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URBN Reports Record Q2 Sales and EPS

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PHILADELPHIA, Aug. 21, 2018 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands and the Food and Beverage division, today announced net income of $93 million and $134 million for the three and six months ended July 31, 2018, respectively. Earnings per diluted share were $0.84 and $1.22 for the three and six months ended July 31, 2018, respectively.

Total Company net sales for the three months ended July 31, 2018, increased 13.7% over the same period last year to a record $992 million. Comparable Retail segment net sales increased 13%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable Retail segment net sales increased 17% at Free People, 15% at Urban Outfitters and 11% at the Anthropologie Group. Wholesale segment net sales increased 10%.

"I'm pleased to announce our teams produced record Q2 sales and earnings per share," said Richard A. Hayne, Chief Executive Officer. "All three brands delivered double-digit Retail segment ‘comp' sales and lower markdown rates to drive these results," finished Mr. Hayne.

Net sales by brand and segment for the three and six-month periods were as follows:

  Three Months Ended     Six Months Ended  
  July 31,     July 31,  
  2018     2017     2018     2017  
Net sales by brand                              
Urban Outfitters $ 379,327     $ 323,828     $ 702,005     $ 608,615  
Anthropologie Group   401,275       362,449       748,360       673,505  
Free People   206,413       180,228       387,720       339,735  
Food and Beverage   5,439       6,426       10,057       12,266  
Total Company $ 992,454     $ 872,931     $ 1,848,142     $ 1,634,121  
                               
Net sales by segment                              
Retail Segment $ 902,027     $ 790,628     $ 1,677,591     $ 1,480,980  
Wholesale Segment   90,427       82,303       170,551       153,141  
Total Company $ 992,454     $ 872,931     $ 1,848,142     $ 1,634,121  
 

For the three and six months ended July 31, 2018, the gross profit rate improved by 180 basis points and 157 basis points versus the prior year's comparable periods, respectively. The improvement in gross profit rate for both periods was driven by lower markdowns at all three brands and leverage in store occupancy cost due to strong Retail segment comparable net sales. These gains were partially offset by deleverage in delivery expense due in part to the increased penetration of the digital channel.

As of July 31, 2018, total inventory increased by $10.5 million, or 2.9%, on a year-over-year basis. Comparable Retail segment inventory increased 3% at cost.

Selling, general and administrative expenses increased by $16.8 million, or 7.6%, and $24.8 million, or 5.6%, during the three and six months ended July 31, 2018, compared to the prior year's comparable periods, respectively. As a percentage of net sales, selling, general and administrative expenses leveraged 136 basis points and 178 basis points during the three and six months ended July 31, 2018, when compared to the prior year's comparable periods, respectively. The dollar growth in selling, general and administrative expenses in both periods was primarily due to increased direct selling and marketing expenses to support and drive the increase in Retail segment net sales and higher bonus expense due to the strong Company performance. The leverage in both periods was primarily driven by the net sales growth, continued savings associated with the fiscal 2018 store reorganization project and the current year benefit associated with the nonrecurring store reorganization expenses incurred in the prior year.

The Company's effective tax rate for the three months ended July 31, 2018, was 21.7% compared to 35.1% in the prior year period. The effective tax rate for the six months ended July 31, 2018 was 22.3% compared to 37.1% in the prior year period. The decrease in the effective tax rate for the three and six month periods was primarily due to the lower federal statutory rate resulting from the U.S. Tax Cuts and Jobs Act.

Net income for the three and six months ended July 31, 2018, was $93 million and $134 million, respectively, and earnings per diluted share was $0.84 and $1.22, respectively.

On August 22, 2017, the Company's Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program, of which 17.9 million common shares were remaining as of July 31, 2018. No shares were repurchased during the six months ended July 31, 2018. During the year ended January 31, 2018, the Company repurchased and subsequently retired 2.1 million common shares for approximately $46 million under this program.

During the six months ended July 31, 2018, the Company opened a total of seven new locations including: three Free People stores, two Urban Outfitters stores and two Anthropologie Group stores; and closed two locations including: one Urban Outfitters store and one Anthropologie Group store.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 246 Urban Outfitters stores in the United States, Canada, and Europe and websites; 227 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 135 Free People stores in the United States and Canada, catalogs and websites and 10 Food and Beverage restaurants, as of July 31, 2018. Free People and Anthropologie Group wholesale sell their products through approximately 2,100 department and specialty stores worldwide, digital businesses and the Company's Retail segment.

