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Urban Outfitters Q2 Earnings Up 49 Percent
PHILADELPHIA, Aug. 11, 2005 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Urban Outfitters, Anthropologie and Free People brands, today announced for the three months ended July 31, 2005, net earnings jumped by 49% over the comparable quarter last year to $30.6 million. Second quarter diluted earnings per share rose to a record $0.36 this year versus $0.25 in the prior year.
As stated in our sales release on August 4, 2005, net sales for the quarter increased by 34%, to a record $253.4 million. Fueling this increase over the prior year period was:
- a 10% jump in total Company comparable store sales
- a 31% increase in the number of stores in operation
- a 54% gain in direct-to-consumer sales
- an 84% surge in wholesale sales
Comparable store sales at Urban Outfitters, Anthropologie and Free People were up 13%, 6% and 36%, respectively; or a combined 10% versus a 26% combined increase during the comparable quarter last year. New and non-comparable store sales increases for the quarter totaled $33.1 million.
"July 'comps' were the best of the quarter due to strong customer response to our Fall fashion assortments," stated Richard A. Hayne, Chairman and President. "This momentum, combined with the current positive spending mood of our customers, makes us optimistic about second half opportunities."
Net sales for the periods were as follows:
Three months ended Six months ended
July 31, July 31,
2005 2004 2005 2004
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters
store sales $122,309 $ 90,841 $226,418 $169,407
Anthropologie
store sales 90,603 73,766 177,910 140,340
Direct-to-
consumer sales 28,273 18,373 56,995 36,974
Free People
sales 12,207 6,504 23,394 13,053
-------- -------- -------- --------
Total net sales $253,392 $189,484 $484,717 $359,774
======== ======== ======== ========
For the three and six months ended July 31, 2005, gross profit margins increased by 72 basis points and 94 basis points, respectively, versus the prior year's comparable periods. These gains were primarily due to higher initial merchandise margins and improved inventory management, resulting in lower shrink and obsolescence.
As of July 31, 2005, total Company inventories grew by $41.7 million on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Total comparable store inventories grew by 22% and 10% on a dollar and unit basis, respectively. Earlier delivery of Fall season apparel and a build in Anthropologie's housewares inventory were the primary drivers of these increases.
For the three and six months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 79 and 114 basis points, respectively, versus the same periods last year. These improvements were primarily a result of greater than planned increases in 'comp' store sales coupled with effective control of store-related payroll and other store-related and fixed administrative expenses.
The Company plans to open a total of 30-32 new stores in the current fiscal year, including 2-3 new Free People stores. Thus far during fiscal year 2006, the Company has opened 12 new stores.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 82 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters web site and catalog; 69 Anthropologie stores in the United States; an Anthropologie web site and catalog; and Free People, the Company's wholesale division, which sells its product to approximately 1,100 specialty stores, department stores and catalogs, as well as through 3 Free People stores and a web site.
A conference call will be held today to discuss first quarter results and will be web cast at 11:00 a.m. EDT on: http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1108956
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. 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, including any effects of terrorist acts or war, availability of suitable retail space for expansion, timing of store openings, 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 and other risks identified in 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)
(unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
July 31, July 31,
-------- --------
2005 2004 2005 2004
---- ---- ---- ----
Net sales $ 253,392 $ 189,484 $ 484,717 $ 359,774
Cost of sales,
including
certain buying,
distribution
and occupancy
costs 148,556 112,466 282,264 212,862
----------- ----------- ----------- -----------
Gross profit 104,836 77,018 202,453 146,912
Selling, general
and
administrative
expenses 55,371 42,898 108,210 84,396
----------- ----------- ----------- -----------
Income from
operations 49,465 34,120 94,243 62,516
Other income, net 1,326 346 2,090 302
----------- ----------- ----------- -----------
Income before
income taxes 50,791 34,466 96,333 62,818
Income tax expense 20,190 13,958 38,292 25,441
----------- ----------- ----------- -----------
Net income $ 30,601 $ 20,508 $ 58,041 $ 37,377
