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 $33 million and earnings per diluted share
of $0.31 for the three months ended April 30, 2019.
Total Company net sales for the three months
ended April 30, 2019, increased 1.0% over the same period last year
to a record $864 million. Comparable Retail segment net sales
increased 1%, driven by double-digit growth in the digital channel,
partially offset by negative retail store sales. By brand,
comparable Retail segment net sales increased 2% at Free People, 1%
at the Anthropologie Group and were flat at Urban Outfitters.
Wholesale segment net sales increased 2%.
“We are pleased to announce record first quarter
sales,” said Richard A. Hayne, Chief Executive Officer. “Our sales
growth was driven by our seventh straight quarter of positive
Retail segment ‘comps’ as well as continued growth in our Wholesale
segment,” finished Mr. Hayne.
Net sales by brand and segment for the three-month period were
as follows:
|
Three Months
Ended |
|
|
April 30, |
|
|
2019 |
|
|
2018 |
|
Net sales by brand |
|
|
|
|
|
|
|
Anthropologie Group |
$ |
354,988 |
|
|
$ |
347,085 |
|
Urban Outfitters |
|
316,806 |
|
|
|
322,678 |
|
Free People |
|
186,191 |
|
|
|
181,307 |
|
Food and Beverage |
|
6,428 |
|
|
|
4,618 |
|
Total Company |
$ |
864,413 |
|
|
$ |
855,688 |
|
|
|
|
|
|
|
|
|
Net sales by segment |
|
|
|
|
|
|
|
Retail Segment |
$ |
782,563 |
|
|
$ |
775,564 |
|
Wholesale Segment |
|
81,850 |
|
|
|
80,124 |
|
Total Company |
$ |
864,413 |
|
|
$ |
855,688 |
|
For the three months ended April 30, 2019, the
gross profit rate decreased by 167 basis points versus the prior
year’s comparable period. The decrease in total company gross
profit rate was driven by lower gross profit in the Retail segment
while gross profit in the Wholesale segment increased. The decrease
in Retail segment gross profit rate was driven by higher markdowns
and deleverage in delivery and logistics expenses. The higher
markdowns were largely driven by underperforming women’s apparel at
the Anthropologie and Urban Outfitters brands. The deleverage in
delivery and logistics expenses is primarily due to the increase in
penetration of the digital channel. The benefit or leverage in
store occupancy due to the increased penetration of the digital
channel was more than offset by negative store comparable net sales
resulting in store occupancy deleverage on a Retail segment basis.
The improvement in Wholesale segment gross profit rate was due to a
higher penetration of sales to full price customers versus closeout
customers.
As of April 30, 2019, total inventory increased
by $3.7 million, or 0.9%, on a year-over-year basis. Comparable
Retail segment inventory increased 1% at cost.
Selling, general and administrative expenses
increased by $2.3 million, or 1.0%, during the three months ended
April 30, 2019, compared to the prior year’s comparable period. As
a percentage of net sales, selling, general and administrative
expenses were flat when compared to the prior year’s comparable
period. The dollar growth in selling, general and administrative
expenses was partially due to increased marketing expenses used to
support the digital channel sales growth.
The Company’s effective tax rate for the three
months ended April 30, 2019, was 23.7% compared to 23.6% in the
prior year period. The effective tax rate for the three
months ended April 30, 2019 was favorably impacted by approximately
140 basis points due to equity activity.
Net income for the three months ended April 30,
2019, was $33 million and earnings per diluted share was $0.31.
On February 1, 2019, the Company adopted an
accounting standards update that amended the previous accounting
standards for lease accounting. The adoption resulted in the
recognition of approximately $1.3 billion of lease liabilities and
corresponding right-of-use assets of approximately $1.1 billion,
with the offsetting balance representing a reduction in the
previously recognized deferred rent balance. The adoption did not
result in a material impact on the Company’s Condensed Consolidated
Statements of Income.
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 12.0 million common
shares were remaining as of April 30, 2019. During the three months
ended April 30, 2019, the Company repurchased and subsequently
retired 2.4 million common shares for approximately $71 million
under this program. During the year ended January 31, 2019, the
Company repurchased and subsequently retired 3.5 million common
shares for approximately $121 million under this program.
During the three months ended April 30, 2019,
the Company opened a total of four new retail locations including:
two Anthropologie Group stores and two Free People stores; and
closed three retail locations including: one Anthropologie Group
store, one Free People store and one Food and Beverage restaurant.
During the three months ended April 30, 2019, one Anthropologie
Group franchisee-owned store was opened.
Urban Outfitters, Inc., offers
lifestyle-oriented general merchandise and consumer products and
services through a portfolio of global consumer brands comprised of
245 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; 136 Free People stores in
the United States, Canada and Europe, catalogs and websites, 12
Food and Beverage restaurants, 4 Urban Outfitters franchisee-owned
stores, 1 Anthropologie Group franchisee-owned store and 1 Free
People franchisee-owned store, as of April 30, 2019. Free People,
Anthropologie Group and Urban Outfitters wholesale sell their
products through approximately 2,200 department and specialty
stores worldwide, digital businesses and the Company’s Retail
segment.
A conference call will be held today to discuss
first quarter results and will be webcast at 5:15 pm. ET at:
https://edge.media-server.com/m6/p/3djbdqhv
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 worldwide
political events and the resultant impact on consumer spending
patterns, the effects of the implementation of the United Kingdom's
referendum to withdraw membership from the European Union (commonly
referred to as “Brexit”), including currency fluctuations, economic
conditions, and legal or regulatory changes, 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 digital 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.
