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 20, 2019

 

For Immediate Release

 

Contact:

 

Oona McCullough

 

 

 

 

Director of Investor Relations

 

 

 

 

(215) 454-4806

URBN Reports Q2 Results

PHILADELPHIA, PA, August 20, 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, Urban Outfitters and Nuuly brands and the Food and Beverage division, today announced net income of $60 million and $93 million for the three and six months ended July 31, 2019, respectively. Earnings per diluted share were $0.61 and $0.91 for the three and six months ended July 31, 2019, respectively.

Total Company net sales for the three months ended July 31, 2019, decreased 3.0% over the same period last year to $962 million. Comparable Retail segment net sales decreased 3%, driven by negative retail store sales, partially offset by growth in the digital channel. By brand, comparable Retail segment net sales increased 6% at Free People and decreased 3% at the Anthropologie Group and 5% at Urban Outfitters. Wholesale segment net sales decreased 8%.

“I am pleased to report that customer reaction to our early fall apparel assortments have improved significantly from our second quarter results,” said Richard A. Hayne, Chief Executive Officer. “Third quarter-to-date Retail segment ‘comp’ sales are positive at all three brands,” 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,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales by brand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anthropologie Group

$

394,280

 

 

$

401,275

 

 

$

749,268

 

 

$

748,360

 

Urban Outfitters

 

355,045

 

 

 

379,327

 

 

 

671,851

 

 

 

702,005

 

Free People

 

205,940

 

 

 

206,413

 

 

 

392,131

 

 

 

387,720

 

Food and Beverage

 

7,064

 

 

 

5,439

 

 

 

13,492

 

 

 

10,057

 

Total Company

$

962,329

 

 

$

992,454

 

 

$

1,826,742

 

 

$

1,848,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Segment

$

878,693

 

 

$

902,027

 

 

$

1,661,256

 

 

$

1,677,591

 

Wholesale Segment

 

83,636

 

 

 

90,427

 

 

 

165,486

 

 

 

170,551

 

Total Company

$

962,329

 

 

$

992,454

 

 

$

1,826,742

 

 

$

1,848,142

 



For the three and six months ended July 31, 2019, the gross profit rate decreased by 304 basis points and 242 basis points versus the prior year’s comparable periods, respectively. The decrease in gross profit rate for both periods was driven by higher markdowns, deleverage in delivery and logistics expenses and store occupancy deleverage. 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 deleverage in store occupancy was due to negative store and Retail segment comparable net sales.

As of July 31, 2019, total inventory increased by $64.4 million, or 17.2%, on a year-over-year basis. Comparable Retail segment inventory increased 5% at cost. The remainder of the increase was primarily related to an increase in inventory in transit.

Selling, general and administrative expenses decreased by $1.2 million, or 0.5%, during the three months ended July 31, 2019, compared to the prior year’s comparable period. Selling, general and administrative expenses increased by $1.1 million, or 0.2%, during the six months ended July 31, 2019, compared to the prior year’s comparable period. As a percentage of net sales, selling, general and administrative expenses deleveraged by 62 basis points and 36 basis points during the three and six months ended July 31, 2019, when compared to the prior year’s comparable periods, respectively. The deleverage in both periods was primarily driven by increased marketing expenses to support our digital sales growth as well as the launch of our new monthly women’s apparel subscription rental service, Nuuly.

The Company’s effective tax rate for the three months ended July 31, 2019, was 26.0% compared to 21.7% in the prior year period. The Company’s effective tax rate for the six months ended July 31, 2019, was 25.2% compared to 22.3% in the prior year period. The increase in the effective tax rate for the three and six month periods was primarily due to the ratio of foreign taxable profits to global taxable profits and the prior year favorable impact of equity activity.

Net income for the three and six months ended July 31, 2019, was $60 million and $93 million, respectively, and earnings per diluted share was $0.61 and $0.91, respectively.

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. During the six months ended July 31, 2019, the Company repurchased and subsequently retired 8.1 million common shares for approximately $217 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. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. As of July 31, 2019, 26.3 million common shares were remaining under the programs.

During the six months ended July 31, 2019, the Company opened a total of seven new retail locations including: three Anthropologie Group stores, three Free People stores and one Urban Outfitters store; and closed five retail locations including: two Anthropologie Group stores, one Free People store and two Food and Beverage restaurants. During the six months ended July 31, 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 246 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; 137 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 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 July 31, 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 second quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/2bvghd8c

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

 

 

Six Months Ended

 

 

July 31,

 

 

July 31,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

962,329

 

 

$

992,454

 

 

$

1,826,742

 

 

$

1,848,142

 

Cost of sales

 

646,454

 

 

 

636,610

 

 

 

1,241,811

 

 

 

1,211,638

 

          Gross profit

 

315,875

 

 

 

355,844

 

 

 