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.37 $ 0.25 $ 0.71 $ 0.46
=========== =========== =========== ===========
Diluted $ 0.36 $ 0.25 $ 0.69 $ 0.45
=========== =========== =========== ===========
Weighted average
common shares
and common share
equivalents
outstanding:
Basic 81,806,803 80,554,025 81,647,205 80,421,047
=========== =========== =========== ===========
Diluted 84,916,500 83,411,392 84,727,414 83,174,091
=========== =========== =========== ===========
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 58.6% 59.4% 58.2% 59.2%
------ ------ ------ ------
Gross profit 41.4% 40.6% 41.8% 40.8%
Selling, general
and
administrative
expenses 21.9% 22.6% 22.3% 23.5%
------ ------ ------ ------
Income from
operations 19.5% 18.0% 19.5% 17.3%
Other income
(expense), net 0.5% 0.2% 0.4% 0.1%
------ ------ ------ ------
Income before
income taxes 20.0% 18.2% 19.9% 17.4%
Income tax expense 8.0% 7.4% 7.9% 7.1%
------ ------ ------ ------
Net income 12.0% 10.8% 12.0% 10.3%
====== ====== ====== ======
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
July 31, January 31, July 31,
2005 2005 2004(a)
--------- --------- ---------
Assets
Current assets:
Cash and cash
equivalents $ 21,776 $ 29,731 $ 22,313
Marketable
securities 143,262 125,953 79,973
Accounts receivable,
net of allowance
for doubtful
accounts of $689,
$586 and $813,
respectively 19,195 8,364 10,420
Inventories 132,596 98,996 90,930
Prepaid expenses,
deferred taxes and
other current
assets 29,097 24,824 18,707
--------- --------- ---------
Total current assets 345,926 287,868 222,343
Property and
equipment, net 216,683 192,792 169,483
Marketable securities 62,113 63,457 60,195
Deferred income taxes
and other assets 13,111 12,567 9,555
--------- --------- ---------
$ 637,833 $ 556,684 $ 461,576
========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 47,945 $ 39,102 $ 37,214
Accrued expenses,
accrued
compensation and
other current
liabilities 53,778 59,169 45,836
--------- --------- ---------
Total current
liabilities 101,723 98,271 83,050
Deferred rent and
other liabilities 58,805 56,169 40,582
--------- --------- ---------
Total liabilities 160,528 154,440 123,632
--------- --------- ---------
Shareholders' equity:
Preferred shares;
$.0001 par value,
10,000,000 shares
authorized, none
issued -- -- --
Common shares;
$.0001 par value,
200,000,000 shares
authorized,
82,152,021,
81,447,444 and
80,895,742 issued
and outstanding,
respectively 8 8 8
Additional paid-in
capital 127,938 109,430 99,517
Unearned
compensation (4,486) (5,058) (5,646)
Retained earnings 353,435 295,394 242,282
Accumulated other
comprehensive
income 410 2,470 1,783
--------- --------- ---------
Total shareholders'
equity 477,305 402,244 337,944
--------- --------- ---------
$ 637,833 $ 556,684 $ 461,576
========= ========= =========
(a) Certain prior year amounts have been reclassified to conform with
the presentation of operating leases and auction rate securities as
discussed in Note 2 to the Company's Annual Report contained in Form
10-K for the fiscal year ended January 31, 2005, filed with the
Securities and Exchange Commission on April 18, 2005.
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
July 31,
-------------------
2005 2004(a)
---- ------
Cash flows from operating activities:
Net income $ 58,041 $ 37,377
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 18,571 15,274
Tax benefit of stock
option exercises 7,374 6,198
Stock-based compensation
expense 572 120
Changes in assets and
liabilities:
Increase in receivables (10,870) (3,708)
Increase in inventories (33,795) (27,685)
Increase in prepaid
expenses and other
assets (4,995) (32)
Increase in payables,
accrued expenses and
other liabilities 1,947 29,260
--------- ---------
Net cash provided by
operating activities 36,845 56,804
--------- ---------
Cash flows from investing
activities:
Capital expenditures (38,081) (36,616)
Purchases of marketable
securities (291,964) (221,622)
Sales and maturities of
marketable securities 274,709 216,299
--------- ---------
Net cash used in
investing activities (55,336) (41,939)
--------- ---------
Cash flows from financing
activities:
Exercise of stock options 11,134 4,274
--------- ---------
Net cash provided by
financing activities 11,134 4,274
--------- ---------
Effect of exchange rate
changes on cash and cash
equivalents (598) (145)
--------- ---------
(Decrease) increase in cash
and cash equivalents (7,955) 18,994
Cash and cash equivalents at
beginning of period 29,731 3,319
--------- ---------
Cash and cash equivalents at
end of period $ 21,776 $ 22,313
========= =========
(a) Certain prior year amounts have been reclassified to
conform with the presentation of operating leases and auction
rate securities as discussed in Note 2 to the Company's
Annual Report contained in Form 10-K for the fiscal year
ended January 31, 2005, filed with the Securities and
Exchange Commission on April 18, 2005.
CONTACT: Urban Outfitters, Inc.
John E. Kyees
Chief Financial Officer
(215) 564-2313
