EX-99.1 2 urbn-ex991_6.htm EX-99.1 urbn-ex991_6.htm

Exhibit 99.1

URBAN OUTFITTERS, INC.

Second Quarter Results

Philadelphia, PA – August 21, 2018

 

For Immediate Release

 

Contact:

 

Oona McCullough

 

 

 

 

Director of Investor Relations

 

 

 

 

(215) 454-4806

URBN Reports Record Q2 Sales and EPS

PHILADELPHIA, PA, August 21, 2018 – 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 $93 million and $134 million for the three and six months ended July 31, 2018, respectively. Earnings per diluted share were $0.84 and $1.22 for the three and six months ended July 31, 2018, respectively.

Total Company net sales for the three months ended July 31, 2018, increased 13.7% over the same period last year to a record $992 million. Comparable Retail segment net sales increased 13%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable Retail segment net sales increased 17% at Free People, 15% at Urban Outfitters and 11% at the Anthropologie Group. Wholesale segment net sales increased 10%.

“I’m pleased to announce our teams produced record Q2 sales and earnings per share,” said Richard A. Hayne, Chief Executive Officer. “All three brands delivered double-digit Retail segment ‘comp’ sales and lower markdown rates to drive these results,” 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,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net sales by brand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urban Outfitters

$

379,327

 

 

$

323,828

 

 

$

702,005

 

 

$

608,615

 

Anthropologie Group

 

401,275

 

 

 

362,449

 

 

 

748,360

 

 

 

673,505

 

Free People

 

206,413

 

 

 

180,228

 

 

 

387,720

 

 

 

339,735

 

Food and Beverage

 

5,439

 

 

 

6,426

 

 

 

10,057

 

 

 

12,266

 

Total Company

$

992,454

 

 

$

872,931

 

 

$

1,848,142

 

 

$

1,634,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Segment

$

902,027

 

 

$

790,628

 

 

$

1,677,591

 

 

$

1,480,980

 

Wholesale Segment

 

90,427

 

 

 

82,303

 

 

 

170,551

 

 

 

153,141

 

Total Company

$

992,454

 

 

$

872,931

 

 

$

1,848,142

 

 

$

1,634,121

 

 



For the three and six months ended July 31, 2018, the gross profit rate improved by 180 basis points and 157 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. These gains were partially offset by deleverage in delivery expense due in part to the increased penetration of the digital channel.

As of July 31, 2018, total inventory increased by $10.5 million, or 2.9%, on a year-over-year basis. Comparable Retail segment inventory increased 3% at cost.

Selling, general and administrative expenses increased by $16.8 million, or 7.6%, and $24.8 million, or 5.6%, during the three and six months ended July 31, 2018, compared to the prior year’s comparable periods, respectively. As a percentage of net sales, selling, general and administrative expenses leveraged 136 basis points and 178 basis points during the three and six months ended July 31, 2018, when 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 expense due to the strong Company performance. The leverage in both periods was primarily driven by the net sales growth, continued savings associated with the fiscal 2018 store reorganization project and the current year benefit associated with the nonrecurring store reorganization expenses incurred in the prior year.

The Company’s effective tax rate for the three months ended July 31, 2018, was 21.7% compared to 35.1% in the prior year period. The effective tax rate for the six months ended July 31, 2018 was 22.3% compared to 37.1% in the prior year period. The decrease in the effective tax rate for the three and six month periods was primarily due to the lower federal statutory rate resulting from the U.S. Tax Cuts and Jobs Act.

Net income for the three and six months ended July 31, 2018, was $93 million and $134 million, respectively, and earnings per diluted share was $0.84 and $1.22, 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 17.9 million common shares were remaining as of July 31, 2018. No shares were repurchased during the six months ended July 31, 2018. 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 six months ended July 31, 2018, the Company opened a total of seven new locations including: three Free People stores, two Urban Outfitters stores and two Anthropologie Group stores; and closed two locations including: one Urban Outfitters store and one Anthropologie Group store.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 246 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; 135 Free People stores in the United States and Canada, catalogs and websites and 10 Food and Beverage restaurants, as of July 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 second quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/8f7kd45c

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

 

 

Six Months Ended

 

 

July 31,

 

 

July 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

992,454

 

 

$

872,931

 

 

$

1,848,142

 

 

$

1,634,121

 

Cost of sales

 

636,610

 

 

 

575,588

 

 

 

1,211,638

 

 

 

1,096,998

 

          Gross profit

 

355,844

 

 

 

297,343

 

 

 

636,504

 

 

 

537,123

 

Selling, general and administrative expenses

 

238,992

 

 

 

