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8-K - URBAN OUTFITTERS INC--FORM 8-K - URBAN OUTFITTERS INCd18639d8k.htm

Exhibit 99.1

URBAN OUTFITTERS, INC.

Second Quarter Results

Philadelphia, PA – August 17, 2015

 

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

Urban Outfitters Reports Record Q2 Sales

PHILADELPHIA, PA, August 17, 2015 - Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands, today announced net income of $67 million and $100 million for the three and six months ended July 31, 2015, respectively. Earnings per diluted share were $0.52 and $0.76 for the three and six months ended July 31, 2015, respectively.

Total Company net sales for the second quarter of fiscal 2016 increased 7% over the same quarter last year to a record $867 million. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 4%. Comparable Retail segment net sales increased 14% at Free People, 4% at Urban Outfitters and 2% at the Anthropologie Group. Wholesale segment net sales rose 21%.

“We are pleased to announce record sales for the second quarter driven by positive retail segment comp growth at each brand,” said Richard A. Hayne, Chief Executive Officer. “Without question, the brands’ strong execution of our long-term strategy helped fuel that sales growth and laid the groundwork for future increases, as well,” finished Mr. Hayne.

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

 

     Three Months Ended
July 31,
     Six Months Ended
July 31,
 
     2015      2014      2015      2014  

Net sales by brand

           

Urban Outfitters

   $ 342,207       $ 328,632       $ 637,882       $ 606,288   

Anthropologie Group1

     370,672         354,316         682,048         654,299   

Free People

     154,581         128,305         286,540         236,976   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Company

   $ 867,460       $ 811,253       $ 1,606,470       $ 1,497,563   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net sales by segment

           

Retail Segment

   $ 795,740       $ 752,116       $ 1,480,749       $ 1,392,546   

Wholesale Segment

     71,720         59,137         125,721         105,017   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Company

   $ 867,460       $ 811,253       $ 1,606,470       $ 1,497,563   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

1  Anthropologie Group consists of the Anthropologie, Bhldn and Terrain brands


For the three and six months ended July 31, 2015, the gross profit rate declined by 71 basis points and 104 basis points versus the prior year’s comparable periods, respectively. The decline in gross profit rate was primarily driven by higher delivery and fulfillment center expenses largely related to the increase in direct-to-consumer sales penetration as well as incremental costs associated with the transition of our South Carolina fulfillment center to Gap, Pennsylvania.

As of July 31, 2015, total inventories increased by $22 million, or 6%, 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. Comparable Retail segment inventories decreased 2% at cost while decreasing 7% in units.

For the three and six months ended July 31, 2015, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 29 basis points and 22 basis points compared to the prior year’s comparable periods, respectively. The increase in both periods was primarily due to increased marketing and technology expenses which drove higher direct-to-consumer traffic.

The Company’s effective tax rate for the second quarter of fiscal 2016 was 35.2% compared to 35.5% in the prior year’s comparable period.

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 a total of 4.8 million common shares for approximately $170.8 million during the six months ended July 31, 2015.

On May 27, 2014, the Company’s Board of Directors authorized the repurchase of 10 million common shares under a share repurchase program. During the six months ended July 31, 2015, the Company repurchased and subsequently retired 2.3 million shares at a total cost of $82.8 million which completed this authorization. The Company repurchased and subsequently retired 7.7 million common shares at a total cost of $258.2 million during fiscal 2015.

On July 1, 2015, the Company entered into a five-year $400 million asset-based revolving credit facility with a group of lenders, with JPMorgan Chase Bank N.A. as administrative agent. The new credit facility replaced the Company’s existing $175 million line of credit facility with Wells Fargo Bank, National Association, which was set to expire in March 2019, and is secured by the Company’s eligible inventory and accounts receivable. As of July 31, 2015, borrowings under the new revolving credit facility totaled approximately $115 million. All borrowings under the revolving credit facilities were used to fund the repurchase of common shares of the Company.

