Q2 2013 Urban Outfitters, Inc. Earnings Conference Call

Monday, August 20, 2012 5:00 p.m. ET  

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URBN (Common Stock)

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Urban Outfitters, Inc. : Reports Record Q2 Sales and Earnings

 

        PHILADELPHIA, PA August 20, 2012 - 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 net income of $61 million and $95 million for the three and six months ended July 31, 2012, respectively.  Earnings per diluted share were $0.42 and $0.65 for the three and six months ended July 31, 2012, respectively.

Total Company net sales rose by 11% over the same quarter last year to $676 million.  Comparable retail segment net sales, which include our comparable direct-to-consumer channel, increased 4% for the quarter, while comparable store net sales decreased 1%. Comparable retail segment net sales at Free People and Urban Outfitters increased 12%, and 6%, respectively, while comparable retail segment net sales at Anthropologie were flat for the quarter. Direct-to-Consumer net sales increased 22% and wholesale segment net sales rose 17% for the quarter.

"I am excited and gratified that our team produced record second quarter sales and profits while reducing 'comp' store inventories," said Chief Executive Officer, Richard A. Hayne.   "As we head into the second half of the year we plan for gradual year over year improvement in our business along with further tightening of our store inventories," finished Mr. Hayne.

Net sales by brand and channel for the three and six month periods were as follows:

Three Months Ended Six Months Ended
July 31, July 31,
Net sales by brand      2012    2011     2012      2011
Urban Outfitters $  310,664 $  272,173 $     577,054 $    507,501
Anthropologie 281,808 272,639 516,926 501,187
Free People 73,788 58,707 135,460 110,458
Other 10,009 5,662 15,759 14,054
Total Company $  676,269 $  609,181 $  1,245,199 $  1,133,200
Net sales by channel
Retail Stores $  501,322 $  464,672 $     921,960 $    855,836
Direct-to-consumer 137,709 112,610 254,817 214,908
    Retail Segment 639,031 577,282 1,176,777 1,070,744
Wholesale Segment 37,238 31,899 68,422 62,456
Total Company $  676,269 $  609,181 $  1,245,199 $  1,133,200

For the three months ended July 31, 2012, the gross profit rate declined 30 basis points versus the prior year's comparable period.  The decrease in gross profit rate was primarily due to the deleveraging of initial merchandise costs and store occupancy costs both of which were partially offset by a reduction in merchandise markdowns. The deleverage of initial merchandise cost is due in part to the mix of our assortment as well as an increase in web exclusive product sold through our direct-to-consumer channel. The deleverage of store occupancy costs was related to negative comparable store net sales as well as an increased number of store openings versus the prior year comparable quarter. For the six months ended July 31, 2012, the gross profit rate declined by 76 basis points versus the prior year's comparable period. The decline in the rate was primarily due to the deleverage of store occupancy costs related to the negative comparable store net sales as well as an increased number of store openings versus the prior comparable quarter.

As of July 31, 2012, total inventories increased by $20 million or 7%, on a year-over-year basis. The growth in total inventories is primarily due to the acquisition of inventory to stock new and non-comparable stores and inventory related to the growth in our direct-to-consumer channel, partially offset by a 5% decrease in comparable store inventories.

        For the three months ended July 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, were down 4 basis points.  For the six months ended July 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 25 basis points.  This increase was primarily due to the deleveraging of direct store controllable expenses driven by the negative comparable store net sales.

        During the six months ended July 31, 2012, the Company opened a total of 28 new stores including: 10 Free People stores, 10 Urban Outfitters stores, 6 Anthropologie stores, 1 BHLDN store and 1 Terrain garden center, and   closed 1 Anthropologie store.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 207 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 173 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, 72 Free People stores, catalogs and website; 2 BHLDN stores and a website and 2 Terrain garden centers and a website, as of July 31, 2012.

Management's second quarter commentary is located on our website at www.urbanoutfittersinc.com.   A conference call will be held today to discuss second quarter results and will be webcast at 5:00 pm. EDT at:  http://investor.urbn.com/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=4814843

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," "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, 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 managers, 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, potential difficulty liquidating certain marketable security investments, 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 Six Months Ended
July 31, July 31,
          2012         2011          2012        2011
Net sales $      676,269 $      609,181 $   1,245,199 $   1,133,200
Cost of sales, including certain buying,  
  distribution and occupancy costs 421,755 378,091 788,206 708,745
          Gross profit 254,514 231,090 456,993 424,455
Selling, general and administrative expenses 158,576 143,095 308,140 277,624
          Income from operations 95,938 87,995 148,853 146,831
Other income, net 144 935 443 2,300
          Income before income taxes 96,082 88,930 149,296 149,131
Income tax expense 34,790 32,237 54,047 53,814
          Net income $        61,292 $        56,693 $       95,249 $       95,317
Net income per common share:
       Basic $            0.42   $            0.36   $           0.66   $           0.59  
       Diluted $            0.42   $            0.35   $           0.65   $           0.59  
Weighted average common shares and common
   share equivalents outstanding:
       Basic 144,817,752 158,581,618 144,764,072 160,436,550
       Diluted 145,614,806 160,743,743 145,592,333 162,960,745
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   62.4%   62.1%   63.3%   62.5%
          Gross profit 37.6% 37.9% 36.7% 37.5%
Selling, general and administrative expenses   23.4%   23.5%   24.7%   24.5%
           Income from operations 14.2% 14.4% 12.0% 13.0%
Other income, net     0.0%     0.2%     0.0%     0.2%
         Income before income taxes 14.2% 14.6%  12.0%  13.2%
Income tax expense     5.1%     5.3%     4.3%     4.8%
          Net income    9.1%    9.3%   7.7%   8.4%

URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
           (unaudited)

 

 July 31,
 2012
January 31,
2012
July 31,
2011

ASSETS
Current assets:
    Cash and cash equivalents        $   135,481 $   145,273 $   226,381

8
    Marketable securities        135,890 89,854 59,347
    Accounts receivable, net of allowance for doubtful accounts
        of $1,550, $1,614 and $994, respectively        48,222 36,673 52,560
    Inventories        322,823 250,073 303,159
    Prepaid expenses, deferred taxes and other current assets               61,612        75,119 57,121
            Total current assets 704,028 596,992 698,568
Property and equipment, net   722,058 684,979 626,188
Marketable securities   91,664 126,913 322,902
Deferred income taxes and other assets          76,832        74,824 57,766
           Total Assets        $ 1,594,582 $ 1,483,708 $ 1,705,424
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable        $    105,786 $     95,754 $   110,759
    Accrued expenses, accrued compensation and other current liabilities              125,954       137,712       117,756
           Total current liabilities        231,740 233,466 228,515
Deferred rent and other liabilities        188,648       183,974        172,589  
           Total Liabilities             420,388      417,440     401,104
Shareholders' equity:  
   Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued - - -
   Common shares; $.0001 par value, 200,000,000 shares authorized, 144,869,307,
       144,633,007 and 157,524,395 issued and outstanding respectively        15 15 16
    Additional paid-in-capital   10,581 - -
    Retained earnings        1,173,013 1,077,765 1,309,964
    Accumulated other comprehensive loss               (9,415)       (11,512)      (5,660)
           Total Shareholders' Equity          1,174,194   1,066,268   1,304,320
           Total Liabilities and Shareholders' Equity                $ 1,594,582 $ 1,483,708 $ 1,705,424

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


HUG#1635094