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Press release from GlobeNewswire (a Nasdaq OMX company)

Urban Outfitters Reports Q3 Earnings Increase 17%

Monday, November 15, 2010

Urban Outfitters Reports Q3 Earnings Increase 17%13:00 EST Monday, November 15, 2010PHILADELPHIA, Nov. 15, 2010 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands today announced earnings of $73 million and $198 million for the three and nine months ended October 31, 2010, respectively. Earnings per diluted share were $0.43 for the quarter and $1.16 for the nine months ended October 31, 2010. Total Company net sales rose by 13% over the same quarter last year to $574 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 6% for the quarter while comparable store net sales grew 1% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 5%, 29%, and 5%, respectively for the quarter. Direct-to-consumer comparable net sales soared 31% and wholesale segment net sales rose 13% for the quarter. "We are proud to deliver record third quarter sales and earnings results," said Glen T. Senk, Chief Executive Officer.  "In a dynamic environment, the consistency of our performance is a reflection of our team's discipline, creativity, and skill," finished Mr. Senk. Net sales by brand and channel for the three and nine months were as follows:   Three Months Ended October 31Nine Months Ended October 31Net sales by brand2010200920102009 Urban Outfitters $265,993 $240,473 $719,730 $633,155 Anthropologie 247,549 216,270 728,581 584,615 Free People 56,108 45,084 143,552 120,045 Other 3,942 4,073 13,849 11,507 Total Company $573,592 $505,900 $1,605,712 $1,349,322          Net sales by channel         Retail Stores $433,425 $395,635 $1,227,621 $1,057,220 Direct-to-consumer 105,670 79,772 288,508 211,508 Retail Segment 539,095 475,407 1,516,129 1,268,728 Wholesale Segment 34,497 30,493 89,583 80,594 Total Company $573,592 $505,900 $1,605,712 $1,349,322 For the three months ended October 31, 2010, gross profit margin declined by 39 basis points versus the prior year's comparable period. This decrease was primarily due to higher shipping costs associated with an increased penetration of international direct-to-consumer business as well as the impact of pre-opening occupancy expense due to the timing of store openings. During the quarter merchandise margins were flat to the prior year comparable period. For the nine months ended October 31, 2010, gross profit margin improved by 176 basis points versus the prior year's comparable period. The increase for the nine month period was primarily due to improved merchandise margins and leveraging of store occupancy expense driven by positive comparable store sales. As of October 31, 2010, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 8% at cost while total comparable store inventory increased by 1% at cost. Total inventories grew by $55 million or 23%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new retail stores. For the three months ended October 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 27 basis points. This increase was primarily due to higher fulfillment costs related to the increased penetration of international direct-to-consumer sales, investments in systems and international infrastructure. For the nine months ended October 31, 2010, selling, general and administration expenses, expressed as a percentage of net sales, decreased by 21 basis points versus the prior comparable period. This decrease was primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the nine months ended October 31, 2010.  During the three months ended October 31, 2010, the Company's quarterly tax rate decreased to 30.8% from 36.1% in the prior year's comparable quarter. This decrease was due to the favorable mix of earnings in certain foreign jurisdictions, the current year federal rehabilitation credit and favorable revisions to state tax estimates resulting from tax return filings. The Company expects the annual effective tax rate to be approximately 34% for the full year. On February 28, 2006, our Board of Directors approved a stock repurchase program. The program authorizes the Company to purchase up to 8,000,000 shares of our common shares from time-to-time, based upon prevailing market conditions. We repurchased 1,220,000 common shares during the fiscal year ended January 31, 2007. During the three months ended October 31, 2010, the Company repurchased 4,273,267 common shares for $133 million at an average price of $31.06 per share. During the nine months ended October 31, 2010 the Company repurchased and subsequently retired 6,288,447 common shares. As of October 31, 2010, 491,553 shares were available under the stock repurchase program. During the nine months ended October 31, 2010, the Company has opened a total of 29 new stores including: 11 Urban Outfitters stores, 13 Anthropologie stores and 5 Free People stores. As of February 1, 2010, the Company converted one Free People store to a new Free People wholesale showroom. The Company expects to open approximately 45 new stores during the fiscal year. Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 166 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and two web sites; 150 Anthropologie stores in the United States, Canada and Europe, catalogs and two websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 38 Free People stores, catalogs and web site; Leifsdottir wholesale, which sells its product to approximately 65 specialty stores and select department stores, and a Leifsdottir web site and 1 Terrain garden center and web site as of October 31, 2010.  Management third quarter commentary is located on our website at www.urbanoutfittersinc.com.   A conference call will be held today to discuss third quarter results and will be web cast at 5:00 pm. EST at: http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-EventDetails&EventId=3273164This 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,  2010200920102009           Net sales $573,592 $505,900 $1,605,712 $1,349,322 Cost of sales, including certain buying, distribution and occupancy costs 337,599 295,812 934,152 808,838 Gross profit 235,993 210,088 671,560 540,484 Selling, general and administrative expenses 131,193 114,327 377,680 320,162 Income from operations 104,800 95,761 293,880 220,322 Other income, net 876 1,817 1,915 4,847 Income before income taxes 105,676 97,578 295,795 225,169 Income tax expense 32,570 35,186 98,075 82,951 Net income $73,106 $62,392 $197,720 $142,218           Net income per common share:          Basic $0.44 $0.37 $1.18 $0.85 Diluted $0.43 $0.36 $1.16 $0.83           Weighted average common shares and common share equivalents outstanding:         Basic 165,699,540 168,319,514 167,808,729 167,903,283 Diluted 168,575,637 171,443,902 171,228,883 170,831,491           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% 58.5% 58.2% 59.9% Gross profit 41.1% 41.5% 41.8% 40.1% Selling, general and administrative expenses 22.8% 22.6% 23.5% 23.8% Income from operations 18.3% 18.9% 18.3% 16.3% Other income, net 0.1% 0.4% 0.1% 0.4% Income before income taxes 18.4% 19.3% 18.4% 16.7% Income tax expense 5.7% 7.0% 6.1% 6.2% Net income 12.7% 12.3% 12.3% 10.5%URBAN OUTFITTERS, INC.Condensed Consolidated Balance Sheets(in thousands, except share and per share data) (unaudited)                 October 31, 2010January 31, 2010October 31, 2009        Assets       Current assets:       Cash and cash equivalents $253,546 $159,024 $202,316 Marketable securities 250,078 342,512 216,079 Accounts receivable, net of allowance for doubtful accounts of $1,538, $1,284 and $1,276, respectively 47,653 38,405 37,592 Inventories 289,256 186,130 234,521 Prepaid expenses, deferred taxes and other current assets 59,073 80,142 46,987 Total current assets 899,606 806,213 737,495         Property and equipment, net 582,786 539,961 534,260 Marketable securities 186,202 243,445 233,525 Deferred income taxes and other assets 53,377 46,474 35,867 Total Assets $1,721,971 $1,636,093 $1,541,147        Liabilities and Shareholders' Equity       Current liabilities:       Accounts payable $114,967 $78,041 $93,264 Accrued expenses, accrued compensation and other current liabilities 123,061 110,508 88,950 Total current liabilities 238,028 188,549 182,214         Deferred rent and other liabilities 164,044 150,769 143,673 Total Liabilities 402,072 339,318 325,887         Shareholders' equity:       Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued – – – Common shares; $.0001 par value, 200,000,000 shares authorized, 163,914,628, 168,558,371 and 168,397,488 issued and outstanding, respectively 17 17 17 Additional paid-in capital 10,165 184,620 179,642 Retained earnings 1,318,952 1,121,232 1,043,557 Accumulated other comprehensive loss (9,235) (9,094) (7,956) Total Shareholders' Equity 1,319,899 1,296,775 1,215,260 Total Liabilities and Shareholders' Equity $1,721,971 $1,636,093 $1,541,147CONTACT: Urban Outfitters, Inc. Oona McCullough, Director of Investor Relations (215) 454-4806