PHILADELPHIA, Aug. 15, 2017 (GLOBE NEWSWIRE) -- 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 $50 million and $62 million for the three and six months ended July 31, 2017, respectively. Earnings per diluted share were $0.44 and $0.54 for the three and six months ended July 31, 2017, respectively.
Total Company net sales for the second quarter of fiscal 2018 were $873 million, a 2% decrease as compared to the same quarter last year. Comparable Retail segment net sales, which include the comparable direct-to-consumer channel, decreased 4.9%. By brand, comparable Retail segment net sales increased 2.9% at Free People, but decreased 4.0% at the Anthropologie Group and 7.9% at Urban Outfitters. The decline in comparable Retail segment net sales was due to negative retail store sales, which was partially offset by continued sales growth in our direct-to-consumer channel. Wholesale segment net sales increased 10%.
"While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments,” said Richard A. Hayne, Chief Executive Officer. “We believe these initiatives combined with encouraging fashion apparel trends could lead to improved topline performance in future quarters,” 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,|
|Net sales by brand||2017||2016||2017||2016|
|Food and Beverage||6,426||5,700||12,266||10,801|
|Net sales by segment|
For the three and six months ended July 31, 2017, the gross profit rate decreased 440 basis points and 369 basis points versus the prior year’s comparable periods, respectively. The decline in gross profit rate for both periods was driven by higher markdowns due to underperforming women’s apparel and accessories product at Anthropologie and Urban Outfitters, deleverage in delivery and logistics expenses primarily due to the penetration of the direct-to-consumer channel and deleverage in initial merchandise mark-ups at the Anthropologie and Urban Outfitters brands due to a change in product mix.
As of July 31, 2017, total inventory decreased by $2 million, or 0.6%, on a year-over-year basis. Comparable Retail segment inventory decreased 4.6% at cost, which was partially offset by inventory to stock non-comparable stores.
Selling, general and administrative expenses decreased by $2.1 million, or 1.0%, during the three months ended July 31, 2017, compared to the prior year’s comparable period primarily due to the net benefit of our store organization project. For the three months ended July 31, 2017, selling, general and administrative expenses, expressed as a percentage of net sales, deleveraged by 26 basis points when compared to the prior year’s comparable period primarily due to the negative comparative Retail segment net sales and increased spending in digital marketing. Selling, general and administrative expenses increased by $5.2 million, or 1.2%, during the six months ended July 31, 2017, compared to the prior year’s comparable period primarily due to approximately $8.1 million, or 50 basis points, of nonrecurring expenses related to severance and fees associated with our store organization project. For the six months ended July 31, 2017, selling, general and administrative expenses, expressed as a percentage of net sales, deleveraged by 62 basis points when compared to the prior year’s comparable period primarily due to the nonrecurring expenses related to our store organization project and the negative comparable Retail segment net sales.
The Company’s effective tax rate for the second quarter of fiscal 2018 was 35.1% compared to 35.5% in the prior year period. The effective tax rate for the first half of fiscal 2018 is 37.1% compared to 36.7% in the prior year period. The increase in the first half effective tax rate was due to the ratio of foreign taxable losses to global taxable profits in the first half and the prospective adoption of the new accounting standard related to share-based compensation.
Net income for the three and six months ended July 31, 2017, was $50 million and $62 million, respectively, and earnings per diluted share was $0.44 and $0.54, respectively.
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 5.0 million common shares for approximately $91 million during the six months ended July 31, 2017. The Company repurchased and subsequently retired 1.3 million common shares for approximately $46 million under this authorization during the year ended January 31, 2017. As of July 31, 2017, 1.0 million common shares are remaining under this authorization.
During the six months ended July 31, 2017, the Company opened a total of 12 new locations including: 6 Free People stores, 4 Urban Outfitters stores, 1 Anthropologie Group store and 1 Food and Beverage restaurant; and closed 6 locations including: 3 Free People stores, 1 Urban Outfitters store, 1 Anthropologie Group store and 1 Food and Beverage restaurant.
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; 225 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 130 Free People stores in the United States and Canada, catalogs and websites and 12 Food and Beverage restaurants, as of July 31, 2017. Free People wholesale sells its product through approximately 1,900 department and specialty stores worldwide, third-party websites and the Company’s own retail stores.
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/m3hzew4w
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, any effects of war, terrorism, and civil unrest, natural disasters or severe weather conditions, increases in labor 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, 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, 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.
|URBAN OUTFITTERS, INC.|
|Condensed Consolidated Statements of Income|
|(amounts in thousands, except share and per share data)|
|Three Months Ended||Six Months Ended|
|July 31,||July 31,|
|Cost of sales||575,588||548,057||1,096,998||1,048,743|
|Selling, general and administrative expenses||222,163||224,299||440,907||435,707|
|Income from operations||75,180||118,212||96,216||168,695|
|Other income (expense), net||1,736||1,071||2,055||(506||)|
|Income before income taxes||76,916||119,283||98,271||168,189|
|Income tax expense||27,001||42,368||36,418||61,712|
|Net income per common share:|
|Weighted-average common shares outstanding:|
|AS A PERCENTAGE OF NET SALES|
|Cost of sales||65.9||%||61.5||%||67.1||%||63.4||%|
|Selling, general and administrative expenses||25.5||%||25.2||%||27.0||%||26.4||%|
|Income from operations||8.6||%||13.3||%||5.9||%||10.2||%|
|Other income (expense), net||0.2||%||0.1||%||0.1||%||0.0||%|
|Income before income taxes||8.8||%||13.4||%||6.0||%||10.2||%|
|Income tax expense||3.1||%||4.8||%||2.2||%||3.8||%|
|URBAN OUTFITTERS, INC.|
|Condensed Consolidated Balance Sheets|
|(amounts in thousands, except share data)|
|July 31,||January 31,||July 31,|
|Cash and cash equivalents||$||276,759||$||248,140||$||243,116|
|Accounts receivable, net of allowance for doubtful accounts|
|of $592, $588 and $876, respectively||75,530||54,505||95,003|
|Prepaid expenses and other current assets||110,017||129,095||94,663|
|Total current assets||937,677||881,397||859,210|
|Property and equipment, net||843,058||867,786||878,607|
|Deferred income taxes and other assets||115,906||109,166||110,279|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Accrued expenses, accrued compensation and other current liabilities||210,399||233,391||222,352|
|Total current liabilities||370,155||352,928||357,177|
|Deferred rent and other liabilities||243,633||236,625||221,901|
|Preferred shares; $.0001 par value, 10,000,000 shares authorized,|
|Common shares; $.0001 par value, 200,000,000 shares authorized,|
|111,280,653, 116,233,781 and 117,136,520 issued and outstanding,|
|Accumulated other comprehensive loss||(23,343||)||(34,069||)||(26,927||)|
|Total Shareholders’ Equity||1,308,813||1,313,084||1,245,018|
|Total Liabilities and Shareholders’ Equity||$||1,922,601||$||1,902,637||$||1,874,096|
Contact: Oona McCullough Director of Investor Relations (215) 454-4806
Source:Urban Outfitters, Inc.