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Urban Outfitters Earnings Soar 85% in Q3
PHILADELPHIA--(BUSINESS WIRE)--Nov. 11, 2004--Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle consumer products company doing business under the Anthropologie, Free People and Urban Outfitters brands, today announced record earnings of $26.0 million for the third quarter ended October 31, 2004, an 85% increase over the comparable quarter last year. Third quarter earnings per diluted share rose to $0.31 this year versus $0.17 in the prior year.
As reported earlier, net sales for the quarter grew by 52% to a record $216.4 million. This increase over the prior year was fueled by:
- A 37% expansion in the number of stores in operation;
- An 18% jump in total Company comparable store sales;
- An 85% spike in Direct-to-consumer sales; and
- A 58% gain in Wholesale sales
For the quarter, comparable store sales at Anthropologie, Free People and Urban Outfitters rose by 22%, 48% and 15%, respectively, for a combined 18% increase. This improvement followed a 17% combined 'comp' store sales increase for the same quarter last year. For the nine months ended October 31, 2004, total Company comparable store sales jumped by 25%, and total Company sales increased to a record $576.1 million, a 55% increase over the comparable period last year.
"All of our Brands and all of our channels of distribution produced truly outstanding results during the quarter. Store sales remained strong across all regions; Direct sales continue to surge ahead and the Free People business is explosive. I am especially pleased that we delivered a 20% operating margin for the quarter," said Richard A. Hayne, Chairman and President; adding, "Our performance thus far this year is testament to the strength of our Brands, the validity of our business strategies and the ability of our teams to deliver the products and the experiences our customers want."
Net sales for the periods were as follows:
Three months ended Nine months ended
October 31, October 31,
2004 2003 2004 2003
--------- --------- --------- ---------
(in thousands) (in thousands)
Urban Outfitters store sales $102,723 $71,290 $272,130 $184,149
Anthropologie store sales 81,467 52,865 221,807 141,693
Direct-to-consumer sales 23,505 12,690 60,479 31,421
Free People sales 8,658 5,486 21,711 14,975
--------- --------- --------- ---------
Total net sales $216,353 $142,331 $576,127 $372,238
========= ========= ========= =========
For the quarter and the nine months, the Company's gross profit margins increased by 235 and 365 basis points, respectively, versus the comparable prior year periods. These gains were due primarily to higher initial merchandise margins, decreased markdowns and the leveraging of occupancy and merchandise buying related expenses.
As of October 31, 2004, total Company inventories grew by $40.7 million on a year-over-year basis. This increase was primarily due to the acquisition of inventory to stock new retail stores. On a comparable store basis, inventories grew by 22% versus a 1% decrease in the prior year. This year's increase reflects the earlier receipt of Holiday Season merchandise and a more appropriate level of merchandise which is required to meet the current customer demand. Sales in early November continue to significantly exceed plan, although we expect 'comps' to continue to moderate throughout the fourth quarter of the current fiscal year and the first quarter of next year.
For the quarter and the nine months, selling, general and administrative expenses, expressed as percentages of net sales, decreased by approximately 111 and 135 basis points, respectively, versus the same periods in the prior year. This improvement primarily related to the leveraging of store-related expenses including direct labor, store management and support.
During the nine months ended October 31, 2004, the Company opened 20 new stores - 10 Anthropologie stores and 10 Urban Outfitters stores. Management plans to open at least 6 additional new stores, including one additional Free People store, during the remainder of Fiscal 2005.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler that offers a variety of lifestyle merchandise to highly defined customer niches through 71 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters web site and catalog; 62 Anthropologie stores in the United States; an Anthropologie catalog and web site; and Free People, the Company's wholesale division, which sells its product to approximately 1,100 specialty stores, department stores and catalogs, as well as through one Free People store and web site as of October 31, 2004.
A conference call will be held today to discuss third quarter results and will be web cast at 11:00 a.m. EST at: http://ir.urbanoutfittersinc.com/ireye/ ir_site.zhtml?ticker=URBN&script=1010&item_id=905406 (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.) Notes of the Company's conference call presentation will be available on: www.urbanoutfittersinc.com.
