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Press release from GlobeNewswire (a Nasdaq OMX company)

Urban Outfitters Reports Record Q2 Sales

Monday, August 15, 2011

Urban Outfitters Reports Record Q2 Sales13:00 EDT Monday, August 15, 2011 PHILADELPHIA, Aug. 15, 2011 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, BHLDN, Terrain and Urban Outfitters brands, today announced net income of $57 million and $95 million for the three and six months ended July 31, 2011, respectively. Earnings per diluted share were $0.35 for the quarter and $0.59 for the six months ended July 31, 2011. Total Company net sales rose by 10% over the same quarter last year to $609 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 1% for the quarter while comparable store net sales decreased 2% for the quarter. Comparable retail segment net sales at Free People and Urban Outfitters increased 18%, and 1%, respectively while comparable retail segment net sales at Anthropologie were flat for the quarter. Direct-to-consumer comparable net sales increased 15% and wholesale segment net sales rose 7% for the quarter. "We remain confident in our strategies and believe we made great executional progress during the quarter," said Chief Executive Officer, Glen T. Senk. "We anticipate gradual improvements in our comparable sales over the balance of the fiscal year and into Spring 2012," Mr. Senk finished. Net sales by brand and channel for the three and six month periods were as follows:  Three Months Ended  Six Months Ended  July 31,  July 31,Net sales by brand   2011    2010     2011    2010 Urban Outfitters $ 272,173    $ 243,232   $  507,501   $ 453,737 Anthropologie 272,639   256,353   501,187   481,032 Free People 58,707   46,876   110,458    87,444 Other 5,662   5,698   14,054   9,907 Total Company $ 609,181    $  552,159   $ 1,133,200    $ 1,032,120                Net sales by channel               Retail Stores $ 464,672    $ 425,655   $   855,836   $ 794,196 Direct-to-consumer 112,610   96,571   214,908   182,838  Retail Segment 577,282   522,226   1,070,744   977,034 Wholesale Segment 31,899   29,933   62,456    55,086 Total Company $ 609,181    $ 552,159   $ 1,133,200   $ 1,032,120 For the three months ended July 31, 2011, gross profit margin percentage declined by 459 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns to clear slow moving women's apparel inventory at both Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store sales. For the six months ended July 31, 2011, gross profit margin percentage declined by 474 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns noted above. As of July 31, 2011, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 12% at cost while total comparable store inventory increased by 9% at cost. Total inventories grew by $60 million or 25%, on a year-over-year basis. Approximately half of the dollar increase was due to non comparable receipts versus the prior year, specifically; early receipts in the final week of July and higher in-transit, fabric and BHLDN inventories. The balance of the increase is driven by the acquisition of inventory to stock new retail stores and to support Direct-to-Consumer growth. For the three months ended July 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 32 basis points versus the prior year comparable period due primarily to ecommerce and related catalog investments. Investments in both technology and in our distribution and fulfillment facilities in Europe also contributed to the increase.  For the six months ended July 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 62 basis points versus the prior year comparable period primarily due to ecommerce and related catalog investments. On November 16, 2010, our Board of Directors approved a share repurchase program that authorized the repurchase of 10.0 million common shares subject to prevailing market conditions. During the three months ended July 31, 2011, the Company repurchased and retired 2.3 million common shares for approximately $67 million. During the six months ended July 31, 2011, the Company repurchased and retired 7.2 million common shares for approximately $216 million. As of July 31, 2011, 3.3 million common shares were available for repurchase under the stock repurchase program. During the six months ended July 31, 2011, the Company opened a total of 20 new stores including: 9 Free People stores, 7 Anthropologie stores and 4 Urban Outfitters stores. Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 180 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 160 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 51 Free People stores, catalogs and website, 1 Terrain garden center and website and a BHLDN website as of July 31, 2011.  Management's second quarter commentary is located on our website at www.urbanoutfittersinc.com.   A conference call will be held today to discuss second quarter results and will be web cast at 5:00 pm. EDT 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. When used in this release, the words "project," "believe," "plan," "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: 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, lowered levels of consumer confidence and higher levels of unemployment, and continuation of lowered levels of consumer spending resulting from the continuing worldwide economic downturn, 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, the closing of any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, response to new store concepts, potential difficulty liquidating certain marketable security investments and other risks identified in the Company's 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 July 31,Six Months Ended July 31, 2011201020112010           Net sales $609,181 $552,159 $1,133,200 $1,032,120 Cost of sales, including certain buying, distribution and occupancy costs 378,091 317,378 708,745 596,553 Gross profit 231,090 234,781 424,455 435,567 Selling, general and administrative expenses 143,095 127,912 277,624 246,487 Income from operations 87,995 106,869 146,831 189,080 Other income, net 935 616 2,300 1,039 Income before income taxes 88,930 107,485 149,131 190,119 Income tax expense 32,237 35,828 53,814 65,505 Net income $56,693 $71,657 $95,317 $124,614           Net income per common share:          Basic $0.36 $0.42 $0.59 $0.74 Diluted $0.35 $0.42 $0.59 $0.72           Weighted average common shares and common share equivalents outstanding:         Basic 158,581,618 168,908,598 160,436,550 168,880,803 Diluted 160,743,743 172,325,996 162,960,745 172,572,985                     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 62.1% 57.5% 62.5% 57.8% Gross profit 37.9% 42.5% 37.5% 42.2% Selling, general and administrative expenses 23.5% 23.1% 24.5% 23.9% Income from operations 14.4% 19.4% 13.0% 18.3% Other income, net 0.2% 0.1% 0.2% 0.1% Income before income taxes 14.6% 19.5% 13.2% 18.4% Income tax expense 5.3% 6.5% 4.8% 6.3% Net income 9.3% 13.0% 8.4% 12.1%    URBAN OUTFITTERS, INC.Condensed Consolidated Balance Sheets(in thousands, except share data) (unaudited)                    July 31,January 31,July 31, 201120112010Assets       Current assets:       Cash and cash equivalents  $226,381 $340,257 $244,954 Marketable securities  59,347 116,420 346,107 Accounts receivable, net of allowance for doubtful accounts of $994, $1,015 and $1,360, respectively  52,560 36,502 42,474 Inventories  303,159 229,561 243,203 Prepaid expenses, deferred taxes and other current assets  57,121 81,237 85,875 Total current assets 698,568 803,977 962,613         Property and equipment, net  626,188 586,346 559,945 Marketable securities  322,902 351,988 157,607 Deferred income taxes and other assets  57,766 52,010 46,902 Total Assets  $1,705,424 $1,794,321 $1,727,067        Liabilities and Shareholders' Equity       Current liabilities:       Accounts payable  $110,759 $82,904 $92,151 Accrued expenses, accrued compensation and other current liabilities  117,756 128,120 106,260 Total current liabilities  228,515 211,024 198,411         Deferred rent and other liabilities  172,589 171,749 155,369 Total Liabilities  401,104 382,773 353,780         Shareholders' equity:        Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued – –  –  Common shares; $.0001 par value, 200,000,000 shares authorized, 157,524,395, 164,413,427 and 168,100,495 issued and outstanding respectively 16 17 17 Additional paid-in-capital  – 27,603 138,413 Retained earnings  1,309,964 1,394,190 1,245,846 Accumulated other comprehensive loss  (5,660) (10,262) (10,989) Total Shareholders' Equity  1,304,320 1,411,548 1,373,287 Total Liabilities and Shareholders' Equity  $1,705,424 $1,794,321 $1,727,067CONTACT: Oona McCullough Director of Investor Relations (215) 454-4806