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

Exhibit 99.1

URBAN OUTFITTERS, INC.

First Quarter Results

Philadelphia, PA – May 21, 2019

 

For Immediate Release

 

Contact:

 

Oona McCullough

 

 

 

 

Director of Investor Relations

 

 

 

 

(215) 454-4806

URBN Reports Record Q1 Sales

PHILADELPHIA, PA, May 21, 2019 – 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.

###

(Tables follow)


 

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