10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-22754

 

Urban Outfitters, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Pennsylvania

23-2003332

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

5000 South Broad Street, Philadelphia, PA

19112-1495

(Address of Principal Executive Offices)

(Zip Code)

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

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Shares, par value $.0001 per share

 

URBN

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares, $0.0001 par value—92,175,750 shares outstanding on December 6, 2022.

 

 

 


TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheets as of October 31, 2022, January 31, 2022 and October 31, 2021

1

 

 

 

 

Condensed Consolidated Statements of Income for the three and nine months ended October 31, 2022 and 2021

2

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 31, 2022 and 2021

3

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended October 31, 2022 and 2021

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2022 and 2021

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

 

 

 

Item 4.

Controls and Procedures

31

 

 

 

PART II

OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

32

 

 

 

Item 1A.

Risk Factors

32

 

 

 

Item 6.

Exhibits

33

 

 

 

 

Signatures

34

 


 

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

 

 

 

October 31,

 

 

January 31,

 

 

October 31,

 

 

 

2022

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

147,431

 

 

$

206,575

 

 

$

236,354

 

Marketable securities

 

 

146,364

 

 

 

239,420

 

 

 

188,375

 

Accounts receivable, net of allowance for doubtful accounts of
   $
1,265, $1,348 and $1,313, respectively

 

 

81,422

 

 

 

63,760

 

 

 

114,208

 

Inventory

 

 

743,579

 

 

 

569,699

 

 

 

627,103

 

Prepaid expenses and other current assets

 

 

226,280

 

 

 

206,293

 

 

 

203,213

 

Total current assets

 

 

1,345,076

 

 

 

1,285,747

 

 

 

1,369,253

 

Property and equipment, net

 

 

1,175,080

 

 

 

1,145,085

 

 

 

1,088,287

 

Operating lease right-of-use assets

 

 

927,092

 

 

 

1,000,255

 

 

 

1,030,776

 

Marketable securities

 

 

95,246

 

 

 

223,557

 

 

 

269,780

 

Deferred income taxes and other assets

 

 

177,622

 

 

 

136,703

 

 

 

132,510

 

Total Assets

 

$

3,720,116

 

 

$

3,791,347

 

 

$

3,890,606

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

326,529

 

 

$

304,246

 

 

$

315,481

 

Current portion of operating lease liabilities

 

 

224,378

 

 

 

236,315

 

 

 

240,074

 

Accrued expenses, accrued compensation and other current liabilities

 

 

457,537

 

 

 

440,912

 

 

 

493,446

 

Total current liabilities

 

 

1,008,444

 

 

 

981,473

 

 

 

1,049,001

 

Non-current portion of operating lease liabilities

 

 

861,033

 

 

 

951,080

 

 

 

986,026

 

Deferred rent and other liabilities

 

 

112,248

 

 

 

113,054

 

 

 

108,848

 

Total Liabilities

 

 

1,981,725

 

 

 

2,045,607

 

 

 

2,143,875

 

Commitments and contingencies (see Note 12)

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Common shares; $.0001 par value, 200,000,000 shares authorized,
   
92,174,487, 96,431,044 and 97,863,862 shares issued and
   outstanding, respectively

 

 

9

 

 

 

10

 

 

 

10

 

Additional paid-in-capital

 

 

7,850

 

 

 

 

 

 

18,671

 

Retained earnings

 

 

1,794,599

 

 

 

1,770,560

 

 

 

1,744,772

 

Accumulated other comprehensive loss

 

 

(64,067

)

 

 

(24,830

)

 

 

(16,722

)

Total Shareholders’ Equity

 

 

1,738,391

 

 

 

1,745,740

 

 

 

1,746,731

 

Total Liabilities and Shareholders’ Equity

 

$

3,720,116

 

 

$

3,791,347

 

 

$

3,890,606

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

1,175,349

 

 

$

1,131,424

 

 

$

3,410,671

 

 

$

3,216,564

 

Cost of sales (excluding store impairment)

 

 

817,348

 

 

 

740,686

 

 

 

2,354,817

 

 

 

2,089,910

 

Store impairment

 

 

958

 

 

 

 

 

 

958

 

 

 

 

Gross profit

 

