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Urban Outfitters Q3 Earnings Up 43 Percent
PHILADELPHIA, Nov. 10, 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 October 31, 2005, net earnings jumped by 43% over the comparable quarter last year to $37.2 million. Third quarter diluted earnings per share rose to a record $0.22 this year versus $0.15 in the prior year.
As stated in our sales release on November 3, 2005, net sales for the quarter increased by 33%, to a record $288.8 million. Fueling this increase over the prior year period was:
-- a 13% jump in total Company comparable store sales; -- a 28% increase in the number of stores in operation; -- a 32% gain in direct-to-consumer sales; -- a 109% surge in wholesale sales.
Comparable store sales at Urban Outfitters, Anthropologie and Free People were up 19%, 7% and 21%, respectively; or a combined 13% versus an 18% combined increase during the comparable quarter last year. Sales at new and non-comparable stores totaled $31.7 million for the quarter.
"All of our Brands delivered record performances in the third quarter resulting in 21.0% operating income - the highest in the Company's history," stated Richard A. Hayne, Chairman and President. "We also cleared slower-selling Fall merchandise during the third quarter and have accelerated receipts of Winter/Holiday season merchandise to take advantage of current trends in the business. So far during November, sales continue to run significantly above our plan so we remain optimistic that this year's Holiday selling period will produce another record quarter," concluded Mr. Hayne.
Net sales for the periods were as follows:
Three months ended Nine months ended
October 31, October 31,
2005 2004 2005 2004
---- ---- ---- ----
(in thousands) (in thousands)
Urban Outfitters
store sales $137,483 $102,723 $363,901 $272,130
Anthropologie
store sales 101,410 81,467 279,320 221,807
Direct-to-consumer
sales 30,921 23,505 87,916 60,479
Free People sales 18,987 8,658 42,381 21,711
-------- -------- -------- --------
Total net sales $288,801 $216,353 $773,518 $576,127
======== ======== ======== ========
Thus far this fiscal year, gross profit margins have increased by 35 basis points, primarily due to higher initial margins and improved inventory management resulting in lower shrink and obsolescence. These increases more than offset a 63 basis point reduction in third quarter gross profit margins.
As of October 31, 2005, total Company inventories grew by $57.3 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 18% on a unit basis and 22% on a dollar basis. This year's increase reflects the earlier delivery of Fall/Holiday Season merchandise and a build in Anthropologie's housewares inventory which posted strong double-digit 'comp' sales results during the third quarter. While inventory weeks of supply are somewhat higher than last year, we believe they are appropriate given the current sales trend.
For the three and nine months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 168 and 134 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. Also included in this improvement is a $1.6 million gain on the disposition of a building representing 52 basis points and 21 basis points for the three and nine months ended October 31, 2005, respectively.
The Company plans to open a total of 30-32 new stores in the current fiscal year, including 4 new Free People stores. Thus far during fiscal year 2006, the Company has opened 21 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 84 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters web site and catalog; 73 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 5 Free People stores, a catalog and 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=1147649
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 Nine Months Ended
------------------ -----------------
October 31, October 31,
----------- -----------
2005 2004 2005 2004
---- ---- ---- ----
Net sales $ 288,801 $ 216,353 $ 773,518 $ 576,127
Cost of sales,
including certain
buying, distribution
and occupancy
costs 168,550 124,895 450,814 337,757
--------- --------- --------- ---------
Gross
profit 120,251 91,458 322,704 238,370
Selling,
general and
administrative
expenses 59,592 48,276 167,802 132,672
--------- --------- --------- ---------
Income from
operations 60,659 43,182 154,902 105,698
Other income,
net 1,021 576 3,111 878
--------- --------- --------- ---------
Income before
income taxes 61,680 43,758 158,013 106,576
Income tax
expense 24,518 17,722 62,810 43,163
--------- --------- --------- ---------
Net income $ 37,162 $ 26,036 $ 95,203 $ 63,413
========= ========= ======== ========
Net income per
common share:
Basic $ 0.23 $ 0.16 $ 0.58 $ 0.39
========= ========= ========= ==========
Diluted $ 0.22 $ 0.15 $ 0.56 $ 0.38
========= ========= ========= ==========
Weighted average common
shares and common
share equivalents
outstanding: (a)
Basic 163,953,135 162,095,230 163,698,505 161,126,172
=========== =========== =========== ===========
Diluted 170,328,859 168,152,512 169,934,178 166,815,992
=========== =========== =========== ===========
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 58.4% 57.7% 58.3% 58.7%
----- ----- ----- -----
Gross profit 41.6% 42.3% 41.7% 41.3%
Selling,
general and
administrative
expenses 20.6% 22.3% 21.7% 23.0%
----- ----- ----- -----
Income from
operations 21.0% 20.0% 20.0% 18.3%
Other income,
net 0.4% 0.2% 0.4% 0.2%
----- ----- ----- -----
Income before
income taxes 21.4% 20.2% 20.4% 18.5%
Income tax
expense 8.5% 8.2% 8.1% 7.5%
----- ----- ----- -----
Net income 12.9% 12.0% 12.3% 11.0%
===== ===== ===== =====
(a) Earnings per share as well as basic and diluted weighted average
common shares and common share equivalents have been adjusted to
reflect the 2:1 stock split effective September 26, 2005.
