• URBN Reports Record Q2 Sales and EPS

    Source: Nasdaq GlobeNewswire / 21 Aug 2018 16:05:12   America/New_York

    PHILADELPHIA, Aug. 21, 2018 (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 $93 million and $134 million for the three and six months ended July 31, 2018, respectively. Earnings per diluted share were $0.84 and $1.22 for the three and six months ended July 31, 2018, respectively.

    Total Company net sales for the three months ended July 31, 2018, increased 13.7% over the same period last year to a record $992 million. Comparable Retail segment net sales increased 13%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable Retail segment net sales increased 17% at Free People, 15% at Urban Outfitters and 11% at the Anthropologie Group. Wholesale segment net sales increased 10%.

    “I’m pleased to announce our teams produced record Q2 sales and earnings per share,” said Richard A. Hayne, Chief Executive Officer. “All three brands delivered double-digit Retail segment ‘comp’ sales and lower markdown rates to drive these results,” finished Mr. Hayne.

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

     Three Months Ended  Six Months Ended 
     July 31,  July 31, 
     2018  2017  2018  2017 
    Net sales by brand               
    Urban Outfitters$379,327  $323,828  $702,005  $608,615 
    Anthropologie Group 401,275   362,449   748,360   673,505 
    Free People 206,413   180,228   387,720   339,735 
    Food and Beverage 5,439   6,426   10,057   12,266 
    Total Company$992,454  $872,931  $1,848,142  $1,634,121 
    Net sales by segment               
    Retail Segment$902,027  $790,628  $1,677,591  $1,480,980 
    Wholesale Segment 90,427   82,303   170,551   153,141 
    Total Company$992,454  $872,931  $1,848,142  $1,634,121 

    For the three and six months ended July 31, 2018, the gross profit rate improved by 180 basis points and 157 basis points versus the prior year’s comparable periods, respectively. The improvement in gross profit rate for both periods was driven by lower markdowns at all three brands and leverage in store occupancy cost due to strong Retail segment comparable net sales. These gains were partially offset by deleverage in delivery expense due in part to the increased penetration of the digital channel.

    As of July 31, 2018, total inventory increased by $10.5 million, or 2.9%, on a year-over-year basis. Comparable Retail segment inventory increased 3% at cost.

    Selling, general and administrative expenses increased by $16.8 million, or 7.6%, and $24.8 million, or 5.6%, during the three and six months ended July 31, 2018, compared to the prior year’s comparable periods, respectively. As a percentage of net sales, selling, general and administrative expenses leveraged 136 basis points and 178 basis points during the three and six months ended July 31, 2018, when compared to the prior year’s comparable periods, respectively. The dollar growth in selling, general and administrative expenses in both periods was primarily due to increased direct selling and marketing expenses to support and drive the increase in Retail segment net sales and higher bonus expense due to the strong Company performance. The leverage in both periods was primarily driven by the net sales growth, continued savings associated with the fiscal 2018 store reorganization project and the current year benefit associated with the nonrecurring store reorganization expenses incurred in the prior year.

    The Company’s effective tax rate for the three months ended July 31, 2018, was 21.7% compared to 35.1% in the prior year period. The effective tax rate for the six months ended July 31, 2018 was 22.3% compared to 37.1% in the prior year period. The decrease in the effective tax rate for the three and six month periods was primarily due to the lower federal statutory rate resulting from the U.S. Tax Cuts and Jobs Act.

    Net income for the three and six months ended July 31, 2018, was $93 million and $134 million, respectively, and earnings per diluted share was $0.84 and $1.22, respectively.

    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 17.9 million common shares were remaining as of July 31, 2018. No shares were repurchased during the six months ended July 31, 2018. During the year ended January 31, 2018, the Company repurchased and subsequently retired 2.1 million common shares for approximately $46 million under this program.

    During the six months ended July 31, 2018, the Company opened a total of seven new locations including: three Free People stores, two Urban Outfitters stores and two Anthropologie Group stores; and closed two locations including: one Urban Outfitters store and one Anthropologie Group store.

    Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 246 Urban Outfitters stores in the United States, Canada, and Europe and websites; 227 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 135 Free People stores in the United States and Canada, catalogs and websites and 10 Food and Beverage restaurants, as of July 31, 2018. Free People and Anthropologie Group wholesale sell their products through approximately 2,100 department and specialty stores worldwide, digital businesses and the Company’s Retail segment.

    A conference call will be held today to discuss second quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/8f7kd45c

    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 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, 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 internet 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.

    (Tables follow)

    Condensed Consolidated Statements of Income
    (amounts in thousands, except share and per share data)
     Three Months Ended  Six Months Ended 
     July 31,  July 31, 
    Net sales$992,454   $872,931   $1,848,142   $1,634,121  
    Cost of sales 636,610    575,588    1,211,638    1,096,998  
      Gross profit 355,844    297,343    636,504    537,123  
    Selling, general and administrative expenses 238,992    222,163    465,756    440,907  
      Income from operations 116,852    75,180    170,748    96,216  
    Other income, net 1,746    1,736    1,826    2,055  
      Income before income taxes 118,598    76,916    172,574    98,271  
    Income tax expense 25,789    27,001    38,505    36,418  
      Net income$92,809   $49,915   $134,069   $61,853  
    Net income per common share:               
      Basic$0.85   $0.44   $1.23   $0.54  
      Diluted$0.84   $0.44   $1.22   $0.54  
    Weighted-average common shares outstanding:               
      Basic 108,831,399    113,500,381    108,663,990    114,865,336  
      Diluted 110,433,840    113,760,647    110,091,586    115,126,977  
    AS A PERCENTAGE OF NET SALES               
    Net sales100.0%  100.0%  100.0%  100.0% 
    Cost of sales64.1%  65.9%  65.6%  67.1% 
      Gross profit35.9%  34.1%  34.4%  32.9% 
    Selling, general and administrative expenses24.1%  25.5%  25.2%  27.0% 
      Income from operations11.8%  8.6%  9.2%  5.9% 
    Other income, net0.1%  0.2%  0.1%  0.1% 
      Income before income taxes11.9%  8.8%  9.3%  6.0% 
    Income tax expense2.5%  3.1%  2.0%  2.2% 
      Net income9.4%  5.7%  7.3%  3.8% 

    Condensed Consolidated Balance Sheets
    (amounts in thousands, except share data)
     July 31,  January 31,  July 31, 
     2018  2018  2017 
    Current assets:           
      Cash and cash equivalents$405,727  $282,220  $276,759 
      Marketable securities 198,166   165,125   110,195 
      Accounts receivable, net of allowance for doubtful accounts
      of $1,613, $1,326 and $592, respectively
     90,646   76,962   75,530 
      Inventory 375,657   351,395   365,176 
      Prepaid expenses and other current assets 131,572   103,055   110,017 
       Total current assets 1,201,768   978,757   937,677 
    Property and equipment, net 807,084   813,768   843,058 
    Marketable securities 45,514   58,688   25,960 
    Deferred income taxes and other assets 104,169   101,567   115,906 
       Total Assets$2,158,535  $1,952,780  $1,922,601 
    Current liabilities:           
      Accounts payable$149,947  $128,246  $159,756 
      Accrued expenses, accrued compensation and other current liabilities 279,991   231,968   210,399 
       Total current liabilities 429,938   360,214   370,155 
    Long-term debt        
    Deferred rent and other liabilities 284,925   291,663   243,633 
      Total Liabilities 714,863   651,877   613,788 
    Shareholders’ equity:           
      Preferred shares; $.0001 par value, 10,000,000 shares authorized,
        none issued
      Common shares; $.0001 par value, 200,000,000 shares authorized,
        108,951,308, 108,248,568 and 111,280,653 issued and outstanding,
    11  11  11 
      Additional paid-in-capital 18,770  684    
      Retained earnings 1,451,492   1,310,859   1,332,145 
      Accumulated other comprehensive loss (26,601)  (10,651)  (23,343)
       Total Shareholders’ Equity 1,443,672   1,300,903   1,308,813 
       Total Liabilities and Shareholders’ Equity$2,158,535  $1,952,780  $1,922,601 


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

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