Category: Retail

Urban Outfitters Fourth Quarter Revenue Tops $1 Billion

PHILADELPHIA, PA, March 9, 2015 - Urban Outfitters, Inc. (URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands, today announced net income of $80 million and $232 million for the three months and year ended January 31, 2015, respectively.  Earnings per diluted share were $0.60 and $1.68 for the three months and year ended January 31, 2015, respectively.

Total Company net sales for the fourth quarter of fiscal 2015 increased 12% over the same quarter last year to a record $1.01 billion. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 6%. Comparable Retail segment net sales increased 18% at Free People, 6% at the Anthropologie Group and 4% at Urban Outfitters. Wholesale segment net sales rose 21%.

For the year ended January 31, 2015, total Company net sales increased 8% over the prior year to a record $3.3 billion. Comparable Retail segment net sales increased 2%. Wholesale segment net sales increased 27%.

"We are pleased to report our first billion dollar quarter, fueled by positive retail segment `comps` at all of our brands, "said Richard A. Hayne, Chief Executive Officer.  "It is encouraging to see this sales trend continue into Q1," finished Mr. Hayne.

Net sales by brand and segment for the three and twelve month periods were as follows:

  Three Months Ended   Twelve Months Ended  
  January 31,   January 31,  
Net sales by brand      2015        2014         2015        2014  
Urban Outfitters $  438,369   $  398,021   $  1,385,070   $  1,369,302
Anthropologie Group[1] 413,004   378,912   1,384,269   1,280,998
Free People 152,630   122,861   530,791   416,369
Other 7,041   6,064   22,947   19,939
Total Company $  1,011,044   $  905,858   $  3,323,077   $  3,086,608
               
Net sales by segment              
Retail Segment $  953,277   $  857,953   $  3,097,274   $  2,908,981
Wholesale Segment 57,767   47,905   225,803   177,627
Total Company $  1,011,044   $  905,858   $  3,323,077   $  3,086,608

[1] Anthropologie Group consists of the Anthropologie and Bhldn brands

For the three months ended January 31, 2015, the gross profit rate decreased by 207 basis points versus the prior year`s comparable period. The deleverage occurred primarily due to lower initial merchandise markups followed by higher markdowns, which were primarily driven by the underperformance at the Urban Outfitters brand. For the year ended January 31, 2015, the gross profit rate decreased by 227 basis points versus the prior year`s comparable period.  The deleverage occurred primarily due to lower initial merchandise markups, store occupancy deleverage due to negative store comparable net sales and higher markdowns, which were primarily driven by the underperformance at the Urban Outfitters brand.

As of January 31, 2015, total inventories increased by $47 million, or 15%, on a year-over-year basis. The growth in total inventories is primarily related to the acquisition of inventory to stock new and non-comparable stores as well as an increase in comparable Retail segment inventories. Comparable Retail segment inventories increased 7% at cost while decreasing 7% in units.

For the three months ended January 31, 2015, selling, general and administrative expenses, expressed as a percentage of net sales, leveraged by 8 basis points when compared to the prior year period. For the year ended January 31, 2015, selling, general and administrative expenses, expressed as a percentage of net sales, deleveraged by 56 basis points compared to the prior year period primarily due to increased marketing and technology expenses which were used to drive higher direct-to-consumer traffic. 

The Company`s effective tax rate for the fourth quarter of fiscal 2015 was 35.0% compared to 31.7% in the prior year period. The tax rate variance is due to prior year favorable one-time benefits pertaining to a federal rehabilitation credit received related to the expansion of the Company`s home office and the release of foreign valuation allowances.

On August 27, 2013, the Board of Directors authorized the repurchase of 10.0 million common shares under a share repurchase program. During the first quarter of fiscal 2015, the Company repurchased and retired 9.7 million common shares for approximately $353 million completing the share repurchase authorization.  On May 27, 2014, the Board of Directors authorized the repurchase of an additional 10.0 million common shares under a share repurchase program.  During the year ended January 31, 2015, the Company repurchased and retired 7.7 million common shares for approximately $258 million, leaving 2.3 million shares available for repurchase under the authorization. On February 23, 2015, the Board of Directors authorized the repurchase of an additional 20.0 million shares under a share repurchase program.