During the six months ended July 31, 2015, the Company opened a total of 13 new stores including: 7 Free People stores, 4 Anthropologie Group stores and 2 Urban Outfitters stores. The Company closed 3 stores during the six months ended July 31, 2015, 2 Urban Outfitters stores and 1 Free People store.

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; 210 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 108 Free People stores in the United States and Canada, catalogs and websites; and Free People wholesale, which sells its product to approximately 1,600 specialty stores and select department stores worldwide; as of July 31, 2015.


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/hvn6tkkj/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.

###

(Tables follow)


URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Income

(in thousands, except share and per share data)

(unaudited)

 

     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2015     2014     2015     2014  

Net sales

   $ 867,460      $ 811,253      $ 1,606,470      $ 1,497,563   

Cost of sales

     549,355        507,995        1,041,944        955,794   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     318,105        303,258        564,526        541,769   

Selling, general and administrative expenses

     214,354        198,141        407,721        376,831   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     103,751        105,117        156,805        164,938   

Other expense, net

     (596     (523     (2,717     (867
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     103,155        104,594        154,088        164,071   

Income tax expense

     36,314        37,085        54,471        59,084   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 66,841      $ 67,509      $ 99,617      $ 104,987   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

        

Basic

   $ 0.52      $ 0.49      $ 0.77      $ 0.75   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.52      $ 0.49      $ 0.76      $ 0.74   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding:

        

Basic

     127,910,026        136,453,663        129,529,108        140,201,489   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     129,080,594        138,177,110        130,931,093        141,978,651   
  

 

 

   

 

 

   

 

 

   

 

 

 

AS A PERCENT OF NET SALES

        

Net sales

     100.0     100.0     100.0     100.0

Cost of sales

     63.3     62.6     64.9     63.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     36.7     37.4     35.1     36.2

Selling, general and administrative expenses

     24.7     24.4     25.3     25.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     12.0     13.0     9.8     11.0

Other expense, net

     (0.1 %)      (0.1 %)      (0.2 %)      0.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     11.9     12.9     9.6     11.0

Income tax expense

     4.2     4.6     3.4     4.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     7.7     8.3     6.2     7.0
  

 

 

   

 

 

   

 

 

   

 

 

 


URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

     July 31,
2015
    January 31,
2015
    July 31,
2014
 
ASSETS       

Current assets:

      

Cash and cash equivalents

   $ 194,441      $ 154,558      $ 145,273   

Marketable securities

     71,926        104,246        106,721   

Accounts receivable, net of allowance for doubtful accounts of $813, $850 and $1,038, respectively

     70,014        70,458        72,813   

Inventories

     384,404        358,237        362,028   

Prepaid expenses, deferred taxes and other current assets

     118,678        121,618        105,129   
  

 

 

   

 

 

   

 

 

 

Total current assets

     839,463        809,117        791,964   

Property and equipment, net

     900,302        889,232        868,642   

Marketable securities

     72,764        104,448        157,146   

Deferred income taxes and other assets

     94,804        85,944        86,394   
  

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,907,333      $ 1,888,741      $ 1,904,146   
  

 

 

   

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY       

Current liabilities:

      

Accounts payable

   $ 134,673      $ 156,090      $ 156,810   

Accrued expenses, accrued compensation and other current liabilities

     218,604        197,650        211,388   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     353,277        353,740        368,198   

Long-term debt

     115,000        —          —     

Deferred rent and other liabilities

     207,808        207,032        199,891   
  

 

 

   

 

 

   

 

 

 

Total Liabilities

     676,085        560,772        568,089   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity:

      

Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued

     —          —          —     

Common shares; $.0001 par value, 200,000,000 shares authorized, 125,126,008, 130,502,864 and 134,057,393 shares issued and outstanding, respectively

     13        13        13   

Additional paid-in-capital

     —          —          —     

Retained earnings

     1,241,227        1,343,383        1,333,658   

Accumulated other comprehensive income (loss)

     (9,992     (15,427     2,386   
  

 

 

   

 

 

   

 

 

 

Total Shareholders’ Equity

     1,231,248        1,327,969        1,336,057   
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 1,907,333      $ 1,888,741      $ 1,904,146