 

357,043

 

 

 

390,738

 

 

 

1,054,896

 

 

 

1,126,654

 

Selling, general and administrative expenses

 

 

299,725

 

 

 

274,836

 

 

 

865,523

 

 

 

771,396

 

 Income from operations

 

 

57,318

 

 

 

115,902

 

 

 

189,373

 

 

 

355,258

 

Other loss, net

 

 

(5,019

)

 

 

(551

)

 

 

(9,270

)

 

 

(2,503

)

Income before income taxes

 

 

52,299

 

 

 

115,351

 

 

 

180,103

 

 

 

352,755

 

Income tax expense

 

 

15,068

 

 

 

26,496

 

 

 

51,866

 

 

 

83,091

 

Net income

 

$

37,231

 

 

$

88,855

 

 

$

128,237

 

 

$

269,664

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

 

$

0.90

 

 

$

1.37

 

 

$

2.75

 

Diluted

 

$

0.40

 

 

$

0.89

 

 

$

1.36

 

 

$

2.71

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

92,174,160

 

 

 

98,202,399

 

 

 

93,544,085

 

 

 

98,209,796

 

Diluted

 

 

93,036,066

 

 

 

99,415,838

 

 

 

94,322,783

 

 

 

99,447,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands)

(unaudited)

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

37,231

 

 

$

88,855

 

 

$

128,237

 

 

$

269,664

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(13,451

)

 

 

(2,605

)

 

 

(34,083

)

 

 

1,423

 

Change in unrealized gains (losses) on marketable securities, net of tax

 

 

(431

)

 

 

(1,029

)

 

 

(5,154

)

 

 

(1,025

)

Total other comprehensive (loss) income

 

 

(13,882

)

 

 

(3,634

)

 

 

(39,237

)

 

 

398

 

Comprehensive income

 

$

23,349

 

 

$

85,221

 

 

$

89,000

 

 

$

270,062

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of July 31, 2022

 

 

92,173,342

 

 

$

9

 

 

$

 

 

$

1,757,368

 

 

$

(50,185

)

 

$

1,707,192

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

37,231

 

 

 

(13,882

)

 

 

23,349

 

Share-based compensation

 

 

 

 

 

 

 

 

7,862

 

 

 

 

 

 

 

 

 

7,862

 

Share-based awards

 

 

1,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share repurchases

 

 

(522

)

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

(12

)

Balances as of October 31, 2022

 

 

92,174,487

 

 

$

9

 

 

$

7,850

 

 

$

1,794,599

 

 

$

(64,067

)

 

$

1,738,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of July 31, 2021

 

 

98,357,090

 

 

$

10

 

 

$

26,581

 

 

$

1,655,917

 

 

$

(13,088

)

 

$

1,669,420

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

88,855

 

 

 

(3,634

)

 

 

85,221

 

Share-based compensation

 

 

 

 

 

 

 

 

7,100

 

 

 

 

 

 

 

 

 

7,100

 

Share-based awards

 

 

9,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share repurchases

 

 

(503,226

)

 

 

 

 

 

(15,010

)

 

 

 

 

 

 

 

 

(15,010

)

Balances as of October 31, 2021

 

 

97,863,862

 

 

$

10

 

 

$

18,671

 

 

$

1,744,772

 

 

$

(16,722

)

 

$

1,746,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of January 31, 2022

 

 

96,431,044

 

 

$

10

 

 

$

 

 

$

1,770,560

 

 

$

(24,830

)

 

$

1,745,740

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

128,237

 

 

 

(39,237

)

 

 

89,000

 

Share-based compensation

 

 

 

 

 

 

 

 

21,971

 

 

 

 

 

 

 

 

 

21,971

 

Share-based awards

 

 

725,882

 

 

 

 

 

 

376

 

 

 

 

 

 

 

 

 

376

 

Share repurchases

 

 

(4,982,439

)

 

 

(1

)

 

 

(14,497

)

 

 

(104,198

)

 

 

 

 

 

(118,696

)

Balances as of October 31, 2022

 

 

92,174,487

 

 

$

9

 

 

$

7,850

 

 

$

1,794,599

 

 

$

(64,067

)

 

$

1,738,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional