URBN
$33.22
Urban Outfitters
($.39)
(1.16%)
Earnings Details
3rd Quarter October 2018
Monday, November 19, 2018 4:05:00 PM
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Summary

Urban Outfitters Beats

Urban Outfitters (URBN) reported 3rd Quarter October 2018 earnings of $0.70 per share on revenue of $973.5 million. The consensus earnings estimate was $0.63 per share on revenue of $968.8 million. The Earnings Whisper number was $0.67 per share. Revenue grew 9.0% on a year-over-year basis.

Urban Outfitters Inc is a lifestyle specialty retail company that operates under the Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands. It also operates a Wholesale segment under the Free People brand.

Results
Reported Earnings
$0.70
Earnings Whisper
$0.67
Consensus Estimate
$0.63
Reported Revenue
$973.5 Mil
Revenue Estimate
$968.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

URBN Reports Record Q3 Sales and EPS

PHILADELPHIA, Nov. 19, 2018 (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 $78 million and $212 million for the three and nine months ended October 31, 2018, respectively. Earnings per diluted share were $0.70 and $1.92 for the three and nine months ended October 31, 2018, respectively.

Total Company net sales for the three months ended October 31, 2018, increased 9.0% over the same period last year to a record $974 million. Comparable Retail segment net sales increased 8%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable Retail segment net sales increased 12% at Free People, 8% at the Anthropologie Group and 7% at Urban Outfitters. Wholesale segment net sales increased 12%.

“I’m pleased to announce our teams produced record Q3 sales and earnings,” said Richard A. Hayne, Chief Executive Officer. “All brands, all channels, all product categories and all geographies delivered positive ‘comp’ sales,” finished Mr. Hayne.

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

 Three Months Ended  Nine Months Ended
 October 31,  October 31,
 2018  2017  2018  2017
Net sales by brand              
Urban Outfitters$379,187  $353,881  $1,081,192  $962,496
Anthropologie Group 385,031   352,080   1,133,391   1,025,585
Free People 202,170   180,572   589,890   520,307
Food and Beverage 7,145   6,241   17,202   18,507
Total Company$973,533  $892,774  $2,821,675  $2,526,895
               
Net sales by segment              
Retail Segment$878,869  $808,546  $2,556,460  $2,289,526
Wholesale Segment 94,664   84,228   265,215   237,369
Total Company$973,533  $892,774  $2,821,675  $2,526,895
               

For the three and nine months ended October 31, 2018, the gross profit rate improved by 134 basis points and 149 basis points versus the prior year’s comparable periods, respectively. The improvement in gross profit rate for both periods was driven by lower markdowns at all three brands and leverage in store occupancy cost due to strong Retail segment comparable net sales.

As of October 31, 2018, total inventory increased by $1.7 million, or 0.4%, on a year-over-year basis. Comparable Retail segment inventory was flat.

Selling, general and administrative expenses increased by $16.5 million, or 7.3%, and $41.3 million, or 6.2%, during the three and nine months ended October 31, 2018, compared to the prior year’s comparable periods, respectively. The dollar growth in selling, general and administrative expenses in both periods was primarily due to increased direct selling and marketing expenses to support and drive the increase in Retail segment net sales and higher bonus and share-based compensation expense. As a percentage of net sales, selling, general and administrative expenses leveraged 40 basis points and 129 basis points during the three and nine months ended October 31, 2018, when compared to the prior year’s comparable periods, respectively. The leverage in both periods was primarily driven by the net sales growth. The leverage for the nine months ended October 31, 2018 further benefited from continued savings associated with the fiscal 2018 store reorganization project and the nonrecurring store reorganization expenses incurred in the prior year.

The Company’s effective tax rate for the three months ended October 31, 2018, was 20.6% compared to 37.4% in the prior year period. The effective tax rate for the nine months ended October 31, 2018 was 21.7% compared to 37.2% in the prior year period. The decrease in the effective tax rate for the three and nine month periods was primarily due to the lower federal statutory rate resulting from the U.S. Tax Cuts and Jobs Act and the favorable impact of certain discrete items.

Net income for the three and nine months ended October 31, 2018, was $78 million and $212 million, respectively, and earnings per diluted share was $0.70 and $1.92, respectively.

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 16.4 million common shares were remaining as of October 31, 2018. During the nine months ended October 31, 2018, the Company repurchased and subsequently retired 1.5 million common shares for approximately $58 million under this program. During the year ended January 31, 2018, the Company repurchased and subsequently retired 2.1 million common shares for approximately $46 million under this program.

