UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact Name of Registrant as Specified in its Charter)
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N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule l2b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01. |
Other Events |
On May 23, 2023, Urban Outfitters, Inc. (the “Company”) issued an earnings release, which is attached hereto as Exhibit 99.1 and incorporated herein by reference. The earnings release disclosed material non-public information regarding the Company’s earnings for the three months ended April 30, 2023.
Item 9.01. |
Financial Statements and Exhibits |
Exhibit No. |
Description |
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99.1 |
Earnings Release dated May 23, 2023 – Operating results for the three months ended April 30, 2023 |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
- 1 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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URBAN OUTFITTERS, INC. |
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Date: May 24, 2023 |
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By: |
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/s/ Melanie Marein-Efron |
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Melanie Marein-Efron |
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Chief Financial Officer |
- 2 -
Exhibit 99.1
URBAN OUTFITTERS, INC.
First Quarter Results
Philadelphia, PA – May 23, 2023
For Immediate Release |
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Contact: |
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Oona McCullough |
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Executive Director of Investor Relations |
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(215) 454-4806 |
URBN Reports Record Q1 Sales and EPS
PHILADELPHIA, PA, May 23, 2023 – Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of the Anthropologie, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands, today announced net income of $53 million and record first quarter earnings per diluted share of $0.56 for the three months ended April 30, 2023.
Total Company net sales for the three months ended April 30, 2023, increased 5.9% to a record $1.11 billion. Total Retail segment net sales increased 4%, with comparable Retail segment net sales increasing 5%, partially offset by a 1% negative impact of foreign currency translation. The increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel sales and low single-digit positive growth in retail store sales. By brand, comparable Retail segment net sales increased 17% at the Free People Group and 13% at the Anthropologie Group and decreased 13% at Urban Outfitters. Wholesale segment net sales decreased 11% driven by a 14% decrease in Free People Group wholesale sales due to a decrease in sales to department stores and specialty customers, while Urban Outfitters wholesale sales increased by $1 million. Nuuly segment net sales increased by $28.6 million driven by a 118% increase in our subscribers as of the current quarter end versus the end of the prior year’s comparable quarter.
“We are pleased to report record first quarter sales and earnings per share driven by a 5% increase in comparable Retail segment sales, strong growth in Nuuly Rent and a significant improvement in gross margins,” said Richard A. Hayne, Chief Executive Officer. “We are equally pleased that Q1’s sales strength has continued quarter-to-date,” finished Mr. Hayne.
Net sales by brand and segment for the three-month periods were as follows:
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Three Months Ended |
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April 30, |
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2023 |
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2022 |
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Net sales by brand |
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Anthropologie Group |
$ |
473,640 |
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$ |
419,677 |
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Urban Outfitters |
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308,708 |
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357,702 |
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Free People Group |
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273,735 |
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245,758 |
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Nuuly |
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51,470 |
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22,849 |
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Menus & Venues |
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6,121 |
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5,948 |
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Total Company |
$ |
1,113,674 |
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$ |
1,051,934 |
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Net sales by segment |
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Retail Segment |
$ |
1,004,101 |
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$ |
963,435 |
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Wholesale Segment |
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58,103 |
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65,650 |
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Nuuly Segment |
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51,470 |
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22,849 |
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Total Company |
$ |
1,113,674 |
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$ |
1,051,934 |
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For the three months ended April 30, 2023, the gross profit rate increased by 260 basis points compared to the three months ended April 30, 2022. Gross profit dollars increased 14.8% to $371.2 million from $323.3 million in the three months ended April 30, 2022. The increase in gross profit rate was primarily due to higher initial merchandise markups at all three brands primarily driven by lower inbound transportation costs. Additionally, the gross profit rate benefited from lower merchandise markdowns at the Anthropologie Group and Free People Group brands.
As of April 30, 2023, total inventory decreased by $39.6 million, or 6.3%, compared to total inventory as of April 30, 2022. Total Retail segment inventory decreased by 5% primarily due to better inventory control supported by a more reliable supply chain. Wholesale segment inventory decreased by 23% in line with the reduction in wholesale sales.
