UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 14, 2008
URBAN OUTFITTERS, INC.
(Exact Name of Registrant as Specified in its Charter)
| Pennsylvania | 000-22754 | 23-2003332 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 5000 South Broad St, Philadelphia PA | 19112-1495 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (215) 454-5500
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 (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4)) |
| Item 2.02. | Results of Operations and Financial Condition |
On August 14, 2008, 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 and six months ended July 31, 2008.
| Item 9.01. | Financial Statements and Exhibits |
| 99.1 | Earnings Release dated August 14, 2008 – Operating Results for the three and six months ended July 31, 2008. |
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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.
| URBAN OUTFITTERS, INC. | ||||||
| Date: August 18, 2008 |
By: | /s/ John E. Kyees | ||||
| John E. Kyees | ||||||
| Chief Financial Officer | ||||||
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Exhibit Index
| Exhibit No. |
Description | |
| EX-99.1 |
Earnings Release dated August 14, 2008 – Operating results for the three and six months ended July 31, 2008. |
- 3 -
Exhibit 99.1
URBAN OUTFITTERS, INC.
Second Quarter Results
Philadelphia, PA – August 14, 2008
| For Immediate Release | Contact: | John Kyees | ||
| Chief Financial Officer | ||||
| (215) 454-5500 |
Urban Outfitters’ Earnings Surge 79% in Q2
PHILADELPHIA, August 14, 2008 (PRIME NEWSWIRE) — Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Terrain and Urban Outfitters brands today announced earnings of $57 million and $100 million for the three and six months ended July 31, 2008, respectively. Earnings per diluted share were $0.33 for the three and $0.58 for the six months.
Key elements of the results are as follows:
| • | net sales jumped 30%; |
| • | comparable store net sales rose 13%; |
| • | 7%, 10% and 19% at Anthropologie, Free People and Urban Outfitters, stores, respectively; |
| • | Direct-to-consumer net sales rose 42% and Free People Wholesale net sales increased 14%; |
| • | gross profit improved 43%; |
| • | operating margin leaped 75%; and |
| • | earnings surged 79%. |
“All of our brands and channels produced exceptional results during the period,” said Glen T. Senk, Chief Executive Officer. “The Company executed superbly throughout the quarter, and we believe we are appropriately positioned for the second half of the year,” finished Mr. Senk.
Net sales for the three and six month periods were as follows:
| Three Months ended | Six months ended | |||||||||||
| July 31, | July 31, | |||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| (in thousands) | (in thousands) | |||||||||||
| Urban Outfitters stores |
$ | 189,812 | $ | 140,931 | $ | 349,602 | $ | 270,839 | ||||
| Anthropologie stores |
165,615 | 137,558 | 311,211 | 256,157 | ||||||||
| Free People stores |
7,759 | 3,300 | 13,618 | 5,990 | ||||||||
| Terrain garden center |
2,608 | — | 3,225 | — | ||||||||
| Net store sales |
365,794 | 281,789 | 677,656 | 532,986 | ||||||||
| Direct-to-consumer |
60,498 | 42,538 | 118,746 | 86,045 | ||||||||
| Retail segment net sales |
426,292 | 324,327 | 796,402 | 619,031 | ||||||||
| Wholesale |
28,003 | 24,122 | 52,185 | 43,962 | ||||||||
| Total net sales |
$ | 454,295 | $ | 348,449 | $ | 848,587 | $ | 662,993 | ||||
For the three and six months ended July 31, 2008, gross profit margins increased by 373 and 408 basis points, respectively, versus the prior year’s comparable periods. Improvements in initial merchandise cost, reductions in markdowns and leverage of store occupancy costs helped achieve this growth for both periods.
As of July 31, 2008, inventories grew by $25.6 million or 14%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable store inventories increased by 3%.
For the three and six months ended July 31, 2008, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 95 and 55 basis points, respectively, versus the comparable periods last year. This rate improvement was led by the leverage of direct store related costs and was driven by the increase in comparable store net sales.
The Company’s second quarter tax rate improved to 33.2% from 35.7% in the first quarter of this fiscal year. Management estimates an annual effective tax rate of 35% for the full fiscal year. The prior year’s unusually low annual effective tax rate was primarily impacted by the receipt of one-time federal tax incentives for work performed on the development of our new home offices.
During the six months ended July 31, 2008, the Company has opened a total of 24 new stores including: 10 Urban Outfitters stores, 7 Anthropologie stores, 6 Free People stores and 1 Terrain garden center. The Company expects to open 45 new stores during the full fiscal year.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 132 Urban Outfitters stores in the United States, Canada, and Europe, two web sites and a catalog; 115 Anthropologie stores, a web site, catalog and Leifsdottir, Anthropologie’s recently launched wholesale concept; Free People Wholesale, which sells its product to approximately 1,700 specialty stores and select department stores; 21 Free People stores, a web-site and catalog; and 1 Terrain garden center as of July 31, 2008.
