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URBN Reports Record Q3 Sales and EPS

PHILADELPHIA, Nov. 19, 2018 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (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 $78 million and $212 million for the three and nine months ended October 31, 2018, respectively. Earnings per diluted share were $0.70 and $1.92 for the three and nine months ended October 31, 2018, respectively.

Total Company net sales for the three months ended October 31, 2018, increased 9.0% over the same period last year to a record $974 million. Comparable Retail segment net sales increased 8%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable Retail segment net sales increased 12% at Free People, 8% at the Anthropologie Group and 7% at Urban Outfitters. Wholesale segment net sales increased 12%.

“I’m pleased to announce our teams produced record Q3 sales and earnings,” said Richard A. Hayne, Chief Executive Officer. “All brands, all channels, all product categories and all geographies delivered positive ‘comp’ sales,” finished Mr. Hayne.

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

  Three Months Ended     Nine Months Ended
  October 31,     October 31,
  2018     2017     2018     2017
Net sales by brand                            
Urban Outfitters $ 379,187     $ 353,881     $ 1,081,192     $ 962,496
Anthropologie Group   385,031       352,080       1,133,391       1,025,585
Free People   202,170       180,572       589,890       520,307
Food and Beverage   7,145       6,241       17,202       18,507
Total Company $ 973,533     $ 892,774     $ 2,821,675     $ 2,526,895
                             
Net sales by segment                            
Retail Segment $ 878,869     $ 808,546     $ 2,556,460     $ 2,289,526
Wholesale Segment   94,664       84,228       265,215       237,369
Total Company $ 973,533     $ 892,774     $ 2,821,675     $ 2,526,895
                             

For the three and nine months ended October 31, 2018, the gross profit rate improved by 134 basis points and 149 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.

As of October 31, 2018, total inventory increased by $1.7 million, or 0.4%, on a year-over-year basis. Comparable Retail segment inventory was flat.

Selling, general and administrative expenses increased by $16.5 million, or 7.3%, and $41.3 million, or 6.2%, during the three and nine months ended October 31, 2018, 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 and share-based compensation expense. As a percentage of net sales, selling, general and administrative expenses leveraged 40 basis points and 129 basis points during the three and nine months ended October 31, 2018, when compared to the prior year’s comparable periods, respectively. The leverage in both periods was primarily driven by the net sales growth. The leverage for the nine months ended October 31, 2018 further benefited from continued savings associated with the fiscal 2018 store reorganization project and the nonrecurring store reorganization expenses incurred in the prior year.

The Company’s effective tax rate for the three months ended October 31, 2018, was 20.6% compared to 37.4% in the prior year period. The effective tax rate for the nine months ended October 31, 2018 was 21.7% compared to 37.2% in the prior year period. The decrease in the effective tax rate for the three and nine month periods was primarily due to the lower federal statutory rate resulting from the U.S. Tax Cuts and Jobs Act and the favorable impact of certain discrete items.

Net income for the three and nine months ended October 31, 2018, was $78 million and $212 million, respectively, and earnings per diluted share was $0.70 and $1.92, 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 16.4 million common shares were remaining as of October 31, 2018. During the nine months ended October 31, 2018, the Company repurchased and subsequently retired 1.5 million common shares for approximately $58 million under this program. 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 nine months ended October 31, 2018, the Company opened a total of 14 new locations including: 4 Anthropologie Group stores, 4 Urban Outfitters stores, 3 Free People stores and 3 Food and Beverage restaurants; and closed 4 locations including: 2 Anthropologie Group stores, 1 Urban Outfitters store and 1 Free People store. During the nine months ended October 31, 2018, 3 franchisee-owned Urban Outfitters stores were opened.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 248 Urban Outfitters stores in the United States, Canada, and Europe and websites; 228 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 134 Free People stores in the United States and Canada, catalogs and websites, 13 Food and Beverage restaurants, and 3 Urban Outfitters franchisee-owned stores, as of October 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 third quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/kefhn89b 

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     Nine Months Ended
  October 31,     October 31,
  2018     2017     2018     2017
                             
Net sales $ 973,533       $ 892,774       $ 2,821,675       $ 2,526,895  
Cost of sales   635,835         595,028         1,847,473         1,692,026  
Gross profit   337,698         297,746         974,202         834,869  
Selling, general and administrative expenses   241,341         224,858         707,097         665,765  
Income from operations   96,357         72,888         267,105         169,104  
Other income (expense), net   1,235         (882 )       3,061         1,173  
Income before income taxes   97,592         72,006         270,166         170,277  
Income tax expense   20,072         26,914         58,577         63,332  
Net income $ 77,520       $ 45,092       $ 211,589       $ 106,945  
                             
Net income per common share:                            
Basic $ 0.71       $ 0.41       $ 1.95       $ 0.95  
Diluted $ 0.70       $ 0.41       $ 1.92       $ 0.94  
                             
Weighted-average common shares outstanding:                            
Basic   108,778,483         109,667,224         108,702,575         113,113,597  
Diluted   110,262,879         110,100,254         110,149,105         113,432,367  
                             
                             
AS A PERCENTAGE OF NET SALES                            
Net sales 100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales 65.3 %     66.6 %     65.5 %     67.0 %
Gross profit 34.7 %     33.4 %     34.5 %     33.0 %
Selling, general and administrative expenses 24.8 %     25.2 %     25.0 %     26.3 %
Income from operations 9.9 %     8.2 %     9.5 %     6.7 %
Other income (expense), net 0.1 %     (0.1 %)     0.1 %     0.0 %
Income before income taxes 10.0 %     8.1 %     9.6 %     6.7 %
Income tax expense 2.0 %     3.0 %     2.1 %     2.5 %
Net income 8.0 %     5.1 %     7.5 %     4.2 %
                             


 
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
                 
  October 31,     January 31,     October 31,  
  2018     2018     2017  
ASSETS                      
Current assets:                      
Cash and cash equivalents $ 329,021     $ 282,220     $ 234,726  
Marketable securities   237,391       165,125       93,228  
Accounts receivable, net of allowance for doubtful accounts of $1,572, $1,326 and $710, respectively   90,954       76,962       78,348  
Inventory   451,659       351,395       449,957  
Prepaid expenses and other current assets   139,774       103,055       111,050  
Total current assets   1,248,799       978,757       967,309  
                       
Property and equipment, net   808,883       813,768       829,106  
Marketable securities   36,033       58,688       41,254  
Deferred income taxes and other assets   103,327       101,567       115,778  
Total Assets $ 2,197,042     $ 1,952,780     $ 1,953,447  
                       
LIABILITIES AND SHAREHOLDERS EQUITY                      
Current liabilities:                      
Accounts payable $ 191,684     $ 128,246     $ 208,567  
Accrued expenses, accrued compensation and other current liabilities   263,289       231,968       214,506  
Total current liabilities   454,973       360,214       423,073  
Long-term debt                
Deferred rent and other liabilities   281,460       291,663       245,566  
Total Liabilities   736,433       651,877       668,639  
                       
Shareholders’ equity:                      
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued                
Common shares; $.0001 par value, 200,000,000 shares authorized, 107,638,846, 108,248,568 and 108,248,471 issued and outstanding, respectively 11     11     11  
Additional paid-in-capital       684        
Retained earnings   1,492,691       1,310,859       1,309,541  
Accumulated other comprehensive loss   (32,093 )     (10,651 )     (24,744 )
Total Shareholders’ Equity   1,460,609       1,300,903       1,284,808  
Total Liabilities and Shareholders’ Equity $ 2,197,042     $ 1,952,780     $ 1,953,447  
                       

 

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