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Urban Outfitters' Q3 Earnings Jump 31 Percent
As stated in the Company's previous sales release on November 6, 2008, net sales for the third quarter of fiscal 2009 increased to $478 million or 26% over the comparable quarter last year. Comparable ('comp') store sales at Urban Outfitters, Anthropologie and Free People rose 17%, 2% and 4%, respectively, for a combined increase of 10%. Direct-to-consumer sales jumped 41% and Free People wholesale sales climbed 21%.
"We were pleased to announce record profit for the quarter with across-the-board improvements in gross profit, occupancy and SG&A rates, driving a 47% gain in operating margin," said Glen T. Senk, Chief Executive Officer. "The organization executed exceptionally, and we believe our rigorous management of inventory and expenses have positioned the Company appropriately for the Holiday and Spring seasons," finished Mr. Senk.
Net sales for the three and nine month periods were as follows:
Three months ended Nine months ended
October 31, October 31,
------------------ ----------------------
2008 2007 2008 2007
-------- -------- ---------- ----------
(in thousands) (in thousands)
Urban Outfitters stores $208,325 $160,864 $ 557,927 $ 431,703
Anthropologie stores 158,852 139,980 470,063 396,137
Free People stores 9,701 4,900 23,319 10,890
Terrain 1,266 -- 4,491 --
-------- -------- ---------- ----------
Net store sales 378,144 305,744 1,055,800 838,730
-------- -------- ---------- ----------
Direct-to-consumer 65,916 46,777 184,662 132,822
-------- -------- ---------- ----------
Retail segment net
sales 444,060 352,521 1,240,462 971,552
-------- -------- ---------- ----------
Wholesale 33,893 26,799 86,078 70,761
-------- -------- ---------- ----------
Total net sales $477,953 $379,320 $1,326,540 $1,042,313
======== ======== ========== ==========
For the three and nine months ended October 31, 2008, gross profit margins increased by 135 and 309 basis points, respectively, versus the prior year's comparable periods. Leverage of store occupancy costs, reductions in markdowns and improvements in initial merchandise cost helped achieve this growth for both periods.
As of October 31, 2008, inventories grew by $39.6 million or 19%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable store inventories increased by 2%.
For the three and nine months ended October 31, 2008, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 139 and 85 basis points, respectively, versus the comparable periods last year. This rate improvement was led by the control and leveraging of direct store related costs helped by the increase in comparable store net sales.
The Company's third quarter tax rate was 35.4% versus 28.5% in the comparable period last year. Management estimates an annual effective tax rate of 35% for the full fiscal year. The prior year's unusually low annual effective tax rate was primarily impacted by the receipt of one-time federal tax incentives for work performed on the development of our new home offices.
Other income during the quarter was reduced by $2.9 million due to a one-time write-off of a certain auction rate preferred stock investment.
During the nine months ended October 31, 2008 the Company has opened a total of 41 new stores including: 18 new Urban Outfitters stores, 10 new Anthropologie stores, 12 new Free People stores and 1 new Terrain garden center. The Company expects to open approximately 47 new stores during the full fiscal year.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 140 Urban Outfitters stores in the United States, Canada, and Europe, two web sites and a catalog; 118 Anthropologie stores, a web site, catalog and Leifsdottir, Anthropologie's newly launched wholesale concept; Free People Wholesale, which sells its product to approximately 1,700 specialty stores and select department stores; 27 Free People stores, a web-site and catalog; and 1 Terrain garden center as of October 31, 2008.
A conference call will be held today to discuss third quarter results and will be web cast at 11:00 a.m. EST on: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=2004866
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 Nine Months Ended
------------------------ ------------------------
October 31, October 31,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net sales $ 477,953 $ 379,320 $ 1,326,540 $ 1,042,313
Cost of sales,
including
certain buying,
distribution and
occupancy costs 282,557 229,382 785,954 649,733
----------- ----------- ----------- -----------
Gross profit 195,396 149,938 540,586 392,580
Selling, general
and administrative
expenses 105,017 88,611 304,345 247,966
----------- ----------- ----------- -----------
Income from
operations 90,379 61,327 236,241 144,614
Other income, net 1,437 2,151 7,102 5,991
----------- ----------- ----------- -----------
Income before
income taxes 91,816 63,478 243,343 150,605
Income tax expense 32,542 18,096 84,524 43,989
----------- ----------- ----------- -----------
Net income $ 59,274 $ 45,382 $ 158,819 $ 106,616
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.35 $ 0.27 $ 0.95 $ 0.65
=========== =========== =========== ===========
Diluted $ 0.35 $ 0.27 $ 0.93 $ 0.63
=========== =========== =========== ===========
Weighted average
common shares and
common share
equivalents
outstanding:
Basic 167,030,294 165,430,768 166,619,747 165,195,871
=========== =========== =========== ===========
Diluted 171,064,904 169,933,513 171,122,246 169,486,304
=========== =========== =========== ===========
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 59.1% 60.5% 59.2% 62.3%
----------- ----------- ----------- -----------
Gross profit 40.9% 39.5% 40.8% 37.7%
Selling, general
and administrative
expenses 22.0% 23.3% 22.9% 23.8%
----------- ----------- ----------- -----------
Income from
operations 18.9% 16.2% 17.9% 13.9%
Other income
(expense), net 0.3% 0.6% 0.5% 0.6%
----------- ----------- ----------- -----------
Income before
income taxes 19.2% 16.8% 18.4% 14.5%
Income tax expense 6.8% 4.8% 6.4% 4.2%
----------- ----------- ----------- -----------
Net income 12.4% 12.0% 12.0% 10.3%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
October 31, January 31, October 31,
2008 2008 2007
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 71,714 $ 105,271 $ 36,393
Marketable securities 124,435 80,127 154,410
Accounts receivable, net of
allowance for doubtful
accounts of $2,326, $972 and
$1,699, respectively 33,822 26,365 24,879
Inventories 252,308 171,925 212,696
Prepaid expenses, deferred
taxes and other current
assets 64,079 49,922 38,259
---------- ---------- ----------
Total current assets 546,358 433,610 466,637
Property and equipment, net 513,639 488,889 489,434
Marketable securities 228,264 188,252 78,510
Deferred income taxes and
other assets 40,165 32,040 31,621
---------- ---------- ----------
Total Assets $1,328,426 $1,142,791 $1,066,202
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 82,432 $ 74,020 $ 78,845
Accrued expenses, accrued
compensation and other
current liabilities 87,149 93,358 81,303
---------- ---------- ----------
Total current liabilities 169,581 167,378 160,148
Deferred rent and other
liabilities 137,448 121,982 110,410
---------- ---------- ----------
Total Liabilities 307,029 289,360 270,558
---------- ---------- ----------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par
value, 200,000,000 shares
authorized, 167,706,788,
166,104,615 and 165,936,965
issued and outstanding,
respectively 17 17 17
Additional paid-in capital 167,752 144,204 139,637
Retained earnings 860,794 701,975 648,360
Accumulated other
comprehensive income (7,166) 7,235 7,630
---------- ---------- ----------
Total Shareholders' Equity 1,021,397 853,431 795,644
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $1,328,426 $1,142,791 $1,066,202
========== ========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Urban Outfitters, Inc.
Urban Outfitters, Inc.
John Kyees, Chief Financial Officer
(215) 454-5500