For the three months ended April 30, 2023, selling, general and administrative expenses increased by $22.8 million, or 8.2%, compared to the three months ended April 30, 2022, and expressed as a percentage of net sales, deleveraged 59 basis points. The deleverage in selling, general and administrative expenses as a rate to sales was primarily related to higher compensation costs, including higher incentive-based compensation costs due to improved Company performance. The dollar growth in selling, general and administrative expenses was due to higher compensation costs, including higher incentive-based compensation costs due to improved Company performance, as well as increased marketing expenses to support increased sales and customer growth.
The Company’s effective tax rate for the three months ended April 30, 2023 was 27.1%, compared to 28.7% in the three months ended April 30, 2022. The decrease in the effective tax rate for the three months ended April 30, 2023 was attributable to the ratio of foreign taxable earnings to global taxable earnings and the favorable impact of general business credits in the current year.
Net income for the three months ended April 30, 2023 was $52.8 million and record first quarter earnings per diluted share was $0.56.
On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program; all shares were repurchased and the authorization was completed by the end of June 2022. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the year ended January 31, 2023, the Company repurchased and subsequently retired 4.7 million common shares for approximately $112 million. During the three months ended April 30, 2023, the Company did not repurchase any common shares. As of April 30, 2023, 19.2 million common shares were remaining under the program.
During the three months ended April 30, 2023, the Company opened 5 Free People Group stores (including 2 FP Movement stores) and closed 5 retail locations including: 3 Urban Outfitters stores, 1 Anthropologie Group store and 1 Menus & Venues restaurant. During the three months ended April 30, 2023, 1 Urban Outfitters franchisee-owned store was opened.
Urban Outfitters, Inc. offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 260 Urban Outfitters stores in the United States, Canada and Europe and websites; 237 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 193 Free People stores (including 33 FP Movement stores) in the United States, Canada and Europe, catalogs and websites, 10 Menus & Venues restaurants, 7 Urban Outfitters franchisee-owned stores and 2 Anthropologie Group franchisee-owned stores as of April 30, 2023. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores worldwide, digital businesses and the Company’s Retail segment.
A conference call will be held today to discuss first quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/3urrq5ur.
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 contain 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: overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, 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, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, including geopolitical instability and impacts of the war between Russia and Ukraine and from related sanctions imposed by the United States, the European Union, United Kingdom and others, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises (such as the coronavirus (COVID-19)), labor shortages and increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs, border adjustment taxes or increases in duties or quotas), the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our 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
(amounts in thousands, except share and per share data)
(unaudited)
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Three Months Ended |
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April 30, |
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2023 |
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2022 |
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Net sales |
$ |
1,113,674 |
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$ |
1,051,934 |
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Cost of sales |
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742,443 |
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728,633 |
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Gross profit |
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371,231 |
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323,301 |
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Selling, general and administrative expenses |
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299,848 |
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277,064 |
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Income from operations |
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71,383 |
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46,237 |
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Other income (loss), net |
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1,019 |
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(1,989 |
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Income before income taxes |
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72,402 |
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44,248 |
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Income tax expense |
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19,585 |
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12,715 |
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Net income |
$ |
52,817 |
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$ |
31,533 |
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Net income per common share: |
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Basic |
$ |
0.57 |
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$ |
0.33 |
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Diluted |
$ |
0.56 |
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$ |
0.33 |
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Weighted-average common shares outstanding: |
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Basic |
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92,474,688 |
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95,479,927 |
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Diluted |
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93,821,292 |
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96,347,211 |
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AS A PERCENTAGE OF NET SALES |
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Net sales |
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100.0 |
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100.0 |
% |
Cost of sales |
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66.7 |
% |
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69.3 |
% |
Gross profit |
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33.3 |
% |
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30.7 |
% |
Selling, general and administrative expenses |
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26.9 |
% |
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26.3 |
% |
Income from operations |
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6.4 |
% |
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4.4 |
% |
Other income (loss), net |
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0.1 |
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(0.2 |
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Income before income taxes |
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6.5 |
% |
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4.2 |
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Income tax expense |
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1.8 |
% |
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1.2 |
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Net income |
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4.7 |
% |
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3.0 |
% |
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
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April 30, |
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January 31, |
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April 30, |
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2023 |
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2023 |
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2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
171,655 |
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$ |
201,260 |
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$ |
71,640 |
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Marketable securities |
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209,777 |
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181,378 |
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187,563 |
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Accounts receivable, net of allowance for doubtful accounts |
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105,589 |
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70,339 |
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97,058 |
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Inventory |
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590,326 |
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587,510 |
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629,953 |
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Prepaid expenses and other current assets |
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223,894 |
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197,232 |
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221,905 |
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Total current assets |
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1,301,241 |
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1,237,719 |
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1,208,119 |
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Property and equipment, net |
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1,201,506 |
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1,187,735 |