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://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1908465
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.
###
(Tables follow)
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Net sales |
$ | 454,295 | $ | 348,449 | $ | 848,587 | $ | 662,993 | ||||||||
| Cost of sales, including certain buying, distribution and occupancy costs |
267,785 | 218,422 | 503,397 | 420,351 | ||||||||||||
| Gross profit |
186,510 | 130,027 | 345,190 | 242,642 | ||||||||||||
| Selling, general and administrative expenses |
103,590 | 82,756 | 199,328 | 159,355 | ||||||||||||
| Income from operations |
82,920 | 47,271 | 145,862 | 83,287 | ||||||||||||
| Other income, net |
2,445 | 2,037 | 5,665 | 3,840 | ||||||||||||
| Income before income taxes |
85,365 | 49,308 | 151,527 | 87,127 | ||||||||||||
| Income tax expense |
28,377 | 17,442 | 51,982 | 25,894 | ||||||||||||
| Net income |
$ | 56,988 | $ | 31,866 | $ | 99,545 | $ | 61,233 | ||||||||
| Net income per common share: |
||||||||||||||||
| Basic |
$ | 0.34 | $ | 0.19 | $ | 0.60 | $ | 0.37 | ||||||||
| Diluted |
$ | 0.33 | $ | 0.19 | $ | 0.58 | $ | 0.36 | ||||||||
| Weighted average common shares and common share equivalents outstanding: |
||||||||||||||||
| Basic |
166,698,963 | 165,315,656 | 166,412,217 | 165,076,476 | ||||||||||||
| Diluted |
171,687,530 | 169,710,489 | 171,148,661 | 169,260,752 | ||||||||||||
| 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 |
58.9 | % | 62.7 | % | 59.3 | % | 63.4 | % | ||||||||
| Gross profit |
41.1 | % | 37.3 | % | 40.7 | % | 36.6 | % | ||||||||
| Selling, general and administrative expenses |
22.8 | % | 23.7 | % | 23.5 | % | 24.0 | % | ||||||||
| Income from operations |
18.3 | % | 13.6 | % | 17.2 | % | 12.6 | % | ||||||||
| Other income (expense), net |
0.5 | % | 0.6 | % | 0.7 | % | 0.6 | % | ||||||||
| Income before income taxes |
18.8 | % | 14.2 | % | 17.9 | % | 13.2 | % | ||||||||
| Income tax expense |
6.2 | % | 5.0 | % | 6.1 | % | 4.0 | % | ||||||||
| Net income |
12.6 | % | 9.2 | % | 11.8 | % | 9.2 | % | ||||||||
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
| July 31, 2008 |
January 31, 2008 |
July 31, 2007 | |||||||
| Assets | |||||||||
| Current assets: |
|||||||||
| Cash and cash equivalents |
$ | 160,391 1 | $ | 105,271 | $ | 42,387 | |||
| Marketable securities |
76,905 | 80,127 | 130,748 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $2,395, $972 and $1,562, respectively |
32,468 | 26,365 | 24,516 | ||||||
| Inventories |
211,205 | 171,925 | 185,619 | ||||||
| Prepaid expenses, deferred taxes and other current assets |
47,762 | 49,922 | 28,981 | ||||||
| Total current assets |
528,731 | 433,610 | 412,251 | ||||||
| Property and equipment, net |
507,399 | 488,889 | 468,972 | ||||||
| Marketable securities |
191,129 | 188,252 | 68,357 | ||||||
| Deferred income taxes and other assets |
41,130 | 32,040 | 31,426 | ||||||
| Total Assets |
$ | 1,268,389 | $ | 1,142,791 | $ | 981,006 | |||
| Liabilities and Shareholders’ Equity | |||||||||
| Current liabilities: |
|||||||||
| Accounts payable |
$ | 88,521 | $ | 74,020 | $ | 61,058 | |||
| Accrued expenses, accrued compensation and other current liabilities |
83,478 | 93,358 | 72,047 | ||||||
| Total current liabilities |
171,999 | 167,378 | 133,105 | ||||||
| Deferred rent and other liabilities |
128,252 | 121,982 | 102,628 | ||||||
| Total Liabilities |
300,251 | 289,360 | 235,733 | ||||||
| Shareholders’ equity: |
|||||||||
| Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued |
— | — | — | ||||||
| Common shares; $.0001 par value, 200,000,000 shares authorized, 167,164,738, 166,104,615 and 165,810,665 issued and outstanding, respectively |
17 | 17 | 17 | ||||||
| Additional paid-in-capital |
160,615 | 144,204 | 136,551 | ||||||
| Retained earnings |
801,520 | 701,975 | 602,977 | ||||||
| Accumulated other comprehensive income |
5,986 | 7,235 | 5,728 | ||||||
| Total Shareholders’ Equity |
968,138 | 853,431 | 745,273 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 1,268,389 | $ | 1,142,791 | $ | 981,006 | |||