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 $45 million and $107 million for the three
and nine months ended October 31, 2017, respectively. Earnings
per diluted share were $0.41 and $0.94 for the three and nine
months ended October 31, 2017, respectively.
Total Company net sales for the third quarter of
fiscal 2018 increased 3.5% over the same quarter last year to a
record $893 million. Comparable Retail segment net sales, which
include the comparable direct-to-consumer channel, increased 1%.
Excluding the estimated impact of the North American hurricanes in
the quarter, comparable Retail segment net sales increased 2%, and
by brand, comparable Retail segment net sales increased 5% at Free
People, 2% at the Anthropologie Group and 1% at Urban Outfitters.
Comparable Retail segment sales were driven by strong, double-digit
growth in the direct-to-consumer channel, partially offset by
negative retail store sales. Wholesale segment net sales increased
8.7%.
“I am pleased to announce record third quarter
sales, positive Retail segment comps at all three brands and
another strong performance from Free People wholesale,” said
Richard A. Hayne, Chief Executive Officer. “Record sales were
driven by improved apparel execution across all channels and
brands,” 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, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net sales by
brand |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Urban Outfitters |
$ |
353,881 |
|
|
$ |
348,471 |
|
|
$ |
962,496 |
|
|
$ |
1,001,197 |
|
Anthropologie
Group |
|
352,080 |
|
|
|
340,727 |
|
|
|
1,025,585 |
|
|
|
1,021,410 |
|
Free People |
|
180,572 |
|
|
|
167,445 |
|
|
|
520,307 |
|
|
|
476,380 |
|
Food and Beverage |
|
6,241 |
|
|
|
5,848 |
|
|
|
18,507 |
|
|
|
16,649 |
|
Total Company |
$ |
892,774 |
|
|
$ |
862,491 |
|
|
$ |
2,526,895 |
|
|
$ |
2,515,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Segment |
$ |
808,546 |
|
|
$ |
785,026 |
|
|
$ |
2,289,526 |
|
|
$ |
2,300,981 |
|
Wholesale Segment |
|
84,228 |
|
|
|
77,465 |
|
|
|
237,369 |
|
|
|
214,655 |
|
Total Company |
$ |
892,774 |
|
|
$ |
862,491 |
|
|
$ |
2,526,895 |
|
|
$ |
2,515,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended October 31,
2017, the gross profit rate decreased by 142 basis points versus
the prior year’s comparable period. The decline in gross
profit rate was primarily driven by deleverage in delivery and
logistics expense due to increased penetration of the
direct-to-consumer channel, higher international penetration and
increased furniture penetration. For the nine months ended October
31, 2017, the gross profit rate decreased by 291 basis points
versus the prior year’s comparable period. The decline in gross
profit rate was driven by deleverage in delivery and logistics
expenses primarily due to the penetration of the direct-to-consumer
channel, higher international penetration and increased furniture
penetration and higher markdowns due to underperforming women’s
apparel and accessories product at Anthropologie and Urban
Outfitters.
As of October 31, 2017, total inventory
decreased by $3.9 million, or 0.9%, on a year-over-year basis.
Comparable Retail segment inventory decreased 1% at cost, which was
partially offset by inventory to stock non-comparable stores.
Selling, general and administrative expenses
decreased by $4.7 million, or 2.1%, during the three months ended
October 31, 2017, compared to the prior year’s comparable period.
For the three months ended October 31, 2017, selling, general and
administrative expenses, expressed as a percentage of net sales,
leveraged by 143 basis points when compared to the prior year’s
comparable period. The decrease in expenses and leverage were
primarily due to savings associated with our store organization
project and lower share-based compensation expense, partially
offset by increased investments in digital marketing expenditures
to drive sales. Selling, general and administrative expenses
increased by $0.5 million, or 0.1%, during the nine months ended
October 31, 2017, compared to the prior year’s comparable period.
For the nine months ended October 31, 2017, selling, general and
administrative expenses, expressed as a percentage of net sales,
leveraged by 10 basis points when compared to the prior year’s
comparable period. The leverage is primarily due to the net savings
associated with our store organization project and lower
share-based compensation expense, partially offset by increased
investments in digital marketing expenditures to drive sales.
