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Urban Outfitters Reports Q2 Earnings
PHILADELPHIA, Aug. 10, 2006 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced earnings of $25.7 million and $46.0 million for the three and six months ended July 31, 2006, respectively. Earnings per diluted share were $0.15 for the quarter and $0.27 for the six months.
As stated in the Company's previous sales release on August 8, 2006, net sales for the quarter increased by 13%, to $285.6 million. Factors driving this increase over the prior year period were:
-- A 29% increase in the number of stores in operation resulting
in new and non-comparable store sales increases of $36.2 million;
-- A 64% jump in Free People wholesale sales; and
-- An 11% gain in direct-to-consumer sales;
These factors offset a 7% decrease in total Company comparable store sales during the second quarter. By brand, 'comp' store sales decreased by 2% at Anthropologie, 11% at Urban Outfitters and increased by 8% at Free People. In the prior year's second quarter, 'comps' at these brands increased by 6%, 13% and 36%, respectively, and total Company 'comps' rose by 10%.
"We accomplished our goal of ending the quarter with 'comp' store inventories in-line with comparable store sales," stated Richard A. Hayne, Chairman and President. "We have good information about our customers' current fashion preferences. Our goal for the second half is to use that information to bring the 'comps' back into positive territory," added Mr. Hayne.
Net sales for the periods were as follows:
Three months ended Six months ended
July 31, July 31,
2006 2005 2006 2005
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters store
sales $125,609 $122,309 $242,722 $226,418
Anthropologie store sales 107,740 90,603 207,668 177,910
Direct-to-consumer sales 31,518 28,273 65,004 56,995
Free People sales 20,692 12,207 40,172 23,394
-------- -------- -------- --------
Total net sales $285,559 $253,392 $555,566 $484,717
======== ======== ======== ========
For the three and six months ended July 31, 2006, gross profit margins decreased by 468 basis points and 550 basis points, respectively, versus the prior year's comparable periods. These reductions were primarily due to a higher rate of fixed store occupancy expense caused by 'comp' store sales decreases and additional markdowns to clear seasonal inventories.
As of July 31, 2006, total Company inventories grew by $15.9 million or 12% on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Total comparable store inventories fell by 5.9%.
For the three and six months, selling, general and administrative expenses ("SG&A"), expressed as a percentage of net sales, increased by 128 and 131 basis points, respectively, versus the same periods last year. The rate increase was primarily caused by the effect of 'comp' store sales declines on fixed store related expenses. The combination of variable store labor expenses, and other SG&A categories, were flat to last year as a rate of sales.
The Company plans to open a total of 35-38 new stores in the current fiscal year, including 3-5 new Free People stores. During the first six months of fiscal year 2006, the Company has opened 13 new stores.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 98 Urban Outfitters stores in the United States, Canada, and Europe, an Urban Outfitters web site and catalog; 83 Anthropologie stores in the United States; an Anthropologie web site and catalog, and Free People, the Company's wholesale segment, which sells its product to approximately 1,500 specialty stores, department stores and catalogs, as well as through 7 Free People stores, a web site and catalog, as of July 31, 2006.
