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Urban Outfitters Reports Q2 Earnings Jump 46%
PHILADELPHIA, Aug 16, 2010 (GlobeNewswire via COMTEX) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands today announced earnings of $72 million and $125 million for the three and six months ended July 31, 2010, respectively. Earnings per diluted share were $0.42 for the quarter and $0.72 for the six months ended July 31, 2010.
Total Company net sales rose by 20% over the same quarter last year to $552 million. Comparable retail segment net sales, which include our direct-to-consumer channels, jumped 11% for the quarter while comparable store net sales increased 7% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 13%, 24%, and 9%, respectively for the quarter. Direct-to-consumer net sales soared 36% and wholesale segment net sales rose 16% for the quarter.
"We are delighted to announce record second quarter sales and earnings, with every brand, channel, region and shared service group delivering exceptional results," said Glen T. Senk, Chief Executive Officer. "Given the context of an uncertain economic environment, the Company continues to focus on superior creative execution combined with disciplined inventory and expense management," finished Mr. Senk.
Net sales by brand and channel for the three and six months were as follows:
Three Months Ended Six Months Ended
July 31 July 31
------------------------- ------------------------
Net sales by brand 2010 2009 2010 2009
------------ ----------- ------------ ----------
Urban Outfitters $ 243,232 $ 211,396 $ 453,737 $ 392,682
Anthropologie 256,353 203,740 481,032 368,346
Free People 46,876 39,177 87,444 74,960
Other 5,698 4,313 9,907 7,434
------------ ----------- ------------ ----------
Total Company $ 552,159 $ 458,626 $ 1,032,120 $ 843,422
============ =========== ============ ==========
Net sales by
channel
Retail Stores $ 425,655 $ 361,789 $ 794,196 $ 661,580
Direct-to-consumer 96,571 70,931 182,838 131,741
------------ ----------- ------------ ----------
Retail Segment 522,226 432,720 977,034 793,321
------------ ----------- ------------ ----------
Wholesale Segment 29,933 25,906 55,086 50,101
------------ ----------- ------------ ----------
Total Company $ 552,159 $ 458,626 $ 1,032,120 $ 843,422
============ =========== ============ ==========
For the three and six months ended July 31, 2010, gross profit margins improved by 173 and 303 basis points, respectively, versus the prior year's comparable periods. The increase in the quarter was primarily due to a lower rate of markdowns to clear seasonal inventories, leveraging of store occupancy expense driven by positive comparable store sales and improvements in initial merchandise margins. The improvements for the six months ended July 31, 2010 were primarily due to improved initial merchandise margins, leveraging of store occupancy expenses and a lower rate of merchandise markdowns.
As of July 31, 2010, inventories grew by $26 million or 12%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 3% at cost.
For the three and six months ended July 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 52 basis points for both periods, versus the comparable periods last year. These decreases were primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the quarter and year to date.
During the three months ended July 31, 2010, the Company's quarterly tax rate decreased to 33.3% from 38.2% in the prior year's comparable quarter. This decrease was due to the favorable impact of foreign operations income as well as a one-time federal rehabilitation credit earned related to our newest building at the company's headquarters at the Navy Yard in Philadelphia, PA. The Company expects the annual effective tax rate to be approximately 35% for the full year.
On February 28, 2006, our Board of Directors approved a stock repurchase program. The program authorizes the Company to purchase up to 8,000,000 shares of our common shares from time-to-time, based upon prevailing market conditions. We purchased 1,220,000 common shares during the fiscal year ended January 31, 2007. During the quarter ended July 31, 2010, the Company repurchased and subsequently retired 2,015,180 common shares for $68 million at an average price of $33.72 per share. As of July 31, 2010, 4,764,820 shares were available under the share repurchase authorization.
During the six months ended July 31, 2010, the Company has opened a total of 16 new stores including: 5 Urban Outfitters stores, 8 Anthropologie stores and 3 Free People stores. As of February 1, 2010, the Company converted one Free People store to a new Free People wholesale showroom. The Company expects to open approximately 45 new stores during the fiscal year.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 160 Urban Outfitters stores in the United States, Canada, and Europe, a catalog and two web sites; 145 Anthropologie stores in the United States, Canada and Europe, a catalog and two websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 36 Free People stores, a catalog and web site; Leifsdottir wholesale, which sells its product to approximately 65 specialty stores and select department stores, Leifsdottir web site and 1 Terrain garden center and web site as of July 31, 2010.