222,163

 

 

 

465,756

 

 

 

440,907

 

          Income from operations

 

116,852

 

 

 

75,180

 

 

 

170,748

 

 

 

96,216

 

Other income, net

 

1,746

 

 

 

1,736

 

 

 

1,826

 

 

 

2,055

 

          Income before income taxes

 

118,598

 

 

 

76,916

 

 

 

172,574

 

 

 

98,271

 

Income tax expense

 

25,789

 

 

 

27,001

 

 

 

38,505

 

 

 

36,418

 

          Net income

$

92,809

 

 

$

49,915

 

 

$

134,069

 

 

$

61,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Basic

$

0.85

 

 

$

0.44

 

 

$

1.23

 

 

$

0.54

 

       Diluted

$

0.84

 

 

$

0.44

 

 

$

1.22

 

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Basic

 

108,831,399

 

 

 

113,500,381

 

 

 

108,663,990

 

 

 

114,865,336

 

       Diluted

 

110,433,840

 

 

 

113,760,647

 

 

 

110,091,586

 

 

 

115,126,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AS A PERCENTAGE OF NET SALES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

100.0%

 

 

100.0%

 

 

100.0%

 

 

100.0%

 

Cost of sales

64.1%

 

 

65.9%

 

 

65.6%

 

 

67.1%

 

         Gross profit

35.9%

 

 

34.1%

 

 

34.4%

 

 

32.9%

 

Selling, general and administrative expenses

24.1%

 

 

25.5%

 

 

25.2%

 

 

27.0%

 

         Income from operations

11.8%

 

 

8.6%

 

 

9.2%

 

 

5.9%

 

Other income, net

0.1%

 

 

0.2%

 

 

0.1%

 

 

0.1%

 

         Income before income taxes

11.9%

 

 

8.8%

 

 

9.3%

 

 

6.0%

 

Income tax expense

2.5%

 

 

3.1%

 

 

2.0%

 

 

2.2%

 

         Net income

9.4%

 

 

5.7%

 

 

7.3%

 

 

3.8%

 


 

URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 

 

July 31,

 

 

January 31,

 

 

July 31,

 

 

2018

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

    Cash and cash equivalents

$

405,727

 

 

$

282,220

 

 

$

276,759

 

    Marketable securities

 

198,166

 

 

 

165,125

 

 

 

110,195

 

    Accounts receivable, net of allowance for doubtful accounts

         of $1,613, $1,326 and $592, respectively

 

90,646

 

 

 

76,962

 

 

 

75,530

 

    Inventory

 

375,657

 

 

 

351,395

 

 

 

365,176

 

    Prepaid expenses and other current assets

 

131,572

 

 

 

103,055

 

 

 

110,017

 

            Total current assets

 

1,201,768

 

 

 

978,757

 

 

 

937,677

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

807,084

 

 

 

813,768

 

 

 

843,058

 

Marketable securities

 

45,514

 

 

 

58,688

 

 

 

25,960

 

Deferred income taxes and other assets

 

104,169

 

 

 

101,567

 

 

 

115,906

 

           Total Assets

$

2,158,535

 

 

$

1,952,780

 

 

$

1,922,601

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

    Accounts payable

$

149,947

 

 

$

128,246

 

 

$

159,756

 

    Accrued expenses, accrued compensation and other current liabilities

 

279,991

 

 

 

231,968

 

 

 

210,399

 

           Total current liabilities

 

429,938

 

 

 

360,214

 

 

 

370,155

 

Long-term debt

 

 

 

 

 

 

 

 

Deferred rent and other liabilities

 

284,925

 

 

 

291,663

 

 

 

243,633

 

           Total Liabilities

 

714,863

 

 

 

651,877

 

 

 

613,788

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

   Preferred shares; $.0001 par value, 10,000,000 shares authorized,

        none issued

 

 

 

 

 

 

 

 

   Common shares; $.0001 par value, 200,000,000 shares authorized,

        108,951,308, 108,248,568 and 111,280,653 issued and outstanding,

        respectively

11

 

 

11

 

 

11

 

    Additional paid-in-capital

 

18,770

 

 

684

 

 

 

 

    Retained earnings

 

1,451,492

 

 

 

1,310,859

 

 

 

1,332,145

 

    Accumulated other comprehensive loss

 

(26,601

)

 

 

(10,651

)

 

 

(23,343

)

           Total Shareholders’ Equity

 

1,443,672

 

 

 

1,300,903

 

 

 

1,308,813

 

           Total Liabilities and Shareholders’ Equity

$

2,158,535

 

 

$

1,952,780

 

 

$

1,922,601