URBAN OUTFITTERS,
INC.Condensed Consolidated Statements of
Income(amounts in thousands, except share and per share
data)(unaudited)
|
Three Months
Ended |
|
|
April 30, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
864,413 |
|
|
|
$ |
855,688 |
|
|
Cost of sales |
|
595,357 |
|
|
|
|
575,028 |
|
|
Gross profit |
|
269,056 |
|
|
|
|
280,660 |
|
|
Selling, general and administrative expenses |
|
229,036 |
|
|
|
|
226,764 |
|
|
Income from operations |
|
40,020 |
|
|
|
|
53,896 |
|
|
Other income, net |
|
2,680 |
|
|
|
|
80 |
|
|
Income before income taxes |
|
42,700 |
|
|
|
|
53,976 |
|
|
Income tax expense |
|
10,115 |
|
|
|
|
12,716 |
|
|
Net income |
$ |
32,585 |
|
|
|
$ |
41,260 |
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.31 |
|
|
|
$ |
0.38 |
|
|
Diluted |
$ |
0.31 |
|
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
104,437,460 |
|
|
|
|
108,490,926 |
|
|
Diluted |
|
105,340,148 |
|
|
|
|
109,743,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS A PERCENTAGE OF NET SALES |
|
|
|
|
|
|
|
Net sales |
100.0 |
% |
|
|
100.0 |
% |
|
Cost of sales |
68.9 |
% |
|
|
67.2 |
% |
|
Gross profit |
31.1 |
% |
|
|
32.8 |
% |
|
Selling, general and administrative expenses |
26.5 |
% |
|
|
26.5 |
% |
|
Income from operations |
4.6 |
% |
|
|
6.3 |
% |
|
Other income, net |
0.3 |
% |
|
|
0.0 |
% |
|
Income before income taxes |
4.9 |
% |
|
|
6.3 |
% |
|
Income tax expense |
1.1 |
% |
|
|
1.5 |
% |
|
Net income |
3.8 |
% |
|
|
4.8 |
% |
|
URBAN OUTFITTERS,
INC.Condensed Consolidated Balance
Sheets(amounts in thousands, except share
data)(unaudited)
|
April
30, |
|
|
January
31, |
|
|
April
30, |
|
|
2019 |
|
|
2019 |
|
|
2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
291,199 |
|
|
$ |
358,260 |
|
|
$ |
313,713 |
|
Marketable securities |
|
229,163 |
|
|
|
279,232 |
|
|
|
166,367 |
|
Accounts receivable, net of allowance for doubtful accounts of
$892, $1,499 and $1,895, respectively |
|
88,390 |
|
|
|
80,461 |
|
|
|
88,936 |
|
Inventory |
|
408,362 |
|
|
|
370,507 |
|
|
|
404,617 |
|
Prepaid expenses and other current assets |
|
122,183 |
|
|
|
114,296 |
|
|
|
123,505 |
|
Total current assets |
|
1,139,297 |
|
|
|
1,202,756 |
|
|
|
1,097,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
829,072 |
|
|
|
796,029 |
|
|
|
819,725 |
|
Operating lease right-of-use assets |
|
1,088,290 |
|
|
|
— |
|
|
|
— |
|
Marketable securities |
|
93,894 |
|
|
|
57,292 |
|
|
|
35,079 |
|
Deferred income taxes and other assets |
|
101,267 |
|
|
|
104,438 |
|
|
|
99,273 |
|
Total Assets |
$ |
3,251,820 |
|
|
$ |
2,160,515 |
|
|
$ |
2,051,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
174,258 |
|
|
$ |
144,414 |
|
|
$ |
158,870 |
|
Current portion of operating lease liabilities |
|
214,443 |
|
|
|
— |
|
|
|
— |
|
Accrued expenses, accrued compensation and other current
liabilities |
|
259,478 |
|
|
|
242,230 |
|
|
|
256,221 |
|
Total current liabilities |
|
648,179 |
|
|
|
386,644 |
|
|
|
415,091 |
|
Non-current portion of operating lease
liabilities |
|
1,092,180 |
|
|
|
— |
|
|
|
— |
|
Deferred rent and other liabilities |
|
63,490 |
|
|
|
284,773 |
|
|
|
289,709 |
|
Total Liabilities |
|
1,803,849 |
|
|
|
671,417 |
|
|
|
704,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
Preferred shares; $.0001 par value, 10,000,000 shares
authorized, none issued |
|
— |
|
|
|
— |
|
|
|
— |
|
Common shares; $.0001 par value, 200,000,000 shares authorized,
103,599,364, 105,642,283 and 108,670,688 issued and outstanding,
respectively |
10 |
|
|
11 |
|
|
11 |
|
Additional paid-in-capital |
|
— |
|
|
|
— |
|
|
|
6,434 |
|
Retained earnings |
|
1,478,678 |
|
|
|
1,516,190 |
|
|
|
1,358,683 |
|
Accumulated other comprehensive loss |
|
(30,717 |
) |
|
|
(27,103 |
) |
|
|
(18,713 |
) |
Total Shareholders’ Equity |
|
1,447,971 |
|
|
|
1,489,098 |
|
|
|
1,346,415 |
|
Total Liabilities and Shareholders’ Equity |
$ |
3,251,820 |
|
|
$ |
2,160,515 |
|
|
$ |
2,051,215 |
|
|
Contact: |
|
Oona McCullough |
|
|
|
Director of Investor
Relations |
|
|
|
(215) 454-4806 |
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