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Urban Outfitters Reports Q3 Earnings Increase 17%
PHILADELPHIA, Nov 15, 2010 (GlobeNewswire via COMTEX) --
Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands today announced earnings of $73 million and $198 million for the three and nine months ended October 31, 2010, respectively. Earnings per diluted share were $0.43 for the quarter and $1.16 for the nine months ended October 31, 2010.
Total Company net sales rose by 13% over the same quarter last year to $574 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 6% for the quarter while comparable store net sales grew 1% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 5%, 29%, and 5%, respectively for the quarter. Direct-to-consumer comparable net sales soared 31% and wholesale segment net sales rose 13% for the quarter.
"We are proud to deliver record third quarter sales and earnings results," said Glen T. Senk, Chief Executive Officer. "In a dynamic environment, the consistency of our performance is a reflection of our team's discipline, creativity, and skill," finished Mr. Senk.
Net sales by brand and channel for the three and nine months were as follows:
Three Months Ended
Nine Months Ended
October 31 October 31
------------------ ----------------------
Net sales by brand 2010 2009 2010 2009
-------- -------- ---------- ----------
Urban Outfitters $265,993 $240,473 $719,730 $633,155
Anthropologie 247,549 216,270 728,581 584,615
Free People 56,108 45,084 143,552 120,045
Other 3,942 4,073 13,849 11,507
-------- -------- ---------- ----------
Total Company $573,592 $505,900 $1,605,712 $1,349,322
======== ======== ========== ==========
Net sales by
channel
Retail Stores $433,425 $395,635 $1,227,621 $1,057,220
Direct-to-consumer 105,670 79,772 288,508 211,508
-------- -------- ---------- ----------
Retail Segment 539,095 475,407 1,516,129 1,268,728
-------- -------- ---------- ----------
Wholesale Segment 34,497 30,493 89,583 80,594
-------- -------- ---------- ----------
Total Company $573,592 $505,900 $1,605,712 $1,349,322
======== ======== ========== ==========
For the three months ended October 31, 2010, gross profit margin declined by 39 basis points versus the prior year's comparable period. This decrease was primarily due to higher shipping costs associated with an increased penetration of international direct-to-consumer business as well as the impact of pre-opening occupancy expense due to the timing of store openings. During the quarter merchandise margins were flat to the prior year comparable period. For the nine months ended October 31, 2010, gross profit margin improved by 176 basis points versus the prior year's comparable period. The increase for the nine month period was primarily due to improved merchandise margins and leveraging of store occupancy expense driven by positive comparable store sales.
As of October 31, 2010, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 8% at cost while total comparable store inventory increased by 1% at cost. Total inventories grew by $55 million or 23%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new retail stores.
For the three months ended October 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 27 basis points. This increase was primarily due to higher fulfillment costs related to the increased penetration of international direct-to-consumer sales, investments in systems and international infrastructure. For the nine months ended October 31, 2010, selling, general and administration expenses, expressed as a percentage of net sales, decreased by 21 basis points versus the prior comparable period. This decrease was primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the nine months ended October 31, 2010.
During the three months ended October 31, 2010, the Company's quarterly tax rate decreased to 30.8% from 36.1% in the prior year's comparable quarter. This decrease was due to the favorable mix of earnings in certain foreign jurisdictions, the current year federal rehabilitation credit and favorable revisions to state tax estimates resulting from tax return filings. The Company expects the annual effective tax rate to be approximately 34% for the full year.
On February 28, 2006, our Board of Directors approved a stock repurchase program. The program authorizes the Company to purchase up to 8,000,000 shares of our common shares from time-to-time, based upon prevailing market conditions. We repurchased 1,220,000 common shares during the fiscal year ended January 31, 2007. During the three months ended October 31, 2010, the Company repurchased 4,273,267 common shares for $133 million at an average price of $31.06 per share. During the nine months ended October 31, 2010 the Company repurchased and subsequently retired 6,288,447 common shares. As of October 31, 2010, 491,553 shares were available under the stock repurchase program.
