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) March 8, 2007
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 St, 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)) |
| Item 2.02. | Results of Operations and Financial Condition |
On March 8, 2007, the Company issued an earnings release, which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The earnings release disclosed material non-public information regarding the Company’s earnings for the quarter and year ended January 31, 2007.
| Item 9.01. | Financial Statements and Exhibits |
| 99.1 | Earnings Release dated March 8, 2007 – Operating results for the quarter and year ended January 31, 2007. |
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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: March 9, 2007 | By: | /s/ John E. Kyees | ||
| John E. Kyees Chief Financial Officer | ||||
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Exhibit Index
| Exhibit No. | Description | |
| EX-99.1 | Earnings Release dated March 8, 2007 – Operating results for the quarter and year ended January 31, 2007. |
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Exhibit 99.1
URBAN OUTFITTERS, INC.
Fourth Quarter and Annual Results
Philadelphia, PA – March 8, 2007
| For Immediate Release | Contact: | John E. Kyees | ||
| Chief Financial Officer | ||||
| (215) 454-5500 |
Urban Outfitters Reports Record Q4 Sales and Earnings
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 January 31, |
Year ended 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.
###
(Tables follow)
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)
| Quarter Ended January 31, |
Fiscal Year Ended 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 | ||||