false 0000912615 0000912615 2021-05-25 2021-05-25

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549 

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 25, 2021 

 

URBAN OUTFITTERS, INC.

(Exact Name of Registrant as Specified in its Charter) 

 

 

Pennsylvania		000-22754		23-2003332
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
5000 South Broad Street, Philadelphia, PA				19112
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code (215) 454-5500

N/A

(Former name or former address, if changed since last report) 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares, par value $.0001 per share		URBN		NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule l2b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

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Item 8.01.	Other Events

On May 25, 2021, Urban Outfitters, Inc. (the “Company”) issued a press release, which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The press release disclosed material non-public information regarding the Company’s operating results for the three months ended April 30, 2021.

 

Item 9.01.	Financial Statements and Exhibits

 

Exhibit No.	Description
99.1	Press Release dated May 25, 2021 – Operating results for the three months ended April 30, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

						URBAN OUTFITTERS, INC.
		Date: May 26, 2021				By:		/s/ Melanie Marein-Efron
								Melanie Marein-Efron
								Chief Financial Officer

 

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Exhibit 99.1

URBAN OUTFITTERS, INC.

First Quarter Results

Philadelphia, PA – May 25, 2021

 

URBN Reports Record Q1 Sales and EPS

PHILADELPHIA, PA, May 25, 2021 – Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of the Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands, today announced net income of $54 million and record first quarter earnings per diluted share of $0.54 for the three months ended April 30, 2021.

Due to the material impact of COVID-19 on our business operations in fiscal 2021, including mandated store closures, this release includes a comparison of fiscal 2022 results to fiscal 2020, in addition to a comparison of fiscal 2022 results to fiscal 2021. Management views the comparison of fiscal 2022 results to fiscal 2020 as the more meaningful measurement of the Company’s business performance.

Sales Results for Fiscal 2022 Compared to Fiscal 2020 and Fiscal 2021

Total Company net sales for the three months ended April 30, 2021, were a record $927 million. Net sales increased 7.3% compared to the three months ended April 30, 2019. Comparable Retail segment net sales increased 10%, driven by strong double-digit growth in digital channel sales, partially offset by negative retail store sales due to reduced store traffic impacted by temporary store closures and occupancy restrictions in Europe and Canada. By brand, comparable Retail segment net sales increased 44% at the Free People Group, 9% at Urban Outfitters and 1% at the Anthropologie Group. Total Retail segment net sales also increased 10%. Wholesale segment net sales decreased 24% due in part to realigning the Free People brand customer base to focus on more regular price selling.

Total Company net sales for the three months ended April 30, 2021, increased 57.6% compared to the three months ended April 30, 2020. Comparable Retail segment net sales increased 51%, driven by strong double-digit growth in both retail store and digital channel sales. By brand, comparable Retail segment net sales increased 77% at the Free People Group, 50% at the Anthropologie Group and 42% at Urban Outfitters. Total Retail segment net sales increased 53%. Wholesale segment net sales increased 196%. Net sales for the three months ended April 30, 2020, were significantly impacted by the COVID-19 pandemic including mandated store closures for all of the Company’s stores and the majority of its wholesale partners.

“The first quarter was one for the record books; record sales, a record low markdown rate, and record earnings per share,” said Richard A. Hayne, Chief Executive Officer. “Strong ‘comps’ were driven by powerful demand and superb execution by all teams.  In May, sales trends have accelerated further which we believe bodes well for second quarter results,” finished Mr. Hayne.

Net sales by brand and segment for the three-month periods were as follows:

 

 

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Operating Results for the Three Months Ended April 30, 2021, Compared to Three Months Ended April 30, 2019

Total Company net sales for the three months ended April 30, 2021 were a record $927 million. Net sales increased 7.3% compared to the three months ended April 30, 2019. Comparable Retail segment net sales increased 10%, driven by strong double-digit growth in digital channel sales, partially offset by negative retail store sales due to reduced store traffic impacted by temporary store closures and occupancy restrictions in Europe and Canada. By brand, comparable Retail segment net sales increased 44% at the Free People Group, 9% at Urban Outfitters and 1% at the Anthropologie Group. Total Retail segment net sales also increased 10%. Wholesale segment net sales decreased 24% due in part to realigning the Free People brand customer base to focus on more regular price selling.

For the three months ended April 30, 2021, the gross profit rate increased to 32.4% from 31.1% in the three months ended April 30, 2019. Gross profit dollars increased 11.7% to $300.7 million from $269.1 million. The increase in gross profit rate was primarily due to record low first quarter merchandise markdown rates in the Retail segment and benefits associated with negotiated rent concessions with landlords and international government assistance programs. All three brands recorded lower merchandise markdown rates with the Urban Outfitters and Free People brands achieving record low first quarter merchandise markdown rates. This was partially offset by an increase in delivery and logistics expenses and lower initial merchandise markups. Delivery and logistics expense deleverage was primarily driven by the increased penetration of the digital channel as well as an increase in home category net sales. Lower initial merchandise markups are primarily due to higher inbound freight and logistics expenses.

As of April 30, 2021, total inventory increased by $69.4 million, or 17.0%, compared to total inventory as of April 30, 2019.  The increase in inventory is due to the improving sales trend as well as ongoing challenges in the supply chain.  Due to extended lead times, we are bringing in product earlier to ensure we can meet our sales demand. As a result, while Retail segment comparable inventory was down 3% as compared to April 30, 2019, the significant increase in inventory in-transit more than offset it.

For the three months ended April 30, 2021, selling, general and administrative expenses decreased by $1.9 million, or 0.8%, compared to the three months ended April 30, 2019, and expressed as a percentage of net sales, decreased to 24.5% from 26.5% in the three months ended April 30, 2019. The leverage in selling, general and administrative expenses as a rate to sales and decrease in dollars was primarily related to disciplined store payroll management and overall expense control. This was partially offset by an increase in digital marketing expenses during the quarter to support the strong digital sales and customer growth.

The Company’s effective tax rate for the three months ended April 30, 2021, was 27.0% compared to 23.7% in the three months ended April 30, 2019. The increase in the effective tax rate for the three months ended April 30, 2021, was primarily due to the ratio of foreign taxable losses to global taxable profits and a lower benefit of equity activity compared to the three months ended April 30, 2019.

Net income for the three months ended April 30, 2021, was $54 million and record first quarter earnings per diluted share was $0.54.

Operating Results for the Three Months Ended April 30, 2021, Compared to Three Months Ended April 30, 2020

Total Company net sales for the three months ended April 30, 2021, increased 57.6% compared to the three months ended April 30, 2020. Comparable Retail segment net sales increased 51%, driven by strong double-digit growth in both retail store and digital channel sales. By brand, comparable Retail segment net sales increased 77% at the Free People Group,

 

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50% at the Anthropologie Group and 42% at Urban Outfitters. Total Retail segment net sales increased 53%. Wholesale segment net sales increased 196%. Net sales for the three months ended April 30, 2020, were significantly impacted by the COVID-19 pandemic including mandated store closures for all of the Company’s stores and the majority of its wholesale partners.

For the three months ended April 30, 2021, the gross profit rate increased to 32.4% from 2.0% in the prior year’s comparable period. Gross profit dollars increased by $288.8 million to $300.7 million from $11.8 million in the prior year’s comparable period. The increase in gross profit rate was due to the negative impacts the COVID-19 mandated store closures had on the Company’s Retail segment and its partners in the Wholesale segment in the prior year quarter. The mandated store closures resulted in a significant deleverage in store occupancy and an increase in merchandise markdowns in the prior year quarter. The Company also recorded a meaningful increase in inventory obsolescence reserves in the prior year quarter due to the impact the store closures had on the aging of the Company’s inventory. Finally, during the prior year quarter the Company recorded a $14.5 million store impairment charge.

As of April 30, 2021, total inventory increased by $142.1 million, or 42.3%, on a year-over-year basis. During the three months ended April 30, 2020, the Company cancelled or delayed many orders to reduce inventory levels as a result of the significant impacts the COVID-19 pandemic was having on its operations, particularly with the mandated store closures, and recorded a meaningful increase in inventory obsolescence reserves.

For the three months ended April 30, 2021, selling, general and administrative expenses increased by $16.6 million, or 7.9%, compared to the prior year’s comparable period and expressed as a percentage of net sales, decreased to 24.5% from 35.8% in the prior year’s comparable period. The leverage in selling, general and administrative expenses for the three months ended April 30, 2021, was primarily related to leverage in store and field management expense due to the Company continuing to employ and pay a large portion of regional and store management teams despite store closures and reduced sales related to the COVID-19 pandemic in the prior year quarter. Additionally, in the prior year quarter the Company recorded a significant increase in allowance for doubtful accounts reserves for wholesale customer accounts receivables as a result of the significant disruption and uncertainty in the wholesale macro environment due to the COVID-19 pandemic.

The Company’s effective tax rate for the three months ended April 30, 2021, was an expense of 27.0% compared to a benefit of 30.3% in the prior year period.

Net income for the three months ended April 30, 2021, was $54 million and record first quarter earnings per diluted share was $0.54.

Other Information

On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the three months ended April 30, 2021, the Company did not repurchase any shares. During the year ended January 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately $7 million. These shares were repurchased prior to the known spread of the COVID-19 pandemic in the United States that forced the Company to close its stores for an extended period of time. As of April 30, 2021, 25.9 million common shares were remaining under the programs.

During the three months ended April 30, 2021, the Company opened a total of twelve new retail locations including: six Free People Group stores (including one FP Movement store), four Urban Outfitters stores and two Anthropologie Group stores; and closed two Free People Group stores and one Anthropologie Group store. During the three months ended April 30, 2021, no franchisee-owned stores were opened or closed.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 251 Urban Outfitters stores in the United States, Canada and Europe and websites; 238 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 153 Free People Group stores in the United States, Canada and Europe, catalogs and websites, 11 Menus & Venues restaurants and 1 Urban Outfitters franchisee-owned store, as of April 30, 2021. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores worldwide, digital businesses and the Company’s Retail segment.

A conference call will be held today to discuss first quarter results and will be webcast at 5:30 pm. ET at: https://edge.media-server.com/mmc/p/jq8yytc5

 

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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 contain forward-looking statements. When used in this release, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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 impacts of public health crises such as the coronavirus (COVID-19) pandemic, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, 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, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, increases in labor costs, increases in raw material costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new store concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs, border adjustment taxes or increases in duties or quotas), the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our 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.

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(Tables follow)

 

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URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Operations

(amounts in thousands, except share and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 

 

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URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)