PHILADELPHIA, Aug. 15, 2017 (GLOBE NEWSWIRE) -- 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 $50 million and $62 million for the three and six months ended July 31, 2017, respectively. Earnings per diluted share were $0.44 and $0.54 for the three and six months ended July 31, 2017, respectively.

Total Company net sales for the second quarter of fiscal 2018 were $873 million, a 2% decrease as compared to the same quarter last year. Comparable Retail segment net sales, which include the comparable direct-to-consumer channel, decreased 4.9%. By brand, comparable Retail segment net sales increased 2.9% at Free People, but decreased 4.0% at the Anthropologie Group and 7.9% at Urban Outfitters. The decline in comparable Retail segment net sales was due to negative retail store sales, which was partially offset by continued sales growth in our direct-to-consumer channel. Wholesale segment net sales increased 10%.       

"While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments,” said Richard A. Hayne, Chief Executive Officer. “We believe these initiatives combined with encouraging fashion apparel trends could lead to improved topline performance in future quarters,” 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 brand2017 2016 2017 2016
Urban Outfitters$323,828 $353,837 $608,615 $652,726
Anthropologie Group  362,449  366,610  673,505  680,683
Free People 180,228  164,421  339,735  308,935
Food and Beverage 6,426  5,700  12,266  10,801
Total Company$872,931 $890,568 $1,634,121 $1,653,145
        
Net sales by segment       
Retail Segment$790,628 $815,762 $1,480,980 $1,515,955
Wholesale Segment 82,303  74,806  153,141  137,190
Total Company$872,931 $890,568 $1,634,121 $1,653,145
        

For the three and six months ended July 31, 2017, the gross profit rate decreased 440 basis points and 369 basis points versus the prior year’s comparable periods, respectively. The decline in gross profit rate for both periods was driven by higher markdowns due to underperforming women’s apparel and accessories product at Anthropologie and Urban Outfitters, deleverage in delivery and logistics expenses primarily due to the penetration of the direct-to-consumer channel and deleverage in initial merchandise mark-ups at the Anthropologie and Urban Outfitters brands due to a change in product mix.

As of July 31, 2017, total inventory decreased by $2 million, or 0.6%, on a year-over-year basis. Comparable Retail segment inventory decreased 4.6% at cost, which was partially offset by inventory to stock non-comparable stores.

Selling, general and administrative expenses decreased by $2.1 million, or 1.0%, during the three months ended July 31, 2017, compared to the prior year’s comparable period primarily due to the net benefit of our store organization project. For the three months ended July 31, 2017, selling, general and administrative expenses, expressed as a percentage of net sales, deleveraged by 26 basis points when compared to the prior year’s comparable period primarily due to the negative comparative Retail segment net sales and increased spending in digital marketing. Selling, general and administrative expenses increased by $5.2 million, or 1.2%, during the six months ended July 31, 2017, compared to the prior year’s comparable period primarily due to approximately $8.1 million, or 50 basis points, of nonrecurring expenses related to severance and fees associated with our store organization project. For the six months ended July 31, 2017, selling, general and administrative expenses, expressed as a percentage of net sales, deleveraged by 62 basis points when compared to the prior year’s comparable period primarily due to the nonrecurring expenses related to our store organization project and the negative comparable Retail segment net sales.

The Company’s effective tax rate for the second quarter of fiscal 2018 was 35.1% compared to 35.5% in the prior year period. The effective tax rate for the first half of fiscal 2018 is 37.1% compared to 36.7% in the prior year period. The increase in the first half effective tax rate was due to the ratio of foreign taxable losses to global taxable profits in the first half and the prospective adoption of the new accounting standard related to share-based compensation.

Net income for the three and six months ended July 31, 2017, was $50 million and $62 million, respectively, and earnings per diluted share was $0.44 and $0.54, respectively.

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 5.0 million common shares for approximately $91 million during the six months ended July 31, 2017. 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. As of July 31, 2017, 1.0 million common shares are remaining under this authorization.