During the nine months ended October 31, 2018, the Company opened a total of 14 new locations including: 4 Anthropologie Group stores, 4 Urban Outfitters stores, 3 Free People stores and 3 Food and Beverage restaurants; and closed 4 locations including: 2 Anthropologie Group stores, 1 Urban Outfitters store and 1 Free People store. During the nine months ended October 31, 2018, 3 franchisee-owned Urban Outfitters stores were opened.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 248 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; 134 Free People stores in the United States and Canada, catalogs and websites, 13 Food and Beverage restaurants, and 3 Urban Outfitters franchisee-owned stores, as of October 31, 2018. Free People and Anthropologie Group wholesale sell their products through approximately 2,100 department and specialty stores worldwide, digital businesses and the Company’s Retail segment.

A conference call will be held today to discuss third quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/kefhn89b 

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 contain 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 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 internet 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  Nine Months Ended
 October 31,  October 31,
 2018  2017  2018  2017
               
Net sales$973,533   $892,774   $2,821,675   $2,526,895 
Cost of sales 635,835    595,028    1,847,473    1,692,026 
Gross profit 337,698    297,746    974,202    834,869 
Selling, general and administrative expenses 241,341    224,858    707,097    665,765 
Income from operations 96,357    72,888    267,105    169,104 
Other income (expense), net 1,235    (882)   3,061    1,173 
Income before income taxes 97,592    72,006    270,166    170,277 
Income tax expense 20,072    26,914    58,577    63,332 
Net income$77,520   $45,092   $211,589   $106,945 
               
Net income per common share:              
Basic$0.71   $0.41   $1.95   $0.95 
Diluted$0.70   $0.41   $1.92   $0.94 
               
Weighted-average common shares outstanding:              
Basic 108,778,483    109,667,224    108,702,575    113,113,597 
Diluted 110,262,879    110,100,254    110,149,105    113,432,367 
               
               
AS A PERCENTAGE OF NET SALES              
Net sales100.0%  100.0%  100.0%  100.0%
Cost of sales65.3%  66.6%  65.5%  67.0%
Gross profit34.7%  33.4%  34.5%  33.0%
Selling, general and administrative expenses24.8%  25.2%  25.0%  26.3%
Income from operations9.9%  8.2%  9.5%  6.7%
Other income (expense), net0.1%  (0.1%)  0.1%  0.0%
Income before income taxes10.0%  8.1%  9.6%  6.7%
Income tax expense2.0%  3.0%  2.1%  2.5%
Net income8.0%  5.1%  7.5%  4.2%
               


 
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
         
 October 31,  January 31,  October 31, 
 2018  2018  2017 
ASSETS           
Current assets:           
Cash and cash equivalents$329,021  $282,220  $234,726 
Marketable securities 237,391   165,125   93,228 
Accounts receivable, net of allowance for doubtful accounts of $1,572, $1,326 and $710, respectively 90,954   76,962   78,348 
Inventory 451,659   351,395   449,957 
Prepaid expenses and other current assets 139,774   103,055   111,050 
Total current assets 1,248,799   978,757   967,309 
            
Property and equipment, net 808,883   813,768   829,106 
Marketable securities 36,033   58,688   41,254 
Deferred income taxes and other assets 103,327   101,567   115,778 
Total Assets$2,197,042  $1,952,780  $1,953,447 
            
LIABILITIES AND SHAREHOLDERS EQUITY           
Current liabilities:           
Accounts payable$191,684  $128,246  $208,567 
Accrued expenses, accrued compensation and other current liabilities 263,289   231,968   214,506 
Total current liabilities 454,973   360,214   423,073 
Long-term debt        
Deferred rent and other liabilities 281,460   291,663   245,566 
Total Liabilities 736,433   651,877   668,639 
            
Shareholders’ equity:           
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued        
Common shares; $.0001 par value, 200,000,000 shares authorized, 107,638,846, 108,248,568 and 108,248,471 issued and outstanding, respectively11  11  11 
Additional paid-in-capital   684    
Retained earnings 1,492,691   1,310,859   1,309,541 
Accumulated other comprehensive loss (32,093)  (10,651)  (24,744)
Total Shareholders’ Equity 1,460,609   1,300,903   1,284,808 
Total Liabilities and Shareholders’ Equity$2,197,042  $1,952,780  $1,953,447 
            

 

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

 

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Source: Urban Outfitters, Inc.