Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 4, 2010

 

 

URBAN OUTFITTERS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Pennsylvania   000-22754   23-2003332

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

5000 South Broad St, Philadelphia PA   19112-1495
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (215) 454-5500

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4))

 

 

 


Item 2.02. Results of Operations and Financial Condition

On March 4, 2010, the Company issued an earnings release, which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The earnings release disclosed material non-public information regarding the Company’s earnings for the three and twelve months ended January 31, 2010. After the issuance of the earnings release, the Company corrected its estimate of next year’s annual effective tax rate which it believes will be approximately 35.8%.

 

Item 9.01. Financial Statements and Exhibits

 

  99.1 Earnings Release dated March 4, 2010 – Earnings for the three and twelve months ended January 31, 2010.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 4, 2010     URBAN OUTFITTERS, INC.
   

 

By:

 

/s/ Eric Artz

      Eric Artz
      Chief Financial Officer

 

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Exhibit Index

 

Exhibit No.

  

Description

EX-99.1    Earnings Release dated March 4, 2010 – Earnings for the three and twelve months ended January 31, 2010.

 

- 3 -

Earnings Release

Exhibit 99.1

URBAN OUTFITTERS, INC.

Fourth Quarter and Annual Results

Philadelphia, PA – March 4, 2010

 

For Immediate Release      Contact:    John Kyees
        Chief Investor Relations Officer
        (215) 454-5500

Urban Outfitters Reports Q4 Earnings Jump 92%

PHILADELPHIA, March 4, 2010 (GLOBENEWSWIRE)—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 record earnings of $78 million and $220 million for the fourth quarter and year ended January 31, 2010, respectively. Earnings per diluted share were $0.45 for the quarter and $1.28 for the year.

As stated in the Company’s previous sales release on February 4, 2010, total Company sales for the fourth quarter reached a record $589 million, an increase of 16% over the comparable quarter last year. Comparable retail segment sales, which include our direct-to-consumer channels, increased 9% for the quarter. Comparable store sales rose 10% and 11% at Anthropologie and Free People, respectively and were flat at Urban Outfitters, for a combined comparable store sales increase of 4%. Direct-to-consumer sales surged 28% reflecting strong growth across all brands and wholesale sales continued to improve as compared to previous quarterly trends, down 2% versus the same quarter last year. Total Company net sales for the year ended January 31, 2010 increased 6%, to a record $1.9 billion.

“We are delighted to announce a series of record-breaking results for the quarter and year, including quarterly earnings growth of 92% and a quarterly operating profit of 20%” said Glen T. Senk, Chief Executive Officer. “The sales and profit trend improved in each quarter throughout 2009, and our current February ‘comp’ sales performance exceeded our fourth quarter ‘comp’. Our team continued to exhibit exceptional discipline in managing expenses while simultaneously making strategic investments in design, the supply chain, technology, International, Direct-to-consumer and our newest businesses, Terrain and Leifsdottir,” continued Mr. Senk.

Net sales for the periods were as follows:

 

     Three months ended
January 31,
   Twelve months ended
January 31,
     2010    2009    2010    2009
     (in thousands)    (in thousands)

Urban Outfitters stores

   $ 227,858    $ 213,435    $ 760,133    $ 771,362

Anthropologie stores

     211,740      172,098      704,849      642,161

Free People stores

     11,738      9,588      38,752      32,907

Terrain

     1,438      1,165      6,260      5,656
                           

Store net sales

     452,774      396,286      1,509,994      1,452,086
                           

Direct-to-consumer

     112,231      87,810      323,739      272,472
                           

Retail segment net sales

     565,005      484,096      1,833,733      1,724,558
                           

Wholesale

     23,488      23,982      104,082      110,060
                           

Total net sales

   $ 588,493    $ 508,078    $ 1,937,815    $ 1,834,618
                           


For the fourth quarter ended January 31, 2010, gross profit margin improved by 771 basis points, versus the prior year’s comparable quarter. The increase was primarily due to significant improvements in initial merchandise margins and a reduction in merchandise markdowns. For the year ended January 31, 2010, gross profit margin increased by 168 basis points versus the prior comparable year. This increase was primarily due to improvements in initial merchandise margins that were partially offset by a higher rate of store occupancy expense driven by the decrease in comparable store sales.

As of January 31, 2010, inventories increased by $16.4 million or 9.7% on a year-over-year basis. This increase was primarily due to the acquisition of inventory to stock new retail stores. For the quarter ended January 31, 2010, total comparable store inventories decreased by 3% at cost.

For the fourth quarter ended January 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by one basis point versus the prior year’s comparable quarter. This reduction was primarily driven by cost control across all areas of the business, with the most impact coming from direct store related expenses. These reductions were partially offset by an increase in incentive based compensation related to meeting annual performance targets. For the year ended January 31, 2010, selling, general and administrative expenses expressed as a percentage of net sales increased by 51 basis points versus the prior comparable year. This increase was related to an increase in incentive based compensation partially offset by cost control across all other areas of the business with direct store controllable representing the most significant savings.

The Company’s annual effective tax rate for the year ended January 31, 2010 was 36.2% versus 35.6% for the prior year. The increase in the current year rate is primarily attributable to a lower proportion of tax free interest income due to a strategic shift to a mix of lower risk securities versus the prior year’s holdings. The Company estimates that next year’s tax rate will be favorable to this year’s annual rate and more comparable with the January 31, 2010 fourth quarter effective rate of 35.9%. The Company expects a favorable change in next year’s rate due in part to an increase in income generated from foreign operations.

During the year ended January 31, 2010, the Company opened a total of 33 new stores including: 13 Urban Outfitters stores, 16 Anthropologie stores including our first Anthropologie store in Europe, and 4 Free People stores. The Company plans to open approximately 45 new stores during Fiscal 2011.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 155 Urban Outfitters stores in the United States, Canada, and Europe; 2 websites and a catalog; 137 Anthropologie stores in the United States, Canada and Europe, a web site and a catalog; Free People wholesale which sells its product to approximately 1,400 specialty stores and select department stores; 34 Free People stores, a web site and catalog; Leifsdottir wholesale, which sells its product to approximately 65 specialty and select department stores; and one Terrain garden center as of January 31, 2010.

A conference call will be held today to discuss fourth quarter results and will be web cast at 11:00 a.m. EST on: http://phx.corporate-ir.net/playerlink.zhtml?c=115825&s=wm&e=2729530

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.

###

(Tables follow)


URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

(unaudited)

 

     Quarter Ended     Fiscal Year Ended  
     January 31,     January 31,  
   2010     2009     2010     2009  

Net sales

   $ 588,493      $ 508,078      $ 1,937,815      $ 1,834,618   

Cost of sales, including certain buying, distribution and occupancy costs

     342,832        335,186        1,151,670        1,121,140   
                                

Gross profit

     245,661        172,892        786,145        713,478   

Selling, general and administrative expenses

     126,999        109,698        447,161        414,043   
                                

Income from operations

     118,662        63,194        338,984        299,435   

Other income, net

     575        2,953        5,422        10,055   
                                

Income before income taxes

     119,237        66,147        344,406        309,490   

Income tax expense

     41,562        25,602        124,513        110,126   
                                

Net income

   $ 77,675      $ 40,545      $ 219,893      $ 199,364   
                                

Net income per common share:

        

Basic

   $ 0.46      $ 0.24      $ 1.31      $ 1.20   
                                

Diluted

   $ 0.45      $ 0.24      $ 1.28      $ 1.17   
                                

Weighted average common shares and common share equivalents outstanding:

        

Basic

     168,499,260        167,309,239        168,053,502        166,793,062   
                                

Diluted

     172,421,607        170,071,913        171,230,245        170,860,605   
                                

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

     58.3     66.0     59.4     61.1
                                

Gross profit

     41.7     34.0     40.6     38.9

Selling, general and administrative expenses

     21.5     21.6     23.1     22.6
                                

Income from operations

     20.2     12.4     17.5     16.3

Other income, net

     0.1     0.6     0.3     0.6
                                

Income before income taxes

     20.3     13.0     17.8     16.9

Income tax expense

     7.1     5.0     6.4     6.0
                                

Net income

     13.2     8.0     11.4     10.9
                                


URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

     January 31,
2010
    January 31,
2009
 
Assets     

Current assets:

    

Cash and cash equivalents

   $ 159,024      $ 316,035   

Marketable securities

     342,512        49,948   

Accounts receivable, net of allowance for doubtful accounts of $1,284 and $1,229, respectively

     38,405        36,390   

Inventories

     186,130        169,698   

Prepaid expenses, deferred taxes and other current assets

     80,142        52,331   
                

Total current assets

     806,213        624,402   

Property and equipment, net

     539,961        505,407   

Marketable securities

     243,445        155,226   

Deferred income taxes and other assets

     46,474        43,974   
                

Total Assets

   $ 1,636,093      $ 1,329,009   
                
Liabilities and Shareholders’ Equity     

Current liabilities:

    

Accounts payable

   $ 78,041      $ 62,955   

Accrued expenses, accrued compensation and other current liabilities

     110,508        78,195   
                

Total current liabilities

     188,549        141,150   

Deferred rent and other liabilities

     150,769        134,084   
                

Total Liabilities

     339,318        275,234   
                

Shareholders’ equity:

    

Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued

     —          —     

Common shares; $.0001 par value, 200,000,000 shares authorized, 168,558,371 and 167,712,088 issued and outstanding, respectively

     17        17   

Additional paid-in-capital

     184,620        170,166   

Retained earnings

     1,121,232        901,339   

Accumulated other comprehensive loss

     (9,094     (17,747
                

Total Shareholders’ Equity

     1,296,775        1,053,775   
                

Total Liabilities and Shareholders’ Equity

   $ 1,636,093      $ 1,329,009