• URBN Reports Record Q1 Sales

    Source: Nasdaq GlobeNewswire / 21 May 2019 16:11:30   America/New_York

    PHILADELPHIA, May 21, 2019 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands and the Food and Beverage division, today announced net income of $33 million and earnings per diluted share of $0.31 for the three months ended April 30, 2019.

    Total Company net sales for the three months ended April 30, 2019, increased 1.0% over the same period last year to a record $864 million. Comparable Retail segment net sales increased 1%, driven by double-digit growth in the digital channel, partially offset by negative retail store sales. By brand, comparable Retail segment net sales increased 2% at Free People, 1% at the Anthropologie Group and were flat at Urban Outfitters. Wholesale segment net sales increased 2%.

    “We are pleased to announce record first quarter sales,” said Richard A. Hayne, Chief Executive Officer. “Our sales growth was driven by our seventh straight quarter of positive Retail segment ‘comps’ as well as continued growth in our Wholesale segment,” finished Mr. Hayne.

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

     Three Months Ended 
     April 30, 
     2019  2018 
    Net sales by brand       
    Anthropologie Group$354,988  $347,085 
    Urban Outfitters 316,806   322,678 
    Free People 186,191   181,307 
    Food and Beverage 6,428   4,618 
    Total Company$864,413  $855,688 
    Net sales by segment       
    Retail Segment$782,563  $775,564 
    Wholesale Segment 81,850   80,124 
    Total Company$864,413  $855,688 

    For the three months ended April 30, 2019, the gross profit rate decreased by 167 basis points versus the prior year’s comparable period. The decrease in total company gross profit rate was driven by lower gross profit in the Retail segment while gross profit in the Wholesale segment increased. The decrease in Retail segment gross profit rate was driven by higher markdowns and deleverage in delivery and logistics expenses. The higher markdowns were largely driven by underperforming women’s apparel at the Anthropologie and Urban Outfitters brands. The deleverage in delivery and logistics expenses is primarily due to the increase in penetration of the digital channel. The benefit or leverage in store occupancy due to the increased penetration of the digital channel was more than offset by negative store comparable net sales resulting in store occupancy deleverage on a Retail segment basis. The improvement in Wholesale segment gross profit rate was due to a higher penetration of sales to full price customers versus closeout customers.

    As of April 30, 2019, total inventory increased by $3.7 million, or 0.9%, on a year-over-year basis. Comparable Retail segment inventory increased 1% at cost.

    Selling, general and administrative expenses increased by $2.3 million, or 1.0%, during the three months ended April 30, 2019, compared to the prior year’s comparable period. As a percentage of net sales, selling, general and administrative expenses were flat when compared to the prior year’s comparable period. The dollar growth in selling, general and administrative expenses was partially due to increased marketing expenses used to support the digital channel sales growth.

    The Company’s effective tax rate for the three months ended April 30, 2019, was 23.7% compared to 23.6% in the prior year period.  The effective tax rate for the three months ended April 30, 2019 was favorably impacted by approximately 140 basis points due to equity activity.

    Net income for the three months ended April 30, 2019, was $33 million and earnings per diluted share was $0.31.

    On February 1, 2019, the Company adopted an accounting standards update that amended the previous accounting standards for lease accounting. The adoption resulted in the recognition of approximately $1.3 billion of lease liabilities and corresponding right-of-use assets of approximately $1.1 billion, with the offsetting balance representing a reduction in the previously recognized deferred rent balance. The adoption did not result in a material impact on the Company’s Condensed Consolidated Statements of Income.

    On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program, of which 12.0 million common shares were remaining as of April 30, 2019. During the three months ended April 30, 2019, the Company repurchased and subsequently retired 2.4 million common shares for approximately $71 million under this program. During the year ended January 31, 2019, the Company repurchased and subsequently retired 3.5 million common shares for approximately $121 million under this program.

    During the three months ended April 30, 2019, the Company opened a total of four new retail locations including: two Anthropologie Group stores and two Free People stores; and closed three retail locations including: one Anthropologie Group store, one Free People store and one Food and Beverage restaurant. During the three months ended April 30, 2019, one Anthropologie Group franchisee-owned store was opened.

    Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 245 Urban Outfitters stores in the United States, Canada and Europe and websites; 228 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 136 Free People stores in the United States, Canada and Europe, catalogs and websites, 12 Food and Beverage restaurants, 4 Urban Outfitters franchisee-owned stores, 1 Anthropologie Group franchisee-owned store and 1 Free People franchisee-owned store, as of April 30, 2019. Free People, Anthropologie Group and Urban Outfitters wholesale sell their products through approximately 2,200 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 5:15 pm. ET at: https://edge.media-server.com/m6/p/3djbdqhv

    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. 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 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 worldwide political events and the resultant impact on consumer spending patterns, the effects of the implementation of the United Kingdom's referendum to withdraw membership from 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 or severe or unseasonable weather conditions, 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, the departure of one or more key senior executives, import risks, 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, risks associated with digital sales, our ability to maintain and expand our digital sales channels, response to new store concepts, our ability to integrate acquisitions, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate, the impact of the U.S. Tax Cuts and Jobs Act, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in the Company’s 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.

    Condensed Consolidated Statements of Income
    (amounts in thousands, except share and per share data)

     Three Months Ended 
     April 30, 
     2019  2018 
    Net sales$864,413   $855,688  
    Cost of sales 595,357    575,028  
    Gross profit 269,056    280,660  
    Selling, general and administrative expenses 229,036    226,764  
    Income from operations 40,020    53,896  
    Other income, net 2,680    80  
    Income before income taxes 42,700    53,976  
    Income tax expense 10,115    12,716  
    Net income$32,585   $41,260  
    Net income per common share:       
    Basic$0.31   $0.38  
    Diluted$0.31   $0.38  
    Weighted-average common shares outstanding:       
    Basic 104,437,460    108,490,926  
    Diluted 105,340,148    109,743,677  
    Net sales100.0%  100.0% 
    Cost of sales68.9%  67.2% 
    Gross profit31.1%  32.8% 
    Selling, general and administrative expenses26.5%  26.5% 
    Income from operations4.6%  6.3% 
    Other income, net0.3%  0.0% 
    Income before income taxes4.9%  6.3% 
    Income tax expense1.1%  1.5% 
    Net income3.8%  4.8% 

    Condensed Consolidated Balance Sheets
    (amounts in thousands, except share data)

     April 30,  January 31,  April 30, 
     2019  2019  2018 
    Current assets:           
    Cash and cash equivalents$291,199  $358,260  $313,713 
    Marketable securities 229,163   279,232   166,367 
    Accounts receivable, net of allowance for doubtful accounts of $892, $1,499 and $1,895, respectively 88,390   80,461   88,936 
    Inventory 408,362   370,507   404,617 
    Prepaid expenses and other current assets 122,183   114,296   123,505 
    Total current assets 1,139,297   1,202,756   1,097,138 
    Property and equipment, net 829,072   796,029   819,725 
    Operating lease right-of-use assets 1,088,290       
    Marketable securities 93,894   57,292   35,079 
    Deferred income taxes and other assets 101,267   104,438   99,273 
    Total Assets$3,251,820  $2,160,515  $2,051,215 
    Current liabilities:           
    Accounts payable$174,258  $144,414  $158,870 
    Current portion of operating lease liabilities 214,443       
    Accrued expenses, accrued compensation and other current liabilities 259,478   242,230   256,221 
    Total current liabilities 648,179   386,644   415,091 
    Non-current portion of operating lease liabilities 1,092,180       
    Deferred rent and other liabilities 63,490   284,773   289,709 
    Total Liabilities 1,803,849   671,417   704,800 
    Shareholders’ equity:           
    Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued        
    Common shares; $.0001 par value, 200,000,000 shares authorized, 103,599,364, 105,642,283 and 108,670,688 issued and outstanding, respectively10  11  11 
    Additional paid-in-capital       6,434 
    Retained earnings 1,478,678   1,516,190   1,358,683 
    Accumulated other comprehensive loss (30,717)  (27,103)  (18,713)
    Total Shareholders’ Equity 1,447,971   1,489,098   1,346,415 
    Total Liabilities and Shareholders’ Equity$3,251,820  $2,160,515  $2,051,215 

     Contact: Oona McCullough
       Director of Investor Relations
       (215) 454-4806

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