Earnings Disclosure

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Q2 2014 Urban Outfitters, Inc. Earnings Conference Call

Monday, August 19, 2013 5:00 p.m. ET  

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URBN (Common Stock)

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Urban Outfitters Reports Record Q2 Sales and Earnings

For Immediate Release  

Contact:   Oona McCullough


Director of Investor Relations


(215) 454-4806


Urban Outfitters Reports Record Q2 Sales and Earnings

        PHILADELPHIA, PA, August 19, 2013 - Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands, today announced record second quarter net income of $76 million for the three months ended July 31, 2013 and net income of $123 million for the six months ended July 31, 2013.  Earnings per diluted share were $0.51 and $0.83 for the three and six months ended July 31, 2013, respectively.

Total Company net sales for the second quarter of fiscal 2014 increased to a record $759 million or 12% over the same quarter last year. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 9%.  Comparable Retail segment net sales increased 38% at Free People, 9% at Anthropologie and 5% at Urban Outfitters. Wholesale segment net sales rose 17%.

"I am pleased with the strong results we delivered this quarter," said Richard A. Hayne, Chief Executive Officer. "They were driven by a favorable customer response to our product offerings, improved merchandise margins, the opening of additional stores, and better creative and marketing initiatives in our direct-to-consumer channel," 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,
Net sales by brand      2013    2012     2013      2012
Urban Outfitters $  336,575 $  310,664 $     629,365 $     577,054
Anthropologie 315,084 281,808 580,152 516,926
Free People 97,216 73,788 180,540 135,460
Other 9,649 10,009 16,644 15,759
Total Company $  758,524 $  676,269 $  1,406,701 $  1,245,199
Net sales by segment
Retail Segment $  714,991 $  639,031 $  1,326,962 $  1,176,777
Wholesale Segment 43,533 37,238 79,739 68,422
Total Company $  758,524 $  676,269 $  1,406,701 $  1,245,199

For the three months ended July 31, 2013, the gross profit rate improved by 169 basis points versus the prior year's comparable period.  For the six months ended July 31, 2013, the gross profit rate improved by 148 basis points versus the prior year's comparable period.  The improvement in gross profit rate for both periods was primarily due to a reduction in merchandise markdowns primarily driven by improvements at the Anthropologie brand. We also improved our initial merchandise margins and leveraged store occupancy expenses.  These improvements were partially offset by a deleveraging of delivery expense primarily related to an increase in direct-to-consumer net sales penetration.

As of July 31, 2013, total inventories increased by $24 million, or 8%, 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 were flat.

        For the three months ended July 31, 2013, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 14 basis points compared to the prior year period. The deleverage was primarily due to increased marketing expenses to support our customer acquisition and retention programs.  For the six months ended July 31, 2013, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 24 basis points compared to the prior year period primarily due to the leverage of direct selling controllable expenses driven by the strong positive Retail segment sales.  The leverage in direct selling controllable expenses was partially offset by increases in marketing expenses.

        During the six months ended July 31, 2013, the Company opened a total of 17 new stores including: 6 Free People stores, 8 Urban Outfitters stores and 3 Anthropologie stores, and closed 1 Urban Outfitters store and 1 Anthropologie store.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 222 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 182 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, 83 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 July 31, 2013.

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 webcast at 5:00 pm. EDT at:  http://edge.media-server.com/m/p/9fx3e9i7/lan/en

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.


(Tables follow)

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

Three Months Ended Six Months Ended
July 31, July 31,
         2013         2012          2013        2012
Net sales $      758,524 $      676,269 $   1,406,701 $   1,245,199
Cost of sales   460,281 421,755 869,649 788,206
          Gross profit 298,243 254,514 537,052 456,993
Selling, general and administrative expenses 178,926 158,576 344,769 308,140
          Income from operations 119,317 95,938 192,283 148,853
Other income, net 207 144 78 443
          Income before income taxes 119,524 96,082 192,361 149,296
Income tax expense 43,161 34,790 68,940 54,047
          Net income $        76,363 $        61,292 $       123,421 $       95,249
Net income per common share:
       Basic $            0.52   $            0.42   $           0.84   $           0.66  
       Diluted $            0.51   $            0.42   $           0.83   $           0.65  
Weighted average common shares and common
   share equivalents outstanding:
       Basic 147,038,073 144,817,752 146,670,110 144,764,072
       Diluted 149,361,132 145,614,806 149,086,292 145,592,333
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales     60.7%   62.4%   61.8%   63.3%
          Gross profit 39.3% 37.6% 38.2% 36.7%
Selling, general and administrative expenses   23.6%   23.4%   24.5%   24.7%
           Income from operations 15.7% 14.2% 13.7% 12.0%
Other income, net     0.1%     0.0%     0.0%     0.0%
         Income before income taxes 15.8% 14.2%  13.7%  12.0%
Income tax expense     5.7%     5.1%     4.9%     4.3%
          Net income    10.1%    9.1%   8.8%   7.7%

Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)


 July 31,
January 31,
July 31,

Current assets:
    Cash and cash equivalents   $   298,546 $   245,327 $   135,481
    Marketable securities   232,296 228,486 135,890
    Accounts receivable, net of allowance for doubtful accounts
        of $1,326, $1,681 and $1,550, respectively        53,807 39,519 48,222
    Inventories   347,064 282,411 322,823
    Prepaid expenses, deferred taxes and other current assets          69,488        76,541        61,612
            Total current assets 1,001,201 872,284 704,028
Property and equipment, net   731,421 733,416 722,058
Marketable securities   210,269 149,585 91,664
Deferred income taxes and other assets          47,970        41,926        76,832
           Total Assets   $ 1,990,861 $ 1,797,211 $ 1,594,582
Current liabilities:
    Accounts payable   $    128,993 $     99,059 $    105,786
    Accrued expenses, accrued compensation and other current liabilities         149,304       151,136       125,954
           Total current liabilities   278,297 250,195 231,740
Deferred rent and other liabilities        193,481        192,428        188,648  
           Total Liabilities        471,778      442,623      420,388
Shareholders' equity:
   Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued - - -
   Common shares; $.0001 par value, 200,000,000 shares authorized, 147,318,292,
       146,015,767 and 144,869,307 issued and outstanding respectively   15 15 15
    Additional paid-in-capital   93,585 48,276 10,581
    Retained earnings   1,438,500 1,315,079 1,173,013
    Accumulated other comprehensive loss        (13,017)        (8,782)        (9,415)
           Total Shareholders' Equity     1,519,083   1,354,588   1,174,194
           Total Liabilities and Shareholders' Equity     $ 1,990,861 $ 1,797,211 $ 1,594,582