A conference call will be held today to discuss second quarter results and will be web cast at 11:00 a.m. EDT on: http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1352639
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 Six Months Ended
------------------ ----------------
July 31, July 31,
-------- --------
2006 2005 2006 2005
---- ---- ---- ----
Net sales $ 285,559 $ 253,392 $ 555,566 $ 484,717
Cost of sales,
including
certain buying,
distribution
and occupancy
costs 180,807 148,556 354,046 282,264
------------ ------------ ------------ ------------
Gross profit 104,752 104,836 201,520 202,453
Selling, general
and
administrative
expenses 66,043 55,371 131,260 108,210
------------ ------------ ------------ ------------
Income from
operations 38,709 49,465 70,260 94,243
Other income, net 1,750 1,326 3,162 2,090
------------ ------------ ------------ ------------
Income before
income taxes 40,459 50,791 73,422 96,333
Income tax
expense 14,797 20,190 27,461 38,292
------------ ------------ ------------ ------------
Net income $ 25,662 $ 30,601 $ 45,961 $ 58,041
============ ============ ============ ============
Net income per
common share:
Basic $ 0.16 $ 0.19 $ 0.28 $ 0.36
============ ============ ============ ============
Diluted $ 0.15 $ 0.18 $ 0.27 $ 0.34
============ ============ ============ ============
Weighted average
common shares
and common
share
equivalents
outstanding:
Basic 164,994,329 163,613,606 164,787,024 163,294,410
============ ============ ============ ============
Diluted 168,595,378 169,833,000 168,859,567 169,454,828
============ ============ ============ ============
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 63.3% 58.6% 63.7% 58.2%
------ ------ ------ ------
Gross profit 36.7% 41.4% 36.3% 41.8%
Selling, general
and
administrative
expenses 23.1% 21.9% 23.6% 22.3%
------ ------ ------ ------
Income from
operations 13.6% 19.5% 12.7% 19.5%
Other income
(expense), net 0.6% 0.5% 0.5% 0.4%
------ ------ ------ ------
Income before
income taxes 14.2% 20.0% 13.2% 19.9%
Income tax
expense 5.2% 8.0% 4.9% 7.9%
------ ------ ------ ------
Net income 9.0% 12.0% 8.3% 12.0%
====== ====== ====== ======
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
July 31, January 31, July 31,
2006 2006 2005
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $ 59,722 $ 49,912 $ 21,776
Marketable securities 92,809 141,883 143,262
Accounts receivable, net of
allowance for doubtful accounts
of $1,014, $445 and $689,
respectively 22,299 14,324 19,195
Inventories 148,528 140,377 132,596
Prepaid expenses, deferred taxes
and other current assets 37,419 38,687 29,097
-------- -------- --------
Total current assets 360,777 385,183 345,926
Property and equipment, net 394,706 299,291 216,683
Marketable securities 60,195 64,748 62,113
Deferred income taxes and other
assets 23,375 19,983 13,111
-------- -------- --------
$839,053 $769,205 $637,833
======== ======== ========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 52,396 $ 41,291 $ 47,945
Accrued expenses, accrued
compensation and other current
liabilities 92,015 92,217 53,778
-------- -------- --------
Total current liabilities 144,411 133,508 101,723
Deferred rent and other
liabilities 79,800 74,817 58,805
-------- -------- --------
Total liabilities 224,211 208,325 160,528
-------- -------- --------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
165,536,017, 164,831,477 and
164,304,042 issued and
outstanding, respectively 17 16 16
Additional paid-in capital 140,816 134,146 123,444
Retained earnings 472,151 426,190 353,435
Accumulated other comprehensive
income 1,858 528 410
-------- -------- --------
Total shareholders' equity 614,842 560,880 477,305
-------- -------- --------
$839,053 $769,205 $637,833
======== ======== ========
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
July 31,
----------------------
2006 2005
---- ----
Cash flows from operating activities:
Net income $ 45,961 $ 58,041
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,034 18,571
Excess tax benefits from stock-based
compensation (4,776) --
Stock-based compensation expense 1,574 572
Loss on disposition of property and
equipment, net 297 --
Changes in assets and liabilities:
Increase in receivables (7,941) (10,870)
Increase in inventories (7,897) (33,795)
(Decrease) increase in prepaid expenses
and other assets 404 (4,995)
Increase in payables, accrued expenses
and other liabilities 4,856 9,321
--------- ---------
Net cash provided by operating activities 57,512 36,845
--------- ---------
Cash flows from investing activities:
Capital expenditures (105,701) (38,081)
Purchases of marketable securities (75,643) (291,964)
Sales and maturities of marketable
securities 128,269 274,709
--------- ---------
Net cash used in investing activities (53,075) (55,336)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 3,249 11,134
Excess tax benefits from stock-based
compensation 4,776 --
Share repurchases (2,928) --
--------- ---------
Net cash provided by financing activities 5,097 11,134
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents 276 (598)
--------- ---------
Increase (decrease) in cash and cash
equivalents 9,810 (7,955)
Cash and cash equivalents at beginning of
period 49,912 29,731
--------- ---------
Cash and cash equivalents at end of period $ 59,772 $ 21,776
========= =========
CONTACT: Urban Outfitters, Inc.
John E. Kyees, Chief Financial Officer
(215) 564-2313
