PHILADELPHIA, Nov. 12, 2009 (GLOBE 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 $62 million and $142 million for the three and nine months ended October 31, 2009, respectively. Earnings per diluted share were $0.36 for the quarter and $0.83 for the nine months ended October 31, 2009.
As stated in the Company's previous sales release on November 5, 2009, for the third quarter of fiscal 2010, net sales increased by 6% over the same quarter last year to $506 million. Comparable retail segment net sales, which include our Direct-to-consumer channels, increased 2%. Comparable store net sales at Anthropologie rose 3% while Free People and Urban Outfitters declined 13% and 5%, respectively. Comparable store net sales declined 2%. Direct-to-consumer net sales jumped 21% and Wholesale Segment net sales declined 10%.
"We are proud to announce a record breaking quarter and a solid 19% operating margin," said Glen T. Senk, Chief Executive Officer. "We continued to exhibit exceptional inventory and expense discipline while simultaneously making strategic investments in design, supply chain, technology, Direct-to-consumer initiatives and our European infrastructure. These results highlight our ability to deliver compelling merchandise and a unique shopping experience under difficult market conditions," finished Mr. Senk.
Net sales for the three and nine months were as follows:
Three months ended Nine months ended
October 31, October 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(in thousands) (in thousands)
Urban Outfitters
stores $ 202,322 $ 208,325 $ 532,275 $ 557,927
Anthropologie stores 181,620 158,852 493,109 470,063
Free People stores 10,486 9,701 27,014 23,319
Terrain 1,207 1,266 4,822 4,491
---------- ---------- ---------- ----------
Net store sales 395,635 378,144 1,057,220 1,055,800
---------- ---------- ---------- ----------
Direct-to-consumer 79,772 65,916 211,508 184,662
---------- ---------- ---------- ----------
Retail segment net
sales 475,407 444,060 1,268,728 1,240,462
---------- ---------- ---------- ----------
Wholesale segment net
sales 30,493 33,893 80,594 86,078
---------- ---------- ---------- ----------
Total net sales $ 505,900 $ 477,953 $1,349,322 $1,326,540
========== ========== ========== ==========
For the three months ended October 31, 2009, gross profit margin increased by 65 basis points, versus the prior year's comparable quarter. This increase was primarily due to significant improvements in initial merchandise margins, which were partially offset by increased merchandise markdowns to clear seasonal inventories. For the nine months ended October 31, 2009, gross profit margin decreased by 69 basis points, versus the prior year's comparable period. This decrease was primarily due to merchandise markdowns to clear seasonal inventories and a higher rate of store occupancy expense driven by the decrease in comparable store sales. This decrease was partially offset by improvements in initial merchandise margins.
As of October 31, 2009, inventories decreased by $18 million or 8%, on a year-over-year basis as comparable store inventory declines more than offset additions to inventories for new stores. Total comparable store inventories decreased by 15% at cost and 8% in units leaving the Company well positioned for the upcoming holiday season.
For the three and nine months ended October 31, 2009, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 63 and 79 basis points, respectively, versus the comparable periods last year. The increases were primarily due to the deleveraging of fixed store costs related to the decline in comparable store sales as well as the accrual of additional incentive-based bonus related to our expectation to meet targeted improvements in annual performance and earnings.
During the three months ended October 31, 2009, the Company's quarterly tax rate rose to 36.1% from 35.4% in the prior year's comparable quarter. The increase was primarily due to tax rate increases in certain state municipalities enacted during the current fiscal year. Additionally, the Company produced a lower proportion of tax free interest income due to a strategic shift to a mix of lower risk securities versus the prior year's holdings. The Company's current annual effective tax rate is estimated at 37% as of October 31, 2009.
During the nine months ended October 31, 2009, the Company has opened a total of 25 new stores including: 9 Urban Outfitters stores, 12 Anthropologie stores, including our first European store, and 4 Free People stores. The Company expects to open 32 to 34 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 151 Urban Outfitters stores in the United States, Canada, and Europe, two web sites and a catalog; 133 Anthropologie stores in the United States and Europe, a web site, catalog and Leifsdottir, Anthropologie's wholesale concept; Free People Wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 34 Free People stores, a web-site and catalog; and 1 Terrain garden center as of October 31, 2009.
