<<  Back

URBN Reports Q1 Results

PHILADELPHIA, May 24, 2022 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of the Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands, today announced net income of $32 million and earnings per diluted share of $0.33 for the three months ended April 30, 2022.

Total Company net sales for the three months ended April 30, 2022, increased 13.4% over the same period last year to a record $1.05 billion. Total Retail segment net sales increased 12%, with comparable Retail segment net sales increasing 11%. The relative proportion of Retail segment sales attributable to store and digital channels changed significantly due in large part to the temporary store closures and occupancy restrictions in the United States, Europe and Canada in the prior year quarter due to the COVID-19 pandemic. With those restrictions not present in the current year quarter, Retail segment comparable sales increased due to double-digit growth in retail store sales due to increased store traffic, partially offset by mid-single-digit negative digital channel sales. By brand, comparable Retail segment net sales increased 18% at the Anthropologie Group, 15% at the Free People Group and 1% at Urban Outfitters. Wholesale segment net sales increased 6%, driven by a 9% increase in Free People Group wholesale sales. Nuuly segment net sales increased by $15.0 million driven by a significant increase in our subscriber base.

“We are pleased to announce record Q1 sales driven by an 11% Retail segment ‘comp’,” said Richard A. Hayne, Chief Executive Officer. “Unfortunately, the impact of inflation on our costs of doing business more than offset the benefit of record revenues,” finished Mr. Hayne.

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

  Three Months Ended
  April 30,
  2022   2021
Net sales by brand          
Anthropologie Group $ 419,677   $ 353,567
Urban Outfitters   357,702     349,681
Free People Group   245,758     212,751
Nuuly   22,849     7,820
Menus & Venues   5,948     3,596
Total Company $ 1,051,934   $ 927,415
           
Net sales by segment          
Retail Segment $ 963,435   $ 857,486
Wholesale Segment   65,650     62,109
Nuuly Segment   22,849     7,820
Total Company $ 1,051,934   $ 927,415

For the three months ended April 30, 2022, the gross profit rate decreased by 169 basis points compared to the three months ended April 30, 2021. Gross profit dollars increased 7.5% to $323.3 million compared to the three months ended April 30, 2021. The decrease in gross profit rate was primarily due to lower initial merchandise markups driven largely by higher inbound transportation expenses and raw materials costs.

As of April 30, 2022, total inventory increased by $152.2 million, or 31.9%, compared to total inventory as of April 30, 2021, and Retail segment comparable inventory at cost increased by 35%, which were driven by three factors. First, inventory costs have increased due to higher product costs driven largely by higher inbound transportation expenses and raw materials costs. Second, due to ongoing global supply chain constraints, we are extending our lead times and holding more inventory. Finally, the Urban Outfitters brand’s sales came in lower than planned resulting in increased inventory levels at this point in time.

For the three months ended April 30, 2022, selling, general and administrative expenses increased by $49.9 million, or 22.0%, compared to the three months ended April 30, 2021, and expressed as a percentage of net sales, deleveraged 184 basis points. The deleverage in SG&A as a rate to sales and growth in SG&A dollars was primarily related to the increased penetration of retail store sales in the current year quarter as we incurred store payroll expenses to support the retail store sales growth.

The Company’s effective tax rate for the three months ended April 30, 2022, was 28.7% compared to 27.0% in the three months ended April 30, 2021. The increase in the effective tax rate for the three months ended April 30, 2022, was primarily driven by the ratio of foreign taxable earnings to global taxable earnings.

Net income for the three months ended April 30, 2022, was $32 million and earnings per diluted share were $0.33.

On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the three months ended April 30, 2022, the Company repurchased and subsequently retired 2.4 million common shares for approximately $62 million. As of April 30, 2022, 21.5 million common shares were remaining under the programs.

During the three months ended April 30, 2022, the Company opened a total of five new retail locations including: two Free People Group stores (including one FP Movement store), two Urban Outfitters stores and one Menus & Venues restaurant; and closed three retail locations including: one Free People Group store, one Urban Outfitters store and one Anthropologie Group store. During the three months ended April 30, 2022, two Urban Outfitters franchisee-owned stores and one Anthropologie Group franchisee-owned store were opened.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 262 Urban Outfitters stores in the United States, Canada and Europe and websites; 237 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 174 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 Menus & Venues restaurants, 4 Urban Outfitters franchisee-owned stores and 2 Anthropologie Group franchisee-owned stores as of April 30, 2022. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores worldwide, digital businesses and the Company’s Retail segment.

A conference call will be held today to discuss first quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/rorxqy7f

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 impacts of public health crises such as the coronavirus (COVID-19) pandemic, overall economic and market conditions (including inflation) and worldwide political events and the resultant impact on consumer spending patterns, 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, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war (including geopolitical instability), terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, 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, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), 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, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our 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)

     
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(amounts in thousands, except share and per share data)
(unaudited)
     
  Three Months Ended  
  April 30,  
  2022     2021  
               
Net sales $ 1,051,934     $ 927,415  
Cost of sales   728,633       626,764  
Gross profit   323,301       300,651  
Selling, general and administrative expenses   277,064       227,148  
Income from operations   46,237       73,503  
Other loss, net   (1,989 )     (155 )
Income before income taxes   44,248       73,348  
Income tax expense   12,715       19,801  
Net income $ 31,533     $ 53,547  
               
Net income per common share:              
Basic $ 0.33     $ 0.55  
Diluted $ 0.33     $ 0.54  
               
Weighted-average common shares outstanding:              
Basic   95,479,927       98,108,245  
Diluted   96,347,211       99,322,220  
               
               
AS A PERCENTAGE OF NET SALES              
Net sales   100.0 %     100.0 %
Cost of sales   69.3 %     67.6 %
Gross profit   30.7 %     32.4 %
Selling, general and administrative expenses   26.3 %     24.5 %
Income from operations   4.4 %     7.9 %
Other loss, net   (0.2 %)     (0.0 %)
Income before income taxes   4.2 %     7.9 %
Income tax expense   1.2 %     2.1 %
Net income   3.0 %     5.8 %


 
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
 
  April 30,     January 31,     April 30,  
  2022     2022     2021  
ASSETS                      
Current assets:                      
Cash and cash equivalents $ 71,640     $ 206,575     $ 364,247  
Marketable securities   187,563       239,420       164,430  
Accounts receivable, net of allowance for doubtful accounts of $1,153, $1,348 and $2,155, respectively   97,058       63,760       85,307  
Inventory   629,953       569,699       477,777  
Prepaid expenses and other current assets   221,905       206,293       189,268  
Total current assets   1,208,119       1,285,747       1,281,029  
Property and equipment, net   1,149,772       1,145,085       988,973  
Operating lease right-of-use assets   967,639       1,000,255       1,093,037  
Marketable securities   179,458       223,557       100,680  
Deferred income taxes and other assets   137,322       136,703       115,888  
Total Assets $ 3,642,310     $ 3,791,347     $ 3,579,607  
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY                      
Current liabilities:                      
Accounts payable $ 296,673     $ 304,246     $ 251,944  
Current portion of operating lease liabilities   227,533       236,315       246,226  
Accrued expenses, accrued compensation and other current liabilities   395,949       440,912       393,430  
Total current liabilities   920,155       981,473       891,600  
Non-current portion of operating lease liabilities   913,380       951,080       1,060,228  
Deferred rent and other liabilities   112,854       113,054       93,270  
Total Liabilities   1,946,389       2,045,607       2,045,098  
                       
Shareholders’ equity:                      
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued                
Common shares; $.0001 par value, 200,000,000 shares authorized, 94,434,621, 96,431,044 and 98,235,127 shares issued and outstanding, respectively 9     10     10  
Additional paid-in-capital               17,585  
Retained earnings   1,740,508       1,770,560       1,528,655  
Accumulated other comprehensive loss   (44,596 )     (24,830 )     (11,741 )
Total Shareholders’ Equity   1,695,921       1,745,740       1,534,509  
Total Liabilities and Shareholders’ Equity $ 3,642,310     $ 3,791,347     $ 3,579,607  


 
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
 
    Three Months Ended  
    April 30,  
    2022     2021  
Cash flows from operating activities:                
Net income   $ 31,533     $ 53,547  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:                
Depreciation and amortization     26,702       25,633  
Non-cash lease expense     47,980       45,422  
Provision for deferred income taxes     7,420       37  
Share-based compensation expense     7,102       4,570  
Loss on disposition of property and equipment, net     85       121  
Changes in assets and liabilities:                
Receivables     (34,109 )     4,760  
Inventory     (64,511 )     (87,427 )
Prepaid expenses and other assets     (22,913 )     (1,355 )
Payables, accrued expenses and other liabilities     (15,184 )     43,442  
Operating lease liabilities     (63,662 )     (51,644 )
Net cash (used in) provided by operating activities     (79,557 )     37,106  
Cash flows from investing activities:                
Cash paid for property and equipment     (73,723 )     (42,589 )
Cash paid for marketable securities     (18,703 )     (94,889 )
Sales and maturities of marketable securities     106,043       73,848  
Net cash provided by (used in) investing activities     13,617       (63,630 )
Cash flows from financing activities:                
Proceeds from the exercise of stock options           1,073  
Share repurchases related to share repurchase program     (62,052 )      
Share repurchases related to taxes for share-based awards     (6,636 )     (7,418 )
Net cash used in financing activities     (68,688 )     (6,345 )
Effect of exchange rate changes on cash and cash equivalents     (307 )     1,481  
Decrease in cash and cash equivalents     (134,935 )     (31,388 )
Cash and cash equivalents at beginning of period     206,575       395,635  
Cash and cash equivalents at end of period   $ 71,640     $ 364,247  

 

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



Primary Logo

Source: Urban Outfitters, Inc.