During the nine months ended October 31, 2010, the Company has opened a total of 29 new stores including: 11 Urban Outfitters stores, 13 Anthropologie stores and 5 Free People stores. As of February 1, 2010, the Company converted one Free People store to a new Free People wholesale showroom. The Company expects to open approximately 45 new stores during the fiscal year.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 166 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and two web sites; 150 Anthropologie stores in the United States, Canada and Europe, catalogs and two websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 38 Free People stores, catalogs and web site; Leifsdottir wholesale, which sells its product to approximately 65 specialty stores and select department stores, and a Leifsdottir web site and 1 Terrain garden center and web site as of October 31, 2010.
Management third quarter commentary is located on our website at www.urbanoutfittersinc.com. A conference call will be held today to discuss third quarter results and will be web cast at 5:00 pm. EST at: http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-EventDetails&EventId=3273164
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,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $573,592 $505,900 $1,605,712 $1,349,322
Cost of sales, including
certain buying,
distribution and occupancy
costs 337,599 295,812 934,152 808,838
----------- ----------- ----------- -----------
Gross profit 235,993 210,088 671,560 540,484
Selling, general and
administrative expenses 131,193 114,327 377,680 320,162
----------- ----------- ----------- -----------
Income from operations 104,800 95,761 293,880 220,322
Other income, net 876 1,817 1,915 4,847
----------- ----------- ----------- -----------
Income before income
taxes 105,676 97,578 295,795 225,169
Income tax expense 32,570 35,186 98,075 82,951
----------- ----------- ----------- -----------
Net income $73,106 $62,392 $197,720 $142,218
=========== =========== =========== ===========
Net income per common
share:
Basic $0.44 $0.37 $1.18 $0.85
=========== =========== =========== ===========
Diluted $0.43 $0.36 $1.16 $0.83
=========== =========== =========== ===========
Weighted average common
shares and common share
equivalents outstanding:
Basic 165,699,540 168,319,514 167,808,729 167,903,283
=========== =========== =========== ===========
Diluted 168,575,637 171,443,902 171,228,883 170,831,491
=========== =========== =========== ===========
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 58.9% 58.5% 58.2% 59.9%
----------- ----------- ----------- -----------
Gross profit 41.1% 41.5% 41.8% 40.1%
Selling, general and
administrative expenses 22.8% 22.6% 23.5% 23.8%
----------- ----------- ----------- -----------
Income from operations 18.3% 18.9% 18.3% 16.3%
Other income, net 0.1% 0.4% 0.1% 0.4%
----------- ----------- ----------- -----------
Income before income
taxes 18.4% 19.3% 18.4% 16.7%
Income tax expense 5.7% 7.0% 6.1% 6.2%
----------- ----------- ----------- -----------
Net income 12.7% 12.3% 12.3% 10.5%
=========== =========== =========== ===========
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
October January October
31, 31, 31,
2010 2010 2009
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $253,546 $159,024 $202,316
Marketable securities 250,078 342,512 216,079
Accounts receivable, net of
allowance for doubtful
accounts
of $1,538, $1,284 and $1,276,
respectively 47,653 38,405 37,592
Inventories 289,256 186,130 234,521
Prepaid expenses, deferred
taxes and other current assets 59,073 80,142 46,987
---------- ---------- ----------
Total current assets 899,606 806,213 737,495
Property and equipment, net 582,786 539,961 534,260
Marketable securities 186,202 243,445 233,525
Deferred income taxes and other
assets 53,377 46,474 35,867
---------- ---------- ----------
Total Assets $1,721,971 $1,636,093 $1,541,147
========== ========== ==========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $114,967 $78,041 $93,264
Accrued expenses, accrued
compensation and other current
liabilities 123,061 110,508 88,950
---------- ---------- ----------
Total current liabilities 238,028 188,549 182,214
Deferred rent and other
liabilities 164,044 150,769 143,673
---------- ---------- ----------
Total Liabilities 402,072 339,318 325,887
---------- ---------- ----------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par
value, 200,000,000 shares
authorized, 163,914,628,
168,558,371 and 168,397,488
issued and outstanding,
respectively 17 17 17
Additional paid-in capital 10,165 184,620 179,642
Retained earnings 1,318,952 1,121,232 1,043,557
Accumulated other comprehensive
loss (9,235) (9,094) (7,956)
---------- ---------- ----------
Total Shareholders' Equity 1,319,899 1,296,775 1,215,260
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $1,721,971 $1,636,093 $1,541,147
========== ========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Urban Outfitters, Inc.
CONTACT: Urban Outfitters, Inc.
Oona McCullough, Director of Investor Relations
(215) 454-4806