The Company’s effective tax rate for the third
quarter of fiscal 2018 was 37.4% compared to 33.5% in the prior
year period. The effective tax rate for the first nine months of
fiscal 2018 was 37.2% compared to 35.7% in the first nine months of
fiscal 2017. The increase in the effective tax rate for the three
and nine months periods was primarily due to the ratio of certain
foreign taxable profits and losses to global taxable profits and
the adoption of the new accounting standard related to share-based
compensation.
Net income for the three and nine months ended
October 31, 2017, was $45 million and $107 million,
respectively, and earnings per diluted share was $0.41 and $0.94,
respectively.
On August 22, 2017, the Company’s Board of
Directors authorized the repurchase of 20 million common
shares under a new share repurchase program. Under this
authorization, the Company repurchased and subsequently retired
2.1 million common shares for approximately $46 million during
the nine months ended October 31, 2017. As of October 31,
2017, 17.9 million common shares are remaining under this
authorization.
On February 23, 2015, the Company’s Board
of Directors authorized the repurchase of 20 million common
shares under a share repurchase program. Under this authorization,
the Company repurchased and subsequently retired 6.0 million
common shares for approximately $111 million during the nine months
ended October 31, 2017, which completed this authorization.
The Company repurchased and subsequently retired 1.3 million
common shares for approximately $46 million under this
authorization during the year ended January 31, 2017.
During the nine months ended October 31,
2017, the Company opened a total of 16 new locations including: 8
Free People stores, 4 Urban Outfitters stores, 3 Anthropologie
Group stores and 1 Food and Beverage restaurant; and closed 6
locations including: 3 Free People stores, 1 Urban Outfitters
store, 1 Anthropologie Group store and 1 Food and Beverage
restaurant.
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; 227 Anthropologie Group stores in the United
States, Canada and Europe, catalogs and websites; 132 Free People
stores in the United States and Canada, catalogs and websites and
12 Food and Beverage restaurants, as of October 31, 2017. Free
People and Anthropologie Group wholesale sell their products
through approximately 1,900 department and specialty stores
worldwide, third-party websites and the Company’s own retail
stores.
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/7be6nszp
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, any effects of war, terrorism, and civil unrest, natural
disasters or severe weather conditions, increases in labor 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, 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, 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, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
892,774 |
|
|
|
$ |
862,491 |
|
|
|
$ |
2,526,895 |
|
|
|
$ |
2,515,636 |
|
|
Cost of sales |
|
595,028 |
|
|
|
|
562,594 |
|
|
|
|
1,692,026 |
|
|
|
|
1,611,337 |
|
|
Gross
profit |
|
297,746 |
|
|
|
|
299,897 |
|
|
|
|
834,869 |
|
|
|
|
904,299 |
|
|
Selling, general and
administrative expenses |
|
224,858 |
|
|
|
|
229,592 |
|
|
|
|
665,765 |
|
|
|
|
665,299 |
|
|
Income
from operations |
|
72,888 |
|
|
|
|
70,305 |
|
|
|
|
169,104 |
|
|
|
|
239,000 |
|
|
Other (expense) income,
net |
|
(882 |
) |
|
|
|
854 |
|
|
|
|
1,173 |
|
|
|
|
348 |
|
|
Income
before income taxes |
|
72,006 |
|
|
|
|
71,159 |
|
|
|
|
170,277 |
|
|
|
|
239,348 |
|
|
Income tax expense |
|
26,914 |
|
|
|
|
23,804 |
|
|
|
|
63,332 |
|
|
|
|
85,516 |
|
|
Net
income |
$ |
45,092 |
|
|
|
$ |
47,355 |
|
|
|
$ |
106,945 |
|
|
|
$ |
