Urban Outfitters Inc--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 10, 2014

 

 

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 Street, Philadelphia, PA   19112
(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(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition

On March 10, 2014, Urban Outfitters, Inc. (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, 2014.

 

Item 9.01. Financial Statements and Exhibits

 

  99.1 Earnings Release dated March 10, 2014 – Operating results for the three and twelve months ended January 31, 2014.

 

- 1 -


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.

 

    URBAN OUTFITTERS, INC.
Date: March 11, 2014     By:  

/s/ Francis J. Conforti

      Francis J. Conforti
      Chief Financial Officer

 

- 2 -


Exhibit Index

 

Exhibit
No.

  

Description

EX-99.1    Earnings Release dated March 10, 2014 – Operating results for the three and twelve months ended January 31, 2014.

 

- 3 -

EX-99.1

Exhibit 99.1

URBAN OUTFITTERS, INC.

Fourth Quarter Results

Philadelphia, PA – March 10, 2014

 

For Immediate Release        Contact:    Oona McCullough
          Director of Investor Relations
          (215) 454-4806

Urban Outfitters Reports Record Q4 Net Income

PHILADELPHIA, PA, March 10, 2014 - Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands, today announced record net income of $89 million and $282 million for the three months and year ended January 31, 2014, respectively. Earnings per diluted share were $0.59 and $1.89 for the three months and year ended January 31, 2014, respectively.

Total Company net sales for the fourth quarter of fiscal 2014 increased 6% over the same quarter last year to a record $906 million. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 1%. Comparable Retail segment net sales increased 20% at Free People and 10% at Anthropologie and decreased 9% at Urban Outfitters. Wholesale segment net sales increased 24%.

For the year ended January 31, 2014, total Company net sales increased 10% over the prior year to a record $3.1 billion. Comparable Retail segment net sales increased 6%. Wholesale segment net sales increased 20%.

“I am pleased to announce that URBN produced record earnings for the fourth quarter and year ending January 31, 2014,” said Richard A. Hayne, Chief Executive Officer. “Looking forward, customer reaction to the new spring fashion offerings at our Anthropologie and Free People brands have been strong, but given the continued challenges facing the Urban Outfitters brand, we remain very cautious about URBN’s first quarter performance,” finished Mr. Hayne.

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

 

     Three Months Ended
January 31,
     Twelve Months Ended
January 31,
 
     2014      2013      2014      2013  

Net sales by brand

           

Urban Outfitters

   $ 398,021       $ 415,483       $ 1,369,302       $ 1,324,381   

Anthropologie

     373,959         334,792         1,264,242         1,118,609   

Free People

     122,861         97,736         416,369         320,683   

Other

     11,017         8,821         36,695         31,252   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Company

   $ 905,858       $ 856,832       $ 3,086,608       $ 2,794,925   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net sales by segment

           

Retail Segment

   $ 857,953       $ 818,099       $ 2,908,981       $ 2,646,284   

Wholesale Segment

     47,905         38,733         177,627         148,641   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Company

   $ 905,858       $ 856,832       $ 3,086,608       $ 2,794,925   
  

 

 

    

 

 

    

 

 

    

 

 

 


For the three months ended January 31, 2014, the gross profit rate improved by 4 basis points versus the prior year’s comparable period. The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate. This improvement was mostly offset by increased markdowns at the Urban Outfitters brand. Store occupancy also deleveraged during the quarter due to negative store comparable net sales and pre-opening occupancy expense related to three large New York City Urban Outfitters brand stores scheduled to open in the first half of fiscal 2015. For the year ended January 31, 2014, the gross profit rate improved by 72 basis points versus the prior year’s comparable period. The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate. This improvement was partially offset by increased markdowns at the Urban Outfitters brand. The increased penetration of our direct-to-consumer channel continued to drive store occupancy leverage and delivery expense deleverage.

As of January 31, 2014, total inventories increased by $29 million, or 10%, on a year-over-year basis. The growth in total inventories is primarily related to the acquisition of inventory to stock new and non-comparable stores. Comparable Retail segment inventories increased 3%.

For the three months ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased 119 basis points compared to the prior year period. The increase was primarily due to the deleverage in direct and selling support store related expenses resulting from negative store comparable net sales. For the year ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 28 basis points compared to the prior year period primarily due to increases in marketing expenses.