Management second quarter commentary is located on our website at www.urbanoutfittersinc.com. A conference call will be held today to discuss second quarter results and will be web cast at 5:00 pm. EDT at: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=3220834
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)
Three Months Ended Six Months Ended
------------------------ ------------------------
July 31, July 31,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 552,159 $ 458,626 $ 1,032,120 $ 843,422
Cost of sales, including
certain buying,
distribution and occupancy
costs 317,378 271,535 596,553 513,021
----------- ----------- ----------- -----------
Gross profit 234,781 187,091 435,567 330,401
Selling, general and
administrative expenses 127,912 108,650 246,487 205,840
----------- ----------- ----------- -----------
Income from operations 106,869 78,441 189,080 124,561
Other income, net 616 939 1,039 3,030
----------- ----------- ----------- -----------
Income before income
taxes 107,485 79,380 190,119 127,591
Income tax expense 35,828 30,359 65,505 47,765
----------- ----------- ----------- -----------
Net income $ 71,657 $ 49,021 $ 124,614 $ 79,826
=========== =========== =========== ===========
Net income per common
share:
Basic $ 0.42 $ 0.29 $ 0.74 $ 0.48
=========== =========== =========== ===========
Diluted $ 0.42 $ 0.29 $ 0.72 $ 0.47
=========== =========== =========== ===========
Weighted average common
shares and common share
equivalents outstanding:
Basic 168,908,598 167,919,873 168,880,803 167,691,718
=========== =========== =========== ===========
Diluted 172,325,996 170,719,274 172,572,985 170,521,836
=========== =========== =========== ===========
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 57.5% 59.2% 57.8% 60.8%
----------- ----------- ----------- -----------
Gross profit 42.5% 40.8% 42.2% 39.2%
Selling, general and
administrative expenses 23.1% 23.7% 23.9% 24.4%
----------- ----------- ----------- -----------
Income from operations 19.4% 17.1% 18.3% 14.8%
Other income, net 0.1% 0.2% 0.1% 0.4%
----------- ----------- ----------- -----------
Income before income
taxes 19.5% 17.3% 18.4% 15.2%
Income tax expense 6.5% 6.6% 6.3% 5.7%
----------- ----------- ----------- -----------
Net income 13.0% 10.7% 12.1% 9.5%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
January
July 31, 31, July 31,
2010 2010 2009
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 244,954 $ 159,024 $ 152,885
Marketable securities 346,107 342,512 135,875
Accounts receivable, net of
allowance for doubtful
accounts of $1,360, $1,284
and $1,368, respectively 42,474 38,405 32,039
Inventories 243,203 186,130 217,050
Prepaid expenses, deferred
taxes and other current
assets 85,875 80,142 46,005
---------- ---------- ----------
Total current assets 962,613 806,213 583,854
Property and equipment, net 559,945 539,961 528,295
Marketable securities 157,607 243,445 294,519
Deferred income taxes and other
assets 46,902 46,474 38,553
---------- ---------- ----------
Total Assets $1,727,067 $1,636,093 $1,445,221
========== ========== ==========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 92,151 $ 78,041 $ 85,336
Accrued expenses, accrued
compensation and other
current liabilities 106,260 110,508 74,764
---------- ---------- ----------
Total current liabilities 198,411 188,549 160,100
Deferred rent and other
liabilities 155,369 150,769 136,906
---------- ---------- ----------
Total Liabilities 353,780 339,318 297,006
---------- ---------- ----------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par
value, 200,000,000 shares
authorized,
168,100,495,168,558,371 and
168,200,288 issued and
outstanding, respectively 17 17 17
Additional paid-in capital 138,413 184,620 175,839
Retained earnings 1,245,846 1,121,232 981,165
Accumulated other
comprehensive loss (10,989) (9,094) (8,806)
---------- ---------- ----------
Total Shareholders' Equity 1,373,287 1,296,775 1,148,215
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $1,727,067 $1,636,093 $1,445,221
========== ========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Urban Outfitters, Inc.
CONTACT: Urban Outfitters, Inc.
Oona McCullough, Director of Investor Relations
(215) 454-4806