A conference call will be held today to discuss second quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/8f7kd45c

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 contain forward-looking statements. When used in this release, the words "project," "believe," "plan," "will," "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 worldwide political events and the resultant impact on consumer spending patterns, any effects of war, terrorism, and civil unrest, natural disasters or severe or unseasonable weather conditions, increases in labor costs, increases in raw material costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, the departure of one or more key senior executives, import risks, changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes or increases in duties or quotas, the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, our ability to maintain and expand our digital sales channels, response to new store concepts, our ability to integrate acquisitions, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate, the impact of the U.S. Tax Cuts and Jobs Act, changes in accounting standards and subjective assumptions, regulatory changes and legal matters 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.

(Tables follow)


URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(amounts in thousands, except share and per share data)
(unaudited)
 
  Three Months Ended     Six Months Ended  
  July 31,     July 31,  
  2018
    2017
    2018
    2017
 
                               
Net sales $ 992,454       $ 872,931       $ 1,848,142       $ 1,634,121    
Cost of sales   636,610         575,588         1,211,638         1,096,998    
  Gross profit   355,844         297,343         636,504         537,123    
Selling, general and administrative expenses   238,992         222,163         465,756         440,907    
  Income from operations   116,852         75,180         170,748         96,216    
Other income, net   1,746         1,736         1,826         2,055    
  Income before income taxes   118,598         76,916         172,574         98,271    
Income tax expense   25,789         27,001         38,505         36,418    
  Net income $ 92,809       $ 49,915       $ 134,069       $ 61,853    
                               
Net income per common share:                              
  Basic $ 0.85       $ 0.44       $ 1.23       $ 0.54    
  Diluted $ 0.84       $ 0.44       $ 1.22       $ 0.54    
                               
Weighted-average common shares outstanding:                              
  Basic   108,831,399         113,500,381         108,663,990         114,865,336    
  Diluted   110,433,840         113,760,647         110,091,586         115,126,977    
                               
                               
AS A PERCENTAGE OF NET SALES                              
Net sales 100.0 %     100.0 %     100.0 %     100.0 %  
Cost of sales 64.1 %     65.9 %     65.6 %     67.1 %  
  Gross profit 35.9 %     34.1 %     34.4 %     32.9 %  
Selling, general and administrative expenses 24.1 %     25.5 %     25.2 %     27.0 %  
  Income from operations 11.8 %     8.6 %     9.2 %     5.9 %  
Other income, net 0.1 %     0.2 %     0.1 %     0.1 %  
  Income before income taxes 11.9 %     8.8 %     9.3 %     6.0 %  
Income tax expense 2.5 %     3.1 %     2.0 %     2.2 %  
  Net income 9.4 %     5.7 %     7.3 %     3.8 %  
 


URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
 
  July 31,     January 31,     July 31,  
  2018     2018     2017  
ASSETS                      
Current assets:                      
  Cash and cash equivalents $ 405,727     $ 282,220     $ 276,759  
  Marketable securities   198,166       165,125       110,195  
  Accounts receivable, net of allowance for doubtful accounts
  of $1,613, $1,326 and $592, respectively
  90,646       76,962       75,530  
  Inventory   375,657       351,395       365,176  
  Prepaid expenses and other current assets   131,572       103,055       110,017  
   Total current assets   1,201,768       978,757       937,677  
                       
Property and equipment, net   807,084       813,768       843,058  
Marketable securities   45,514       58,688       25,960  
Deferred income taxes and other assets   104,169       101,567       115,906  
   Total Assets $ 2,158,535     $ 1,952,780     $ 1,922,601  
                       
LIABILITIES AND SHAREHOLDERS' EQUITY                      
Current liabilities:                      
  Accounts payable $ 149,947     $ 128,246     $ 159,756  
  Accrued expenses, accrued compensation and other current liabilities   279,991       231,968       210,399  
   Total current liabilities   429,938       360,214       370,155  
Long-term debt                
Deferred rent and other liabilities   284,925       291,663       243,633  
  Total Liabilities   714,863       651,877       613,788  
                       
Shareholders' equity:                      
  Preferred shares; $.0001 par value, 10,000,000 shares authorized,
    none issued
               
  Common shares; $.0001 par value, 200,000,000 shares authorized,
    108,951,308, 108,248,568 and 111,280,653 issued and outstanding,
    respectively
11     11     11  
  Additional paid-in-capital   18,770     684        
  Retained earnings   1,451,492       1,310,859       1,332,145  
  Accumulated other comprehensive loss   (26,601 )     (10,651 )     (23,343 )
   Total Shareholders' Equity   1,443,672       1,300,903       1,308,813  
   Total Liabilities and Shareholders' Equity $ 2,158,535     $ 1,952,780     $ 1,922,601  


 

Contact:   Oona McCullough
    Director of Investor Relations
    (215) 454-4806

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