08/16/16 at 5:00 p.m. ET
|Urban Outfitters Reports $1 Billion in Q4 Sales|
PHILADELPHIA, PA, March 7, 2016 - 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 $73 million and $224 million for the three months and year ended January 31, 2016, respectively. Earnings per diluted share were $0.61 and $1.78 for the three months and year ended January 31, 2016, respectively.
Total Company net sales for the fourth quarter of fiscal 2016 were flat at $1.01 billion compared to the same quarter last year. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, decreased 2%. Comparable Retail segment net sales increased 2% at Free People and decreased 2% at the Anthropologie Group and 3% at Urban Outfitters. Wholesale segment net sales increased 29% partially due to delayed shipments from the third quarter carrying over into the fourth quarter.
"While apparel sales underperformed during the fourth quarter, I am pleased with the merchandise margin improvement delivered by the brands," said Richard A. Hayne, Chief Executive Officer. "Additionally, our expansion categories performed above our expectations and continue to give us confidence in our future growth opportunities," finished Mr. Hayne.
Net sales by brand and segment for the three and twelve month periods were as follows:
For the three months ended January 31, 2016, the gross profit rate declined by 12 basis points versus the prior year's comparable period. The decline in gross profit rate was driven by approximately 100 basis points of deleverage in delivery and fulfillment center expense, primarily related to the increased direct-to-consumer sales penetration and the impact of the transition of our South Carolina fulfillment center to Gap, Pennsylvania. Gross margin rate was further impacted by additional deleverage related to higher store occupancy costs, store impairment charges and the negative impact of foreign currency. These decreases were almost entirely offset by approximately 200 basis points of improvement in maintained margins primarily driven by significant improvement in the Urban Outfitters brand markdown rate.
During the three months ended January 31, 2016, the Company incurred store impairment charges of $9 million, with $7 million of this charge negatively affecting gross profit and $2 million negatively affecting selling, general and administrative expenses. The store impairment charges related to four Urban Outfitters stores, three stores in Europe and one store in the United States, and one Anthropologie store in Canada.
For the year ended January 31, 2016, the gross profit rate declined by 47 basis points versus the prior year's comparable period. The decline in gross profit rate was primarily driven by higher delivery and fulfillment center expenses, largely related to incremental costs associated with the Gap, Pennsylvania, fulfillment center transition, increased direct-to-consumer sales penetration and store impairment charges.
As of January 31, 2016, total inventories decreased by $28 million, or 8%, on a year-over-year basis. The decrease in total inventories is primarily related to the decline in comparable Retail segment inventories, which decreased 6% at cost and 8% in units.
For the three months ended January 31, 2016, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 65 basis points when compared to the prior year period. For the year ended January 31, 2016, selling, general and administrative expenses, expressed as a percentage of net sales, increased 26 basis points when compared to the prior year period. The increase in both periods is primarily due to an increase in marketing expense to support our customer acquisition and retention efforts and an increase in technology related expenses used to support our omni-channel initiatives.
The Company's effective tax rate for the fourth quarter of fiscal 2016 was 36.9% compared to 35.0% in the prior year period. The higher quarterly tax rate is primarily due to a change in foreign and state tax positions.
On February 23, 2015, the Company's Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. Under this authorization, the Company repurchased and subsequently retired a total of 12.7 million common shares for approximately $382.5 million during the year ended January 31, 2016.
On May 27, 2014, the Company's Board of Directors authorized the repurchase of 10 million common shares under a share repurchase program. During the year ended January 31, 2016, the Company repurchased and subsequently retired 2.3 million shares at a total cost of $82.8 million, which completed this authorization. The Company repurchased and subsequently retired 7.7 million common shares at a total cost of $258.2 million during fiscal 2015.
In summary, for the year ended January 31, 2016, the Company repurchased and subsequently retired a total of 15.0 million shares at a total cost of $465.3 million under both authorizations.
During the year ended January 31, 2016, the Company opened a total of 31 new stores including: 14 Anthropologie Group stores, 13 Free People stores, and 4 Urban Outfitters stores; and closed 5 stores including: 2 Urban Outfitters stores, 2 Anthropologie Group stores and 1 Free People store.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 240 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 218 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 114 Free People stores in the United States and Canada, catalogs and websites; and Free People wholesale, which sells its product to approximately 1,800 specialty stores and select department stores worldwide, as of January 31, 2016.
A conference call will be held today to discuss fourth quarter results and will be webcast at 5:00 pm. ET at: http://edge.media-server.com/m/p/b7rtu39y/lan/en
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 a worldwide political and economic 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, failure of our manufacturers to comply with our social compliance program, 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.
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
URBAN OUTFITTERS, INC.