The Company’s effective tax rate for the fourth quarter of fiscal 2014 was 31.7% compared to 37.8% in the prior year period. The lower quarterly tax rate is primarily due to a federal rehabilitation credit received in the current quarter related to the expansion of the Company’s home office and the release of international valuation allowances.

During the year ended January 31, 2014, the Company opened a total of 38 new stores including: 16 Urban Outfitters stores, 13 Free People stores and 9 Anthropologie stores; and closed 1 Urban Outfitters store and 2 Anthropologie stores due to lease expirations.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 230 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 187 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores worldwide, 90 Free People stores in the United States and Canada, catalogs and websites; 2 Bhldn stores and a website and 2 Terrain garden centers and a website, as of January 31, 2014.

Management’s fourth quarter commentary is located on our website at www.urbanoutfittersinc.com. A conference call will be held today to discuss fourth quarter results and will be webcast at 5:00 pm. EST at: http://www.media-server.com/m/p/jqasas3v

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. 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 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, lowered levels of consumer confidence and higher levels of unemployment, continuation of lowered levels of consumer spending resulting from the continuing worldwide economic downturn and related debt crisis, any effects of terrorist acts or war, natural disasters or severe weather conditions, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, the departure of one or more key senior executives, import risks, including potential disruptions and changes in duties, tariffs and quotas, the closing of any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, response to new store concepts, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in the Company’s 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)

 

     Three Months Ended
January 31,
    Year Ended
January 31,
 
     2014     2013     2014     2013  

Net sales

   $ 905,858      $ 856,832      $ 3,086,608      $ 2,794,925   

Cost of sales

     573,853        543,136        1,925,266        1,763,394   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     332,005        313,696        1,161,342        1,031,531   

Selling, general and administrative expenses

     202,916        181,774        734,511        657,246   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     129,089        131,922        426,831        374,285   

Other income, net

     795        716        687        1,287   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     129,884        132,638        427,518        375,572   

Income tax expense

     41,202        50,090        145,158        138,258   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 88,682      $ 82,548      $ 282,360      $ 237,314   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

        

Basic

   $ 0.60      $ 0.57      $ 1.92      $ 1.63   

Diluted

   $ 0.59      $ 0.56      $ 1.89      $ 1.62   

Weighted average common shares and common share equivalents outstanding:

        

Basic

     147,302,220        145,936,131        147,014,869        145,253,691   

Diluted

     149,202,626        148,372,602        149,225,906        146,663,731   

AS A PERCENT OF NET SALES

        

Net sales

     100.0     100.0     100.0     100.0

Cost of sales

     63.3     63.4     62.4     63.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     36.7     36.6     37.6     36.9

Selling, general and administrative expenses

     22.4     21.2     23.8     23.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     14.3     15.4     13.8     13.4

Other income, net

     0.0     0.1     0.1     0.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     14.3     15.5     13.9     13.4

Income tax expense

     4.5     5.9     4.7     4.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     9.8     9.6     9.2     8.5
  

 

 

   

 

 

   

 

 

   

 

 

 


URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

     January 31,
2014
    January 31,
2013
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 242,058      $ 245,327   

Marketable securities

     281,813        228,486   

Accounts receivable, net of allowance for doubtful accounts of $1,711 and $1,681, respectively

     55,161        39,519   

Inventories

     311,207        282,411   

Prepaid expenses, deferred taxes and other current assets

     104,741        76,541   
  

 

 

   

 

 

 

Total current assets

     994,980        872,284   

Property and equipment, net

     806,909        733,416   

Marketable securities

     366,422        149,585   

Deferred income taxes and other assets

     52,903        41,926   
  

 

 

   

 

 

 

Total Assets

   $ 2,221,214      $ 1,797,211   
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 137,036      $ 99,059   

Accrued expenses, accrued compensation and other current liabilities

     194,794        151,136   
  

 

 

   

 

 

 

Total current liabilities

     331,830        250,195   

Deferred rent and other liabilities

     195,214        192,428   
  

 

 

   

 

 

 

Total Liabilities

     527,044        442,623   

Shareholders’ equity:

    

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

     —          —     

Common shares; $.0001 par value, 200,000,000 shares authorized, 147,309,575 an and 146,015,767 issued and outstanding respectively

     15        15   

Additional paid-in-capital

     97,684        48,276   

Retained earnings

     1,597,439        1,315,079   

Accumulated other comprehensive loss

     (968     (8,782
  

 

 

   

 

 

 

Total Shareholders’ Equity

     1,694,170        1,354,588   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 2,221,214      $ 1,797,211