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 July 31, 2023

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—92,774,395 shares outstanding on September 5, 2023.


TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

 

 

 

 

Condensed Consolidated Balance Sheets as of July 31, 2023, January 31, 2023 and July 31, 2022

1

 

 

 

Condensed Consolidated Statements of Income for the three and six months ended July 31, 2023 and 2022

2

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 31, 2023 and 2022

3

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended July 31, 2023 and 2022

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2023 and 2022

6

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

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

20

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

29

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

PART II

OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

31

 

 

 

Item 1A.

Risk Factors

31

 

 

 

Item 5.

Other Information

31

 

 

 

Item 6.

Exhibits

32

 

 

 

Signatures

33

 


 

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

 

 

July 31,

 

 

January 31,

 

 

July 31,

 

 

 

2023

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

224,744

 

 

$

201,260

 

 

$

91,665

 

Marketable securities

 

 

250,832

 

 

 

181,378

 

 

 

160,020

 

Accounts receivable, net of allowance for doubtful accounts of
   $
1,481, $1,496 and $1,201, respectively

 

 

79,118

 

 

 

70,339

 

 

 

97,374

 

Inventory

 

 

586,514

 

 

 

587,510

 

 

 

697,474

 

Prepaid expenses and other current assets

 

 

224,254

 

 

 

197,232

 

 

 

220,901

 

Total current assets

 

 

1,365,462

 

 

 

1,237,719

 

 

 

1,267,434

 

Property and equipment, net

 

 

1,222,343

 

 

 

1,187,735

 

 

 

1,150,247

 

Operating lease right-of-use assets

 

 

961,458

 

 

 

959,436

 

 

 

927,685

 

Marketable securities

 

 

122,356

 

 

 

102,844

 

 

 

152,528

 

Deferred income taxes and other assets

 

 

298,317

 

 

 

195,178

 

 

 

155,538

 

Total Assets

 

$

3,969,936

 

 

$

3,682,912

 

 

$

3,653,432

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

270,464

 

 

$

257,620

 

 

$

347,805

 

Current portion of operating lease liabilities

 

 

227,669

 

 

 

232,672

 

 

 

222,430

 

Accrued expenses, accrued compensation and other current liabilities

 

 

459,343

 

 

 

400,082

 

 

 

396,650

 

Total current liabilities

 

 

957,476

 

 

 

890,374

 

 

 

966,885

 

Non-current portion of operating lease liabilities

 

 

882,841

 

 

 

884,696

 

 

 

868,686

 

Deferred rent and other liabilities

 

 

162,228

 

 

 

115,159

 

 

 

110,669

 

Total Liabilities

 

 

2,002,545

 

 

 

1,890,229

 

 

 

1,946,240

 

Commitments and contingencies (see Note 11)

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Common shares; $.0001 par value, 200,000,000 shares authorized,
   
92,773,249, 92,180,709 and 92,173,342 shares issued and
   outstanding, respectively

 

 

9

 

 

 

9

 

 

 

9

 

Additional paid-in-capital

 

 

23,214

 

 

 

15,248

 

 

 

 

Retained earnings

 

 

1,982,970

 

 

 

1,826,061

 

 

 

1,757,368

 

Accumulated other comprehensive loss

 

 

(38,802

)

 

 

(48,635

)

 

 

(50,185

)

Total Shareholders’ Equity

 

 

1,967,391

 

 

 

1,792,683

 

 

 

1,707,192

 

Total Liabilities and Shareholders’ Equity

 

$

3,969,936

 

 

$

3,682,912

 

 

$

3,653,432

 

 

 

 

 

 

 

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

 

 

Six Months Ended

 

 

 

July 31,

 

 

July 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales

 

$

1,272,195

 

 

$

1,183,388

 

 

$

2,385,869

 

 

$

2,235,322

 

Cost of sales

 

 

816,614

 

 

 

808,836

 

 

 

1,559,057

 

 

 

1,537,469

 

Gross profit

 

 

455,581

 

 

 

374,552

 

 

 

826,812

 

 

 

697,853

 

Selling, general and administrative expenses

 

 

323,483

 

 

 

288,734

 

 

 

623,331

 

 

 

565,798

 

 Income from operations

 

 

132,098

 

 

 

85,818

 

 

 

203,481

 

 

 

132,055

 

Other income (loss), net

 

 

3,399

 

 

 

(2,262

)

 

 

4,418

 

 

 

(4,251

)

Income before income taxes

 

 

135,497

 

 

 

83,556

 

 

 

207,899

 

 

 

127,804

 