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 filing 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 BALANCE SHEETS
(amounts in thousands, except share and per share data)
(Unaudited)
October January October
31, 31, 31,
2004 2004 2003
-------- -------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 40,513 $ 67,194 $ 37,396
Marketable securities 46,402 19,979 21,544
Accounts receivable, net of allowance
for doubtful accounts of $911, $651
and $705, respectively 13,635 6,711 6,478
Inventories 112,893 63,247 72,213
Other current assets 26,006 18,704 14,771
-------- -------- --------
Total current assets 239,449 175,835 152,402
Property and equipment, net 148,026 121,919 123,023
Marketable securities 67,099 52,315 48,714
Deferred income taxes and other assets 9,548 9,526 8,863
-------- -------- --------
$464,122 $ 359,595 $ 333,002
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,744 $ 27,353 $ 31,260
Other current liabilities 38,280 30,409 28,004
-------- -------- --------
Total current liabilities 82,024 57,762 59,264
Deferred rent and other liabilities 12,101 11,703 11,190
-------- -------- --------
Total liabilities 94,125 69,465 70,454
-------- -------- --------
Shareholders' equity:
Preferred shares; $.0001 par value,
10,000,000 shares authorized,
none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized;
81,221,292, 79,776,542 and
79,000,144 shares issued and
outstanding, respectively 8 8 8
Additional paid-in capital 104,761 83,279 74,997
Unearned compensation (5,349) -- --
Retained earnings 268,318 204,905 186,476
Accumulated other comprehensive income 2,259 1,938 1,067
-------- -------- --------
Total shareholders' equity 369,997 290,130 262,548
-------- -------- --------
$464,122 $ 359,595 $ 333,002
======== ======== ========
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share and per share data)
(Unaudited)
Three months ended Nine months ended
October 31, October 31,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net sales $ 216,353 $ 142,331 $ 576,127 $ 372,238
Cost of sales,
including certain
buying, distribution
and occupancy costs 124,895 85,520 337,757 231,846
----------- ----------- ----------- -----------
Gross profit 91,458 56,811 238,370 140,392
Selling, general
and administrative
expenses 48,276 33,333 132,672 90,753
----------- ----------- ----------- -----------
Income from
operations 43,182 23,478 105,698 49,639
Other income, net 576 198 878 692
----------- ----------- ----------- -----------
Income before
income taxes 43,758 23,676 106,576 50,331
Income tax expense 17,722 9,589 43,163 20,384
----------- ----------- ----------- -----------
Net income $ 26,036 $ 14,087 $ 63,413 $ 29,947
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.32 $ 0.18 $ 0.79 $ 0.38
=========== =========== =========== ===========
Diluted $ 0.31 $ 0.17 $ 0.76 $ 0.37
=========== =========== =========== ===========
Weighted average
common shares and
common share
equivalents
outstanding:
Basic 81,047,615 78,888,858 80,563,086 78,248,780
=========== =========== =========== ===========
Diluted 84,076,256 81,507,826 83,407,996 80,257,298
=========== =========== =========== ===========
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 coss 57.7% 60.1% 58.7% 62.3%
----------- ----------- ----------- -----------
Gross profit 42.3% 39.9% 41.3% 37.7%
Selling, general
and administrative
expenses 22.3% 23.4% 23.0% 24.4%
----------- ----------- ----------- -----------
Income from
operations 20.0% 16.5% 18.3% 13.3%
Other income, net 0.2% 0.1% 0.2% 0.2%
----------- ----------- ----------- -----------
Income before
income taxes 20.2% 16.6% 18.5% 13.5%
Income tax expense 8.2% 6.7% 7.5% 5.5%
----------- ----------- ----------- -----------
Net income 12.0% 9.9% 11.0% 8.0%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
Nine months ended
October 31,
-------------------
2004 2003
-------- --------
Cash flows from operating activities:
Net income $63,413 $29,947
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,347 16,055
Tax benefit of stock option exercises 10,040 1,945
Stock-based compensation expense 417 --
Changes in assets and liabilities:
Increase in accounts receivable (6,914) (3,213)
Increase in inventories (49,590) (23,355)
Increase in prepaid expenses and other assets (7,309) (1,709)
Increase in accounts payable, deferred rent
and other liabilities 24,627 11,926
-------- --------
Net cash provided by operating activities 55,031 31,596
-------- --------
Cash flows from investing activities:
Capital expenditures (44,755) (24,245)
Purchases of marketable securities (64,143) (74,056)
Sales and maturities of marketable securities 21,323 25,945
-------- --------
Net cash used in investing activities (87,575) (72,356)
-------- --------
Cash flows from financing activities:
Exercise of stock options 5,676 5,896
-------- --------
Net cash provided by financing activities 5,676 5,896
-------- --------
Effect of exchange rate changes on cash and cash
equivalents 187 133
-------- --------
Decrease in cash and cash equivalents (26,681) (34,731)
Cash and cash equivalents at beginning of period 67,194 72,127
-------- --------
Cash and cash equivalents at end of period $40,513 $37,396
======== ========
CONTACT: Urban Outfitters, Inc.
John E. Kyees, 215-564-2313
SOURCE: Urban Outfitters, Inc.
