Urban Outfitters Reports Record Q4 Net Income

GlobeNewswire Europe

        PHILADELPHIA, PA, March 10, 2014 - Urban Outfitters, Inc. (URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands, today announced record net income of $89 million and $282 million for the three months and year ended January 31, 2014, respectively.  Earnings per diluted share were $0.59 and $1.89 for the three months and year ended January 31, 2014, respectively.

Total Company net sales for the fourth quarter of fiscal 2014 increased 6% over the same quarter last year to a record $906 million. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 1%. Comparable Retail segment net sales increased 20% at Free People and 10% at Anthropologie and decreased 9% at Urban Outfitters. Wholesale segment net sales increased 24%.

For the year ended January 31, 2014, total Company net sales increased 10% over the prior year to a record $3.1 billion. Comparable Retail segment net sales increased 6%. Wholesale segment net sales increased 20%.

"I am pleased to announce that URBN produced record earnings for the fourth quarter and year ending January 31, 2014," said Richard A. Hayne, Chief Executive Officer.  "Looking forward, customer reaction to the new spring fashion offerings at our Anthropologie and Free People brands have been strong, but given the continued challenges facing the Urban Outfitters brand, we remain very cautious about URBN`s first quarter performance," finished Mr. Hayne.

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

Three Months Ended Twelve Months Ended
January 31, January 31,
Net sales by brand      2014      2013       2014      2013
Urban Outfitters $  398,021 $  415,483 $  1,369,302 $  1,324,381
Anthropologie 373,959 334,792 1,264,242 1,118,609
Free People 122,861 97,736 416,369 320,683
Other 11,017 8,821 36,695 31,252
Total Company $  905,858 $  856,832 $  3,086,608 $  2,794,925
Net sales by segment
Retail Segment $  857,953 $  818,099 $  2,908,981 $  2,646,284
Wholesale Segment 47,905 38,733 177,627 148,641
Total Company $  905,858 $  856,832 $  3,086,608 $  2,794,925

For the three months ended January 31, 2014, the gross profit rate improved by 4 basis points versus the prior year`s comparable period. The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate.  This improvement was mostly offset by increased markdowns at the Urban Outfitters brand.  Store occupancy also deleveraged during the quarter due to negative store comparable net sales and pre-opening occupancy expense related to three large New York City Urban Outfitters brand stores scheduled to open in the first half of fiscal 2015. For the year ended January 31, 2014, the gross profit rate improved by 72 basis points versus the prior year`s comparable period.  The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate.  This improvement was partially offset by increased markdowns at the Urban Outfitters brand. The increased penetration of our direct-to-consumer channel continued to drive store occupancy leverage and delivery expense deleverage.  

As of January 31, 2014, total inventories increased by $29 million, or 10%, on a year-over-year basis. The growth in total inventories is primarily related to the acquisition of inventory to stock new and non-comparable stores. Comparable Retail segment inventories increased 3%.

        For the three months ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased 119 basis points compared to the prior year period. The increase was primarily due to the deleverage in direct and selling support store related expenses resulting from negative store comparable net sales. For the year ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 28 basis points compared to the prior year period primarily due to increases in marketing expenses.  

The Company`s effective tax rate for the fourth quarter of fiscal 2014 was 31.7% compared to 37.8% in the prior year period. The lower quarterly tax rate is primarily due to a federal rehabilitation credit received in the current quarter related to the expansion of the Company`s home office and the release of international valuation allowances.

        During the year ended January 31, 2014, the Company opened a total of 38 new stores including: 16 Urban Outfitters stores, 13 Free People stores and 9 Anthropologie stores; and closed 1 Urban Outfitters store and 2 Anthropologie stores due to lease expirations.

        Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 230 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 187 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 worldwide, 90 Free People stores in the United States and Canada, catalogs and websites; 2 Bhldn stores and a website and 2 Terrain garden centers and a website, as of January 31, 2014.

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 results and will be webcast at 5:00 pm. EST at:  http://www.media-server.com/m/p/jqasas3v

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. 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 the resultant impact on consumer spending patterns, lowered levels of consumer confidence and higher levels of unemployment, continuation of lowered levels of consumer spending resulting from the continuing worldwide economic downturn and related debt crisis, any effects of terrorist acts or war, natural disasters or severe weather conditions, 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, 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, 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.

 

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(Tables follow)
URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)
(unaudited)

Three Months Ended Year Ended
January 31, January 31,
         2014         2013          2014        2013
Net sales $      905,858 $      856,832 $   3,086,608 $   2,794,925
Cost of sales   573,853 543,136 1,925,266 1,763,394
          Gross profit 332,005 313,696 1,161,342 1,031,531
Selling, general and administrative expenses 202,916 181,774 734,511 657,246
          Income from operations 129,089 131,922 426,831 374,285
Other income, net 795 716 687 1,287
          Income before income taxes 129,884 132,638 427,518 375,572
Income tax expense 41,202 50,090 145,158 138,258
          Net income $        88,682 $        82,548 $       282,360 $       237,314
Net income per common share:
       Basic $            0.60   $            0.57   $           1.92   $           1.63  
       Diluted $            0.59   $            0.56   $           1.89   $           1.62  
Weighted average common shares and common
   share equivalents outstanding:
       Basic 147,302,220 145,936,131 147,014,869 145,253,691
       Diluted 149,202,626 148,372,602 149,225,906 146,663,731
AS A PERCENT OF NET SALES
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales     63.3%   63.4%   62.4%   63.1%
          Gross profit 36.7% 36.6% 37.6% 36.9%
Selling, general and administrative expenses   22.4%   21.2%   23.8%   23.5%
           Income from operations 14.3% 15.4% 13.8% 13.4%
Other income, net     0.0%     0.1%     0.1%     0.0%
         Income before income taxes 14.3% 15.5%  13.9% 13.4%
Income tax expense     4.5%     5.9%     4.7%     4.9%
          Net income    9.8%    9.6%   9.2%   8.5%

URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
           (unaudited)

 

 

 January 31,
 2014
January 31,
2013

ASSETS
Current assets:
    Cash and cash equivalents   $   242,058 $   245,327
    Marketable securities   281,813 228,486
    Accounts receivable, net of allowance for doubtful accounts
        of $1,711 and $1,681, respectively        55,161 39,519
    Inventories   311,207 282,411
    Prepaid expenses, deferred taxes and other current assets          104,741        76,541
            Total current assets 994,980 872,284
Property and equipment, net   806,909 733,416
Marketable securities   366,422 149,585
Deferred income taxes and other assets          52,903        41,926
           Total Assets   $ 2,221,214 $ 1,797,211
LIABILITIES AND SHAREHOLDERS` EQUITY
Current liabilities:
    Accounts payable   $     137,036 $     99,059
    Accrued expenses, accrued compensation and other current liabilities         194,794       151,136
           Total current liabilities   331,830 250,195
Deferred rent and other liabilities        195,214        192,428  
           Total Liabilities        527,044      442,623
Shareholders` equity:  
   Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued - -
   Common shares; $.0001 par value, 200,000,000 shares authorized, 147,309,575 an
       and 146,015,767 issued and outstanding respectively        15 15
    Additional paid-in-capital   97,684 48,276
    Retained earnings   1,597,439 1,315,079
    Accumulated other comprehensive loss          (968)        (8,782)
           Total Shareholders` Equity     1,694,170   1,354,588
           Total Liabilities and Shareholders` Equity     $ 2,221,214 $ 1,797,211

 




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Source: Urban Outfitters via GlobeNewswire

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