A conference call will be held today to discuss third quarter results and will be web cast at 11:00 a.m. EST at: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=2536724
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.
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,
-------------------------- --------------------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $ 505,900 $ 477,953 $ 1,349,322 $ 1,326,540
Cost of sales,
including
certain
buying,
distribution
and occupancy
costs 295,812 282,557 808,838 785,954
------------ ------------ ------------ ------------
Gross profit 210,088 195,396 540,484 540,586
Selling,
general and
administra-
tive expenses 114,327 105,017 320,162 304,345
------------ ------------ ------------ ------------
Income from
operations 95,761 90,379 220,322 236,241
Other income,
net 1,817 1,437 4,847 7,102
------------ ------------ ------------ ------------
Income
before
income
taxes 97,578 91,816 225,169 243,343
Income tax
expense 35,186 32,542 82,951 84,524
------------ ------------ ------------ ------------
Net income $ 62,392 $ 59,274 $ 142,218 $ 158,819
============ ============ ============ ============
Net income per
common share:
Basic $ 0.37 $ 0.35 $ 0.85 $ 0.95
============ ============ ============ ============
Diluted $ 0.36 $ 0.35 $ 0.83 $ 0.93
============ ============ ============ ============
Weighted
average common
shares and
common share
equivalents
outstanding:
Basic 168,319,514 167,030,294 167,903,283 166,619,747
============ ============ ============ ============
Diluted 171,443,902 171,064,904 170,831,491 171,122,246
============ ============ ============ ============
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 58.5% 59.1% 59.9% 59.2%
------------ ------------ ------------ ------------
Gross profit 41.5% 40.9% 40.1% 40.8%
Selling,
general and
administra-
tive expenses 22.6% 22.0% 23.8% 22.9%
------------ ------------ ------------ ------------
Income from
operations 18.9% 18.9% 16.3% 17.9%
Other income
(expense),
net 0.4% 0.3% 0.4% 0.5%
------------ ------------ ------------ ------------
Income
before
income
taxes 19.3% 19.2% 16.7% 18.4%
Income tax
expense 7.0% 6.8% 6.2% 6.4%
------------ ------------ ------------ ------------
Net income 12.3% 12.4% 10.5% 12.0%
============ ============ ============ ============
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
October 31, January 31, October 31,
2009 2009 2008
---------- ---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 202,316 $ 316,035 $ 71,714
Marketable securities 216,079 49,948 127,335
Accounts receivable, net of
allowance for doubtful accounts
of $1,276, $1,229 and $2,326,
respectively 37,592 36,390 33,822
Inventories 234,521 169,698 252,308
Prepaid expenses, deferred
taxes and other current assets 46,987 52,331 64,079
---------- ---------- ----------
Total current assets 737,495 624,402 549,258
Property and equipment, net 534,260 505,407 513,639
Marketable securities 233,525 155,226 225,364
Deferred income taxes and other
assets 35,867 43,974 40,165
---------- ---------- ----------
Total Assets $1,541,147 $1,329,009 $1,328,426
========== ========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 93,264 $ 62,955 $ 82,432
Accrued expenses, accrued
compensation and other current
liabilities 88,950 78,195 93,843
---------- ---------- ----------
Total current liabilities 182,214 141,150 176,275
---------- ---------- ----------
Deferred rent and other
liabilities 143,673 134,084 130,754
---------- ---------- ----------
Total Liabilities 325,887 275,234 307,029
---------- ---------- ----------
Shareholders' equity:
Preferred shares; $.0001 par
value, 10,000,000 shares
authorized, none issued -- -- --
Common shares; $.0001 par value,
200,000,000 shares authorized,
168,397,488, 167,712,088 and
167,706,788 issued and
outstanding, respectively 17 17 17
Additional paid-in capital 179,642 170,166 167,752
Retained earnings 1,043,557 901,339 860,794
Accumulated other comprehensive
loss (7,956) (17,747) (7,166)
Total Shareholders' Equity 1,215,260 1,053,775 1,021,397
---------- ---------- ----------
Total Liabilities and Shareholders'
Equity $1,541,147 $1,329,009 $1,328,426
========== ========== ==========