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Press release from GlobeNewswire (a Nasdaq OMX company)

Urban Outfitters Reports Record 4th Quarter Operating Profit

Monday, March 07, 2011

Urban Outfitters Reports Record 4th Quarter Operating Profit13:00 EST Monday, March 07, 2011PHILADELPHIA, March 7, 2011 (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 $75 million and $273 million for the fourth quarter and year ended January 31, 2011, respectively. Earnings per diluted share were $0.45 for the quarter and $1.60 for the year. Total Company net sales rose by 14% over the same quarter last year to $668 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 4% for the quarter while comparable store net sales decreased 2% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 1%, 28%, and 5% respectively for the quarter. Direct-to-consumer comparable net sales soared 28% and wholesale segment net sales rose 31% for the quarter. "I am pleased to announce record sales and operating profits for the quarter, as well as our second highest operating margin rate for the fourth quarter and year," said Glen T. Senk, Chief Executive Officer. "It was another year of strong performance as we delivered 17% sales growth, 22% operating income growth, and executed our long standing goal of growing profits faster than sales," finished Mr. Senk. Net sales by brand and channel for the three and twelve months were as follows:             Three Months Ended January 31Twelve Months Ended January 31Net sales by brand2011201020112010 Urban Outfitters $321,772 $284,068 $1,041,502 $917,223 Anthropologie 283,418 257,759 1,011,999 842,374 Free People 58,941 43,589 202,493 163,634 Other 4,259 3,077 18,108 14,584 Total Company $668,390 $588,493 $2,274,102 $1,937,815          Net sales by channel         Retail Stores $492,381 $452,774 $1,720,002 $1,509,994 Direct-to-consumer 145,282 112,231 433,790 323,739 Retail Segment 637,663 565,005 2,153,792 1,833,733 Wholesale Segment 30,727 23,488 120,310 104,082 Total Company $668,390 $588,493 $2,274,102 $1,937,815   For the fourth quarter ended January 31, 2011, gross profit margin percentage declined by 208 basis points versus the prior year's comparable period. This decrease was primarily due to increased merchandise markdowns to clear seasonal inventory associated with changing women's apparel fashion trends, along with higher shipping costs associated with increased penetration of international direct-to-consumer business. For the year ended January 31, 2011, gross profit margin improved by 62 basis points versus the prior year's comparable period. The increase was primarily due to improved merchandise margins and leveraging of store occupancy expense driven by positive comparable store sales. As of January 31, 2011, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 10% at cost while total comparable store inventory increased by 4% at cost. Total inventories grew by $43 million or 23%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new retail stores. For the fourth quarter ended January 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 7 basis points. This increase was primarily due to continued investments in systems, international expansion and start up expenses for BHLDN which launched on February 14th, 2011. For the year ended January 31, 2011, selling, general and administration expenses, expressed as a percentage of net sales, decreased by 11 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 year. The Company's annual effective tax rate for January 31, 2011 decreased to 34.6% from 36.2% in the prior year. This decrease was due to the favorable mix of earnings in certain foreign jurisdictions and the current year federal rehabilitation credit. On February 28, 2006, our Board of Directors approved a stock repurchase program. The program authorizes the Company to purchase up to 8 million shares of our common shares from time-to-time, based upon prevailing market conditions. We repurchased 1.2 million common shares during the fiscal year ended January 31, 2007. During the quarter ended January 31, 2011, the Company did not repurchase any shares. During the year ended January 31, 2011 the Company repurchased and subsequently retired 6.3 million common shares for $205 million. On November 16, 2010, our Board of Directors authorized the repurchase of 10 million additional shares of the Company's common stock, from time-to-time, subject to prevailing market conditions. This authorization supplements the Company's 2006 stock repurchase program. During the year ended January 31, 2011, the Company opened a total of 46 new stores including: 21 Urban Outfitters stores, 16 Anthropologie stores and 9 Free People stores. Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 176 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and two web sites; 153 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; 42 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 January 31, 2011. Management's fourth quarter commentary is located on our website at www.urbanoutfittersinc.com. A conference call will be held today to discuss fourth quarter and year end results and will be web cast at 5:00 pm EST at: http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-irhomeThis 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 January 31,Year Ended January 31,  2011201020112010 Net sales $668,390 $588,493 $2,274,102 $1,937,815 Cost of sales, including certain buying, distribution and occupancy costs 403,330 342,832 1,337,482 1,151,670 Gross profit 265,060 245,661 936,620 786,145 Selling, general and administrative expenses 144,737 126,999 522,417 447,161 Income from operations 120,323 118,662 414,203 338,984 Other income, net 1,090 575 3,005 5,422 Income before income taxes 121,413 119,237 417,208 344,406 Income tax expense 46,175 41,562 144,250 124,513 Net income $75,238 $77,675 $272,958 $219,893           Net income per common share:          Basic $0.46 $0.46 $1.64 $1.31 Diluted $0.45 $0.45 $1.60 $1.28           Weighted average common shares and common share equivalents outstanding:         Basic 164,188,852 168,499,260 166,896,322 168,053,502 Diluted 167,677,305 172,421,607 170,333,550 171,230,245                     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 60.3% 58.3% 58.8% 59.4% Gross profit 39.7% 41.7% 41.2% 40.6% Selling, general and administrative expenses 21.7% 21.5% 23.0% 23.1% Income from operations 18.0% 20.2% 18.2% 17.5% Other income, net 0.2% 0.1% 0.1% 0.3% Income before income taxes 18.2% 20.3% 18.3% 17.8% Income tax expense 6.9% 7.1% 6.3% 6.4% Net income 11.3% 13.2% 12.0% 11.4%        URBAN OUTFITTERS, INC.Condensed Consolidated Balance Sheets(in thousands, except share and per share data) (unaudited)                    January 31, 2011January 31, 2010Assets     Current assets:     Cash and cash equivalents  $340,257 $159,024 Marketable securities  116,420 342,512 Accounts receivable, net of allowance for doubtful accounts of $1,015 and $1,284, respectively  34,439 38,405 Inventories  229,561 186,130 Prepaid expenses, deferred taxes and other current assets  81,237 80,142 Total current assets 801,914 806,213       Property and equipment, net  586,346 539,961 Marketable securities  350,975 243,445 Deferred income taxes and other assets  52,365 46,474 Total Assets  $1,791,600 $1,636,093      Liabilities and Shareholders' Equity     Current liabilities:     Accounts payable  $82,904 $78,041 Accrued expenses, accrued compensation and other current liabilities  126,057 110,508 Total current liabilities  208,961 188,549       Deferred rent and other liabilities  171,749 150,769 Total Liabilities  380,710 339,318       Shareholders' equity:      Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued –  –  Common shares; $.0001 par value, 200,000,000 shares authorized, 164,413,427 and 168,558,371 issued and outstanding, respectively  17 17 Additional paid-in-capital  27,603 184,620 Retained earnings  1,394,190 1,121,232 Accumulated other comprehensive loss  (10,920) (9,094) Total Shareholders' Equity  1,410,890 1,296,775 Total Liabilities and Shareholders' Equity  $1,791,600 $1,636,093CONTACT: Oona McCullough Director of Investor Relations (215) 454-4806