|Urban Outfitters Reports Record Q2 Sales and EPS|
PHILADELPHIA, PA, August 16, 2016 - Urban Outfitters, Inc. (NASDAQ:URBN), a portfolio of global consumer brands comprised of Anthropologie, Bhldn, Free People, Terrain, Urban Outfitters and Vetri Family brands, today announced net income of $77 million and $106 million for the three and six months ended July 31, 2016, respectively. Earnings per diluted share were $0.66 and $0.91 for the three and six months ended July 31, 2016, respectively.
Total Company net sales for the second quarter of fiscal 2017 increased 3% over the same quarter last year to a record $891 million. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 1%. Comparable Retail segment net sales increased 5% at Urban Outfitters, was flat at Free People, and decreased 3% at the Anthropologie Group. Wholesale segment net sales increased 4%.
"I am pleased to announce our teams delivered record second quarter sales and earnings per share," said Richard A. Hayne, Chief Executive Officer. "These results were driven by a positive Retail segment 'comp' and substantial improvement in merchandise margins," finished Mr. Hayne.
Net sales by brand and segment for the three and six month periods were as follows:
For the three and six months ended July 31, 2016, the gross profit rate increased by 179 basis points and 142 basis points versus the prior year's comparable periods, respectively. The increase in gross profit rate for the three months ended July 31, 2016 was primarily driven by improvement in the Urban Outfitters and Anthropologie Group brands maintained margins, with both brands delivering higher initial margins and lower merchandise markdowns compared to the prior year. The increase in gross profit rate for the six months ended July 31, 2016 was primarily driven by improvement in the Urban Outfitters and Anthropologie Group brands maintained margins, with both brands delivering lower merchandise markdowns compared to the prior year. For the three and six months ended July 31, 2016, the increase was partially offset by a lower gross profit rate at the Free People brand, which was primarily driven by lower maintained margins due to higher merchandise markdowns.
As of July 31, 2016, total inventory decreased by $17 million, or 4%, on a year-over-year basis. The decrease in total inventory is primarily related to the decline in comparable Retail segment inventory, which decreased 4% at cost.
For the three and six months ended July 31, 2016, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 48 basis points and 98 basis points when compared to the prior year's comparable periods, respectively. The deleverage in both periods was primarily due to an increase in direct marketing and technology related expenses to support our direct-to-consumer growth and direct store controllable expenses in order to support our 4% square footage growth.
The Company's effective tax rate for the second quarter of fiscal 2017 was 35.5% compared to 35.2% in the prior year period. The effective tax rate for the first half of fiscal 2017 is 36.7% compared to 35.4% in the first half of fiscal 2016. The increase in the year-to-date tax rate was due to the ratio of foreign taxable losses to global taxable profits for the year.
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 0.3 million common shares for approximately $11 million during the six months ended July 31, 2016. The Company repurchased and subsequently retired a total of 12.7 million common shares for approximately $382 million during fiscal 2016 under this authorization.
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 six months ended July 31, 2015, the Company repurchased and subsequently retired 2.3 million shares at a total cost of $83 million, which completed this authorization.
During the six months ended July 31, 2016, the Company opened a total of 12 new stores including: 8 Free People stores, 3 Anthropologie Group stores and 1 Urban Outfitters store; and closed 3 stores including: 1 Free People store, 1 Anthropologie Group store and 1 Urban Outfitters store. During the six months ended July 31, 2016, the Company opened 1 new Vetri Family restaurant and acquired 6 Vetri Family restaurants.
Urban Outfitters, Inc. is a portfolio of global consumer brands which offers a variety of lifestyle merchandise and consumer products to highly defined customer niches through 240 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 220 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 121 Free People stores in the United States and Canada, catalogs and websites; Free People wholesale, which sells its product to approximately 1,800 specialty stores and select department stores worldwide; and 7 Vetri family restaurants, as of July 31, 2016.
A conference call will be held today to discuss second quarter results and will be webcast at 5:00 pm. ET at: http://edge.media-server.com/m/p/6bkgzor3
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
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URBAN OUTFITTERS, INC.