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1,149,772 |
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Operating lease right-of-use assets |
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921,893 |
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959,436 |
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967,639 |
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Marketable securities |
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86,156 |
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102,844 |
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179,458 |
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Deferred income taxes and other assets |
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281,874 |
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195,178 |
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137,322 |
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Total Assets |
$ |
3,792,670 |
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$ |
3,682,912 |
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$ |
3,642,310 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
263,558 |
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$ |
257,620 |
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$ |
296,673 |
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Current portion of operating lease liabilities |
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233,085 |
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232,672 |
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227,533 |
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Accrued expenses, accrued compensation and other |
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431,033 |
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400,082 |
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395,949 |
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Total current liabilities |
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927,676 |
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890,374 |
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920,155 |
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Non-current portion of operating lease liabilities |
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845,643 |
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884,696 |
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913,380 |
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Deferred rent and other liabilities |
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168,669 |
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115,159 |
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112,854 |
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Total Liabilities |
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1,941,988 |
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1,890,229 |
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1,946,389 |
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Shareholders’ equity: |
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Preferred shares; $.0001 par value, 10,000,000 shares |
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— |
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— |
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— |
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Common shares; $.0001 par value, 200,000,000 shares |
9 |
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9 |
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9 |
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Additional paid-in-capital |
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15,133 |
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15,248 |
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— |
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Retained earnings |
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1,878,878 |
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1,826,061 |
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1,740,508 |
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Accumulated other comprehensive loss |
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(43,338 |
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(48,635 |
) |
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(44,596 |
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Total Shareholders’ Equity |
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1,850,682 |
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1,792,683 |
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1,695,921 |
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Total Liabilities and Shareholders’ Equity |
$ |
3,792,670 |
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$ |
3,682,912 |
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$ |
3,642,310 |
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URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
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Three Months Ended |
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April 30, |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net income |
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$ |
52,817 |
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$ |
31,533 |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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23,879 |
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26,702 |
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Non-cash lease expense |
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50,859 |
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47,980 |
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Provision for deferred income taxes |
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2,457 |
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7,420 |
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Share-based compensation expense |
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7,735 |
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7,102 |
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Amortization of tax credit investment |
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3,976 |
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— |
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Loss on disposition of property and equipment, net |
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222 |
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85 |
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Changes in assets and liabilities: |
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Receivables |
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(35,030 |
) |
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(34,109 |
) |
Inventory |
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(1,649 |
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(64,511 |
) |
Prepaid expenses and other assets |
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(35,045 |
) |
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(22,913 |
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Payables, accrued expenses and other liabilities |
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22,257 |
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(15,184 |
) |
Operating lease liabilities |
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(56,201 |
) |
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(63,662 |
) |
Net cash provided by (used in) operating activities |
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36,277 |
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(79,557 |
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Cash flows from investing activities: |
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Cash paid for property and equipment |
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(32,904 |
) |
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(73,723 |
) |
Cash paid for marketable securities |
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(74,101 |
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(18,703 |
) |
Sales and maturities of marketable securities |
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69,456 |
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106,043 |
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Initial cash payment for tax credit investment |
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(20,000 |
) |
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— |
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Net cash (used in) provided by investing activities |
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(57,549 |
) |
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13,617 |
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Cash flows from financing activities: |
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Share repurchases related to share repurchase program |
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— |
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(62,052 |
) |
Share repurchases related to taxes for share-based awards |
|
|
(7,850 |
) |
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(6,636 |
) |
Tax credit investment liability payments |
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(468 |
) |
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— |
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Net cash used in financing activities |
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(8,318 |
) |
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(68,688 |
) |
Effect of exchange rate changes on cash and cash equivalents |
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(15 |
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(307 |
) |
Decrease in cash and cash equivalents |
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(29,605 |
) |
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(134,935 |
) |
Cash and cash equivalents at beginning of period |
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|
201,260 |
|
|
|
206,575 |
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Cash and cash equivalents at end of period |
|
$ |
171,655 |
|
|
$ |
71,640 |
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