During the six months ended July 31, 2017, the Company opened a total of 12 new locations including: 6 Free People stores, 4 Urban Outfitters stores, 1 Anthropologie Group store 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; 225 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 130 Free People stores in the United States and Canada, catalogs and websites and 12 Food and Beverage restaurants, as of July 31, 2017. Free People wholesale sells its product 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 second quarter results and will be webcast at 5:00 pm. ET at: http://edge.media-server.com/m/p/m3hzew4w

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 Six Months Ended
 July 31, July 31,
  2017   2016   2017   2016 
        
Net sales$872,931  $890,568  $1,634,121  $1,653,145 
Cost of sales  575,588   548,057   1,096,998   1,048,743 
  Gross profit 297,343   342,511   537,123   604,402 
Selling, general and administrative expenses 222,163   224,299   440,907   435,707 
  Income from operations 75,180   118,212   96,216   168,695 
Other income (expense), net 1,736   1,071   2,055   (506)
  Income before income taxes 76,916   119,283   98,271   168,189 
Income tax expense 27,001   42,368   36,418   61,712 
  Net income$49,915  $76,915  $61,853  $106,477 
        
Net income per common share:        
  Basic$0.44  $0.66  $0.54  $0.91 
  Diluted$0.44  $0.66  $0.54  $0.91 
        
Weighted-average common shares outstanding:       
  Basic 113,500,381   117,133,169   114,865,336   117,218,013 
  Diluted 113,760,647   117,383,132   115,126,977   117,484,131 
        
        
AS A PERCENTAGE OF NET SALES       
Net sales 100.0%  100.0%  100.0%  100.0%
Cost of sales  65.9%  61.5%  67.1%  63.4%
  Gross profit 34.1%  38.5%  32.9%  36.6%
Selling, general and administrative expenses 25.5%  25.2%  27.0%  26.4%
  Income from operations 8.6%  13.3%  5.9%  10.2%
Other income (expense), net 0.2%  0.1%  0.1%  0.0%
  Income before income taxes 8.8%  13.4%  6.0%  10.2%
Income tax expense 3.1%  4.8%  2.2%  3.8%
  Net income 5.7%  8.6%  3.8%  6.4%
        

 

URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
      
 July 31, January 31, July 31,
  2017   2017   2016 
ASSETS     
Current assets:     
  Cash and cash equivalents $276,759  $248,140  $243,116 
  Marketable securities  110,195   111,067   59,231 
  Accounts receivable, net of allowance for doubtful accounts     
     of $592, $588 and $876, respectively  75,530   54,505   95,003 
  Inventory  365,176   338,590   367,197 
  Prepaid expenses and other current assets  110,017   129,095   94,663 
        Total current assets 937,677   881,397   859,210 
      
Property and equipment, net  843,058   867,786   878,607 
Marketable securities  25,960   44,288   26,000 
Deferred income taxes and other assets  115,906   109,166   110,279 
        Total Assets $1,922,601  $1,902,637  $1,874,096 
      
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Current liabilities:     
  Accounts payable $159,756  $119,537  $134,825 
  Accrued expenses, accrued compensation and other current liabilities  210,399   233,391   222,352 
     Total current liabilities  370,155   352,928   357,177 
Long-term debt  –   –   50,000 
Deferred rent and other liabilities  243,633   236,625   221,901 
        Total Liabilities  613,788   589,553   629,078 
      
Shareholders’ equity:     
   Preferred shares; $.0001 par value, 10,000,000 shares authorized,           
      none issued –   –   – 
  Common shares; $.0001 par value, 200,000,000 shares authorized,      
     111,280,653, 116,233,781 and 117,136,520 issued and outstanding,      
     respectively 11   12   12 
  Additional paid-in-capital  –   –   7,112 
  Retained earnings  1,332,145  1,347,141   1,264,821 
  Accumulated other comprehensive loss  (23,343)  (34,069)  (26,927)
        Total Shareholders’ Equity  1,308,813   1,313,084   1,245,018 
        Total Liabilities and Shareholders’ Equity $1,922,601  $1,902,637  $1,874,096 
      
Contact:   

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

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