Income tax expense

 

 

31,405

 

 

 

24,083

 

 

 

50,990

 

 

 

36,798

 

Net income

 

$

104,092

 

 

$

59,473

 

 

$

156,909

 

 

$

91,006

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.12

 

 

$

0.64

 

 

$

1.69

 

 

$

0.97

 

Diluted

 

$

1.10

 

 

$

0.64

 

 

$

1.67

 

 

$

0.96

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

92,741,888

 

 

 

93,041,310

 

 

 

92,610,499

 

 

 

94,240,412

 

Diluted

 

 

94,228,185

 

 

 

93,648,214

 

 

 

94,026,950

 

 

 

94,977,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Six Months Ended

 

 

 

July 31,

 

 

July 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

104,092

 

 

$

59,473

 

 

$

156,909

 

 

$

91,006

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

4,515

 

 

 

(6,243

)

 

 

7,692

 

 

 

(20,632

)

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

 

 

21

 

 

 

654

 

 

 

2,141

 

 

 

(4,723

)

Total other comprehensive income (loss)

 

 

4,536

 

 

 

(5,589

)

 

 

9,833

 

 

 

(25,355

)

Comprehensive income

 

$

108,628

 

 

$

53,884

 

 

$

166,742

 

 

$

65,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 April 30, 2023

 

 

92,677,835

 

 

$

9

 

 

$

15,133

 

 

$

1,878,878

 

 

$

(43,338

)

 

$

1,850,682

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

104,092

 

 

 

4,536

 

 

 

108,628

 

Share-based compensation

 

 

 

 

 

 

 

 

7,821

 

 

 

 

 

 

 

 

 

7,821

 

Share-based awards

 

 

105,731

 

 

 

 

 

 

594

 

 

 

 

 

 

 

 

 

594

 

Share repurchases

 

 

(10,317

)

 

 

 

 

 

(334

)

 

 

 

 

 

 

 

 

(334

)

Balances as of July 31, 2023

 

 

92,773,249

 

 

$

9

 

 

$

23,214

 

 

$

1,982,970

 

 

$

(38,802

)

 

$

1,967,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Shares

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

Number of

 

 

Par

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

Balances as of April 30, 2022

 

 

94,434,621

 

 

$

9

 

 

$

 

 

$

1,740,508

 

 

$

(44,596

)

 

$

1,695,921

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

59,473

 

 

 

(5,589

)

 

 

53,884

 

Share-based compensation

 

 

 

 

 

 

 

 

7,007

 

 

 

 

 

 

 

 

 

7,007

 

Share-based awards

 

 

54,532

 

 

 

 

 

 

376

 

 

 

 

 

 

 

 

 

376

 

Share repurchases

 

 

(2,315,811

)

 

 

 

 

 

(7,383

)

 

 

(42,613

)

 

 

 

 

 

(49,996

)

Balances as of July 31, 2022

 

 

92,173,342

 

 

$

9

 

 

$

 

 

$

1,757,368

 

 

$

(50,185

)

 

$

1,707,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2023

 

 

92,180,709

 

 

$

9

 

 

$

15,248

 

 

$

1,826,061

 

 

$

(48,635

)

 

$

1,792,683

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

156,909

 

 

 

9,833

 

 

 

166,742

 

Share-based compensation

 

 

 

 

 

 

 

 

15,556

 

 

 

 

 

 

 

 

 

15,556

 

Share-based awards

 

 

896,119

 

 

 

 

 

 

594

 

 

 

 

 

 

 

 

 

594

 

Share repurchases

 

 

(303,579

)

 

 

 

 

 

(8,184

)

 

 

 

 

 

 

 

 

(8,184

)

Balances as of July 31, 2023

 

 

92,773,249

 

 

$

9

 

 

$

23,214

 

 

$

1,982,970

 

 

$

(38,802

)

 

$

1,967,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

91,006

 

 

 

(25,355

)

 

 

65,651

 

Share-based compensation

 

 

 

 

 

 

 

 

14,109

 

 

 

 

 

 

 

 

 

14,109

 

Share-based awards

 

 

724,215

 

 

 

 

 

 

376

 

 

 

 

 

 

 

 

 

376

 

Share repurchases

 

 

(4,981,917

)

 

 

(1

)

 

 

(14,485

)

 

 

(104,198

)

 

 

 

 

 

(118,684

)

Balances as of July 31, 2022

 

 

92,173,342

 

 

$

9

 

 

$

 

 

$

1,757,368

 

 

$

(50,185

)

 

$

1,707,192

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

5


 

URBAN OUTFITTERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS