 21,119 15,882 83,973 58,263
-------- -------- ---------- ----------
Total net sales $360,796 $318,589 $1,224,717 $1,092,107
======== ======== ========== ==========
For the quarter and year ended January 31, 2007, gross profit margins decreased by 281 basis points and 418 basis points, respectively, versus the prior year's comparable periods. For both periods, these reductions were primarily due to additional markdowns and price adjustments to clear seasonal inventory, a higher rate of fixed store occupancy expense due to 'comp' store sales decreases and adjustments to inventory related valuation reserves.
As of January 31, 2007, total Company inventories grew by $14.0 million or 10.0% on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Total comparable store inventories fell by 2.9%.
For the quarter and year ended January 31, 2007, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 38 and 145 basis points, respectively, versus the same periods last year. The increase was primarily caused by the effect of 'comp' store sales declines on store related expenses.
The Company's annual effective tax rate improved to 31.7% from 38.4% based upon receipt of certification for work performed on the development of its new offices that qualifies for certain one-time federal tax incentives; the execution of certain reorganization efforts and the relief of valuation allowances related to foreign net operating loss carry-forwards. The Company believes it will receive an additional one-time benefit in FY08 from its office relocation work and on-going benefits in FY08 and future years from its tax planning efforts.
During the year ended January 31, 2007, the Company opened 14 new Anthropologie stores, 2 new Free People stores, and 16 new Urban Outfitters stores, or 32 new stores in total. The Company plans to open at least 38 new stores during the current fiscal year.
In three personnel notices, the Company announced today that the Board of Directors, at the Chairman's recommendation, is expected to elect Glen Senk to a newly created position of Chief Executive Officer at its regularly scheduled Board meeting on May 22, 2007. If elected, Mr. Senk would oversee each of the three existing Brands and the corporate shared services functions. Mr. Hayne, the current Chairman and President, would retain his titles and would oversee Board related matters, set strategic goals and objectives in consultation with the CEO and with the approval of the Board of Directors, and would oversee the launch of new concepts. Finally, the Company announced the promotion of Meg Hayne from interim Managing Director to President of the Free People brand.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 106 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 93 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 8 Free People stores, a web site and catalog as of January 31, 2007.
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://ir.urbanoutfittersinc.com/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1484340
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,
----------- -----------
2007 2006 2007 2006
---- ---- ---- ----
Net sales $360,796 $318,589 $1,224,717 $1,092,107
Cost of sales,
including
certain buying,
distribution
and occupancy
costs 228,343 192,687 772,796 643,501
-------- -------- -------- --------
Gross profit 132,453 125,902 451,921 448,606
Selling,
general and
administrative
expenses 84,188 73,105 287,932 240,907
-------- -------- -------- --------
Income from
operations 48,265 52,797 163,989 207,699
Other income,
net 1,642 1,587 6,169 4,698
-------- -------- -------- --------
Income before
income taxes 49,907 54,384 170,158 212,397
Income tax
expense 14,176 18,791 53,952 81,601
-------- -------- -------- --------
Net income $ 35,731 $ 35,593 $116,206 $130,796
======== ======== ======== ========
Net income per
common share:
Basic $ 0.22 $ 0.22 $ 0.71 $ 0.80
======== ======== ======== ========
Diluted $ 0.21 $ 0.21 $ 0.69 $ 0.77
======== ======== ======== ========
Weighted average common
shares and common
share equivalents
outstanding:
Basic 164,440,611 164,314,810 164,679,786 163,717,726
=========== =========== =========== ===========
Diluted 168,585,418 170,481,054 168,652,005 169,936,041
=========== =========== =========== ===========
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 63.3% 60.5% 63.1% 58.9%
------ ------ ------ ------
Gross profit 36.7% 39.5% 36.9% 41.1%
Selling,
general and
administrative
expenses 23.3% 22.9% 23.5% 22.1%
------ ------ ------ ------
Income from
operations 13.4% 16.6% 13.4% 19.0%
Other income,
net 0.4% 0.5% 0.5% 0.4%
------ ------ ------ ------
Income before
income taxes 13.8% 17.1% 13.9% 19.4%
Income tax
expense 3.9% 5.9% 4.4% 7.5%
------ ------ ------ ------
Net income 9.9% 11.2% 9.5% 11.9%
====== ====== ====== ======
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
January 31,
-----------
2007 2006
---- ----
Assets
Current assets:
Cash and cash equivalents $ 27,267 $ 49,912
Marketable securities 132,011 141,883
Accounts receivable, net of
allowance for doubtful accounts
of $849 and $445, respectively 20,871 14,324
Inventories 154,387 140,377
Other current assets 31,869 38,687
-------- --------
Total current assets 366,405 385,183
Property and equipment, net 445,698 299,291
Marketable securities 62,322 64,748
Deferred income taxes and other
assets 24,826 19,983
-------- --------
$899,251 $769,205
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 57,934 $ 41,291
Other current liabilities 77,384 92,217
-------- --------
Total current liabilities 135,318 133,508
Deferred rent 88,650 74,817
-------- --------
Total liabilities 223,968 208,325
-------- --------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized; none issued -- --
Common shares; $.0001 par value,
200,000,000 shares authorized;
164,987,463 and 164,831,477
issued and outstanding, respectively 17 16
Additional paid-in capital 128,586 134,146
Retained earnings 542,396 426,190
Accumulated other comprehensive income 4,284 528
-------- --------
Total shareholders' equity 675,283 560,880
-------- --------
$899,251 $769,205
======== ========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Fiscal Year Ended January 31,
-----------------------------
2007 2006
---- ----
Cash flows from operating activities:
Net income $ 116,206 $ 130,796
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 55,713 39,340
Excess tax benefits from stock
based compensation (5,040) 13,399
Stock-based compensation expense 3,498 1,153
Loss (gain) on disposition of
property and equipment, net 1,393 (631)
Changes in assets and liabilities:
Increase in accounts receivable (6,371) (6,002)
Increase in inventories (13,416) (41,597)
Decrease (increase) in prepaid
expenses and other assets 2,214 (21,071)
Increase in accounts payable,
accrued expenses and other
liabilities 42,630 33,804
--------- ---------
Net cash provided by operating
activities 196,827 149,191
--------- ---------
Cash flows from investing activities:
Cash paid for property and equipment (221,385) (127,730)
Proceeds from disposition of property
and equipment -- 3,769
Purchases of marketable securities (182,653) (416,018)
Sales and maturities of marketable
securities 193,274 396,304
--------- ---------
Net cash used in investing activities (210,764) (143,675)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 6,351 15,230
Excess tax benefits from stock-based
compensation 5,040 --
Share Repurchases (20,801) --
--------- ---------
Net cash (used in) provided by
financing activities (9,410) 15,230
--------- ---------
Effect of exchange rate changes on
cash and cash equivalents 702 (565)
--------- ---------
Increase (decrease) in cash and cash
equivalents (22,645) 20,181
Cash and cash equivalents at beginning
of period 49,912 29,731
--------- ---------
Cash and cash equivalents at end of
period $ 27,267 $ 49,912
========= =========
CONTACT: Urban Outfitters, Inc.
John E. Kyees, Chief Financial Officer
(215) 454-5500