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
Oct. 31, Jan. 31, Oct. 31,
2005 2005 2004
--------- --------- ---------
Assets
Current assets:
Cash and cash equivalents $ 20,067 $ 29,731 $ 5,413
Marketable securities 136,273 125,953 81,502
Accounts receivable, net
of allowance for doubtful
accounts of $855, $586
and $911, respectively 18,509 8,364 13,635
Inventories 170,232 98,996 112,893
Prepaid expenses, deferred
taxes and other current
assets 27,170 24,824 26,006
--------- --------- ---------
Total current assets 372,251 287,868 239,449
Property and equipment, net 255,091 192,792 179,166
Marketable securities 65,946 63,457 67,099
Deferred income taxes and
other assets 17,165 12,567 9,548
--------- --------- ---------
$ 710,453 $ 556,684 $ 495,262
========= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 53,299 $ 39,102 $ 43,744
Accrued expenses, accrued
compensation and other
current liabilities 74,409 59,169 38,280
--------- --------- ---------
Total current liabilities 127,708 98,271 82,024
Deferred rent and other
liabilities 66,392 56,169 43,241
--------- --------- ---------
Total liabilities 194,100 154,440 125,265
--------- --------- ---------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
164,434,327, 162,894,888 and
162,442,584 issued and
outstanding, respectively 17 17 17
Additional paid-in capital 129,321 109,421 104,752
Unearned compensation (4,196) (5,058) (5,349)
Retained earnings 390,597 295,394 268,318
Accumulated other
comprehensive income 614 2,470 2,259
--------- --------- ---------
Total shareholders' equity 516,353 402,244 369,997
--------- --------- ---------
$ 710,453 $ 556,684 $ 495,262
========= ========= =========
Certain prior year amounts have been reclassified to conform with the
presentation of operating leases 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. In addition, shares issued and
outstanding have been adjusted to reflect the 2:1 stock split
effective September 26, 2005.
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
October 31,
-----------------
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 95,203 $ 63,413
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 28,483 21,350
Provision for deferred income taxes (992) --
Tax benefit of stock option exercises 8,306 10,040
Stock-based compensation expense 862 417
Gain on disposition of building (1,562) --
Changes in assets and liabilities:
Increase in receivables (10,187) (6,914)
Increase in inventories (71,546) (49,590)
Increase in prepaid expenses and
other assets (7,628) (7,309)
Increase in payables, accrued
expenses and other liabilities 27,106 27,349
-------- --------
Net cash provided by operating
activities 68,045 58,756
-------- --------
Cash flows from investing activities:
Capital expenditures (78,093) (48,480)
Proceeds from disposition of building 3,769 --
Purchases of marketable securities (396,716) (368,794)
Sales and maturities of marketable
securities 381,854 354,749
-------- --------
Net cash used in investing activities (89,186) (62,525)
-------- --------
Cash flows from financing activities:
Exercise of stock options 11,593 5,676
-------- --------
Net cash provided by financing
activities 11,593 5,676
-------- --------
Effect of exchange rate changes on
cash and cash equivalents (116) 187
-------- --------
(Decrease) increase in cash and cash
equivalents (9,664) 2,094
Cash and cash equivalents at beginning
of period 29,731 3,319
-------- --------
Cash and cash equivalents at end of
period $ 20,067 $ 5,413
========= =========
Certain prior year amounts have been reclassified to conform with the
presentation of operating leases 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