584,931

 

 

 

636,504

 

Selling, general and administrative expenses

 

237,814

 

 

 

238,992

 

 

 

466,850

 

 

 

465,756

 

          Income from operations

 

78,061

 

 

 

116,852

 

 

 

118,081

 

 

 

170,748

 

Other income, net

 

3,498

 

 

 

1,746

 

 

 

6,178

 

 

 

1,826

 

          Income before income taxes

 

81,559

 

 

 

118,598

 

 

 

124,259

 

 

 

172,574

 

Income tax expense

 

21,239

 

 

 

25,789

 

 

 

31,354

 

 

 

38,505

 

          Net income

$

60,320

 

 

$

92,809

 

 

$

92,905

 

 

$

134,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Basic

$

0.61

 

 

$

0.85

 

 

$

0.91

 

 

$

1.23

 

       Diluted

$

0.61

 

 

$

0.84

 

 

$

0.91

 

 

$

1.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       Basic

 

99,095,562

 

 

 

108,831,399

 

 

 

101,722,244

 

 

 

108,663,990

 

       Diluted

 

99,602,465

 

 

 

110,433,840

 

 

 

102,427,040

 

 

 

110,091,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AS A PERCENTAGE OF NET SALES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

100.0%

 

 

100.0%

 

 

100.0%

 

 

100.0%

 

Cost of sales

67.2%

 

 

64.1%

 

 

68.0%

 

 

65.6%

 

         Gross profit

32.8%

 

 

35.9%

 

 

32.0%

 

 

34.4%

 

Selling, general and administrative expenses

24.7%

 

 

24.1%

 

 

25.5%

 

 

25.2%

 

         Income from operations

8.1%

 

 

11.8%

 

 

6.5%

 

 

9.2%

 

Other income, net

0.4%

 

 

0.1%

 

 

0.3%

 

 

0.1%

 

         Income before income taxes

8.5%

 

 

11.9%

 

 

6.8%

 

 

9.3%

 

Income tax expense

2.2%

 

 

2.5%

 

 

1.7%

 

 

2.0%

 

         Net income

6.3%

 

 

9.4%

 

 

5.1%

 

 

7.3%

 


 

URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 

 

July 31,

 

 

January 31,

 

 

July 31,

 

 

2019

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

    Cash and cash equivalents

$

162,018

 

 

$

358,260

 

 

$

405,727

 

    Marketable securities

 

171,398

 

 

 

279,232

 

 

 

198,166

 

    Accounts receivable, net of allowance for doubtful accounts

         of $939, $1,499 and $1,613, respectively

 

95,131

 

 

 

80,461

 

 

 

90,646

 

    Inventory

 

440,087

 

 

 

370,507

 

 

 

375,657

 

    Prepaid expenses and other current assets

 

131,763

 

 

 

114,296

 

 

 

131,572

 

            Total current assets

 

1,000,397

 

 

 

1,202,756

 

 

 

1,201,768

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

867,434

 

 

 

796,029

 

 

 

807,084

 

Operating lease right-of-use assets

 

1,085,543

 

 

 

 

 

 

 

Marketable securities

 

78,857

 

 

 

57,292

 

 

 

45,514

 

Deferred income taxes and other assets

 

105,814

 

 

 

104,438

 

 

 

104,169

 

           Total Assets

$

3,138,045

 

 

$

2,160,515

 

 

$

2,158,535

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

    Accounts payable

$

181,955

 

 

$

144,414

 

 

$

149,947

 

    Current portion of operating lease liabilities

 

209,072

 

 

 

 

 

 

 

    Accrued expenses, accrued compensation and other current liabilities

 

235,106

 

 

 

242,230

 

 

 

279,991

 

           Total current liabilities

 

626,133

 

 

 

386,644

 

 

 

429,938

 

Non-current portion of operating lease liabilities

 

1,090,623

 

 

 

 

 

 

 

Deferred rent and other liabilities

 

59,885

 

 

 

284,773

 

 

 

284,925

 

           Total Liabilities

 

1,776,641

 

 

 

671,417

 

 

 

714,863

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

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

        none issued

 

 

 

 

 

 

 

 

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

        97,965,012, 105,642,283 and 108,951,308 issued and outstanding,

        respectively

10

 

 

11

 

 

11

 

    Additional paid-in-capital

 

 

 

 

 

 

 

18,770

 

    Retained earnings

 

1,398,681

 

 

 

1,516,190

 

 

 

1,451,492

 

    Accumulated other comprehensive loss

 

(37,287

)

 

 

(27,103

)

 

 

(26,601

)

           Total Shareholders’ Equity

 

1,361,404

 

 

 

1,489,098

 

 

 

1,443,672

 

           Total Liabilities and Shareholders’ Equity

$

3,138,045

 

 

$

2,160,515

 

 

$

2,158,535