During the year ended January 31, 2015, the Company opened a total of 38 new stores including: 15 Anthropologie Group stores, 12 Free People stores, and 11 Urban Outfitters stores. The Company closed 3 Urban Outfitters stores due to lease expirations.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 238 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 204 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 102 Free People stores in the United States and Canada, catalogs and websites; Free People wholesale, which sells its product to approximately 1,600 specialty stores and select department stores worldwide; and 2 Terrain garden centers and a website, as of January 31, 2015.

Management`s fourth quarter commentary is located on our website at www.urbanoutfittersinc.com.   A conference call will be held today to discuss fourth quarter results and will be webcast at 5:00 pm. ET at:  http://edge.media-server.com/m/p/obhn7emd/lan/en

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 the resultant impact on consumer spending patterns, lowered levels of consumer confidence and higher levels of unemployment, continuation of lowered levels of consumer spending resulting from a worldwide political and economic crisis, any effects of terrorist acts or war, natural disasters or severe weather conditions, 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, including potential disruptions and changes in duties, tariffs and quotas, the closing of any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, response to new store concepts, failure of our manufacturers to comply with our social compliance program, 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.

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(Tables follow)

URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)

  Three Months Ended   Year Ended  
  January 31,   January 31,  
           2015           2014            2015          2014  
               
Net sales $1,011,044   $      905,858   $   3,323,077   $   3,086,608
Cost of sales  661,407   573,853   2,148,147   1,925,266
          Gross profit 349,637   332,005   1,174,930   1,161,342
Selling, general and administrative expenses 225,655   202,916   809,545   734,511
          Income from operations 123,982   129,089   365,385   426,831
Other (expense) income, net (375)   795   (1,935)   687
          Income before income taxes 123,607   129,884   363,450   427,518
Income tax expense 43,309   41,202   131,022   145,158
          Net income $        80,298   $        88,682   $232,428   $282,360
               
Net income per common share:              
       Basic $            0.61    $            0.60    $           1.70    $           1.92 
       Diluted $            0.60    $            0.59    $           1.68    $           1.89 
               
Weighted average common shares and common              
   share equivalents outstanding:              
       Basic 132,053,126   147,302,220   136,651,899   147,014,869
       Diluted 132,980,947   149,202,626   138,192,734   149,225,906
               
               
AS A PERCENT OF NET SALES              
Net sales 100.0%   100.0%   100.0%   100.0%
Cost of sales  65.4%     63.3%   64.6%     62.4%
          Gross profit 34.6%   36.7%   35.4%   37.6%
Selling, general and administrative expenses 22.3%     22.4%   24.4%     23.8%
           Income from operations 12.3%   14.3%   11.0%   13.8%
Other (expense) income, net  (0.1%)       0.0%   (0.1%)       0.1%
         Income before income taxes 12.2%   14.3%   10.9%    13.9%
Income tax expense 4.3%       4.5%   3.9%       4.7%
          Net income 7.9%      9.8%   7.0%     9.2%

URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

  January 31,
 2015
  January 31,
2014
 
         
ASSETS        
Current assets:        
    Cash and cash equivalents $   154,558   $   242,058  
    Marketable securities 104,246   281,813  
    Accounts receivable, net of allowance for doubtful accounts        
        of $850 and $1,711, respectively 70,458   55,161  
    Inventories 358,237   311,207  
    Prepaid expenses, deferred taxes and other current assets        117,795          104,741  
            Total current assets 805,294   994,980  
         
Property and equipment, net 889,232   806,909  
Marketable securities 104,448   366,422  
Deferred income taxes and other assets 87,782          52,903  
           Total Assets $ 1,886,756   $2,221,214  
         
LIABILITIES AND SHAREHOLDERS` EQUITY        
Current liabilities:        
    Accounts payable $     156,090   $   137,036  
    Accrued expenses, accrued compensation and other current liabilities       197,650        194,794  
           Total current liabilities 353,740   331,830  
         
Deferred rent and other liabilities      207,032         195,214   
           Total Liabilities      560,772        527,044  
         
Shareholders` equity:        
   Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued -   -  
   Common shares; $.0001 par value, 200,000,000 shares authorized, 130,502,864 an        
       and 147,309,575 issued and outstanding, respectively 13   15  
    Additional paid-in-capital -   97,684  
    Retained earnings 1,341,398 1,597,439  
    Accumulated other comprehensive loss        (15,427)          (968)  
           Total Shareholders` Equity   1,325,984     1,694,170  
           Total Liabilities and Shareholders` Equity $ 1,886,756   $2,221,214  

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