153,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
|
$ |
0.41 |
|
|
|
$ |
0.95 |
|
|
|
$ |
1.31 |
|
|
Diluted |
$ |
0.41 |
|
|
|
$ |
0.40 |
|
|
|
$ |
0.94 |
|
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
109,667,224 |
|
|
|
|
116,829,912 |
|
|
|
|
113,113,597 |
|
|
|
|
117,087,696 |
|
|
Diluted |
|
110,100,254 |
|
|
|
|
117,393,710 |
|
|
|
|
113,432,367 |
|
|
|
|
117,453,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS A PERCENTAGE OF NET
SALES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0% |
|
|
|
|
100.0% |
|
|
|
|
100.0% |
|
|
|
|
100.0% |
|
|
Cost of sales |
|
66.6% |
|
|
|
|
65.2% |
|
|
|
|
67.0% |
|
|
|
|
64.1% |
|
|
Gross
profit |
|
33.4% |
|
|
|
|
34.8% |
|
|
|
|
33.0% |
|
|
|
|
35.9% |
|
|
Selling, general and
administrative expenses |
|
25.2% |
|
|
|
|
26.6% |
|
|
|
|
26.3% |
|
|
|
|
26.4% |
|
|
Income
from operations |
|
8.2% |
|
|
|
|
8.2% |
|
|
|
|
6.7% |
|
|
|
|
9.5% |
|
|
Other (expense) income,
net |
|
(0.1%) |
|
|
|
|
0.1% |
|
|
|
|
0.0% |
|
|
|
|
0.0% |
|
|
Income
before income taxes |
|
8.1% |
|
|
|
|
8.3% |
|
|
|
|
6.7% |
|
|
|
|
9.5% |
|
|
Income tax expense |
|
3.0% |
|
|
|
|
2.8% |
|
|
|
|
2.5% |
|
|
|
|
3.4% |
|
|
Net
income |
|
5.1% |
|
|
|
|
5.5% |
|
|
|
|
4.2% |
|
|
|
|
6.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
URBAN OUTFITTERS, INC. |
|
Condensed Consolidated Balance
Sheets |
|
(amounts in thousands, except share data) |
|
(unaudited) |
|
|
|
|
October 31, |
|
|
January 31, |
|
|
October 31, |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
234,726 |
|
|
$ |
248,140 |
|
|
$ |
234,886 |
|
Marketable securities |
|
93,228 |
|
|
|
111,067 |
|
|
|
24,644 |
|
Accounts
receivable, net of allowance for doubtful accounts |
|
|
|
|
|
|
|
|
|
|
|
of $710,
$588 and $568, respectively |
|
78,348 |
|
|
|
54,505 |
|
|
|
68,896 |
|
Inventory |
|
449,957 |
|
|
|
338,590 |
|
|
|
453,826 |
|
Prepaid
expenses and other current assets |
|
111,050 |
|
|
|
129,095 |
|
|
|
107,767 |
|
Total
current assets |
|
967,309 |
|
|
|
881,397 |
|
|
|
890,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
829,106 |
|
|
|
867,786 |
|
|
|
872,309 |
|
Marketable
securities |
|
41,254 |
|
|
|
44,288 |
|
|
|
5,605 |
|
Deferred income taxes
and other assets |
|
115,778 |
|
|
|
109,166 |
|
|
|
117,258 |
|
Total
Assets |
$ |
1,953,447 |
|
|
$ |
1,902,637 |
|
|
$ |
1,885,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
208,567 |
|
|
$ |
119,537 |
|
|
$ |
199,421 |
|
Accrued
expenses, accrued compensation and other current liabilities |
|
214,506 |
|
|
|
233,391 |
|
|
|
205,812 |
|
Total
current liabilities |
|
423,073 |
|
|
|
352,928 |
|
|
|
405,233 |
|
Long-term debt |
– |
|
|
– |
|
|
– |
|
Deferred rent and other
liabilities |
|
245,566 |
|
|
|
236,625 |
|
|
|
232,325 |
|
Total
Liabilities |
|
668,639 |
|
|
|
589,553 |
|
|
|
637,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
|
|
|
|
|
Preferred
shares; $.0001 par value, 10,000,000 shares authorized, none
issued |
– |
|
|
– |
|
|
– |
|
Common
shares; $.0001 par value, 200,000,000 shares authorized, |
|
|
|
|
|
|
|
|
|
|
|
108,248,471, 116,233,781 and 116,233,584 issued and
outstanding, |
|
|
|
|
|
|
|
|
|
|
|
respectively |
11 |
|
|
12 |
|
|
12 |
|
Additional paid-in-capital |
– |
|
|
– |
|
|
– |
|
Retained
earnings |
|
1,309,541 |
|
|
|
1,347,141 |
|
|
|
1,285,268 |
|
Accumulated other comprehensive loss |
|
(24,744 |
) |
|
|
(34,069 |
) |
|
|
(37,647 |
) |
Total
Shareholders’ Equity |
|
1,284,808 |
|
|
|
1,313,084 |
|
|
|
1,247,633 |
|
Total
Liabilities and Shareholders’ Equity |
$ |
1,953,447 |
|
|
$ |
1,902,637 |
|
|
$ |
1,885,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Oona McCullough
Director of Investor Relations
(215) 454-4806
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