• URBN Reports Record Q1 Sales and Earnings

    المصدر: Nasdaq GlobeNewswire / 21 مايو 2024 15:05:00   America/Chicago

    PHILADELPHIA, May 21, 2024 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands including the Anthropologie, Free People, FP Movement, Urban Outfitters and Nuuly brands, today announced net income of $61.8 million and record first quarter earnings per diluted share of $0.65 for the three months ended April 30, 2024. For the three months ended April 30, 2024, adjusted net income was $65.5 million and adjusted earnings per diluted share were $0.69. Adjusted net income and earnings per diluted share for the three months ended April 30, 2024, excludes store impairment and lease abandonment charges. See "Reconciliation of Non-GAAP Financial Measures" included at the end of this release.

    Total Company net sales for the three months ended April 30, 2024, increased 7.8% to a record $1.20 billion. Total Retail segment net sales increased 5.8%, with comparable Retail segment net sales increasing 4.6%. The increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel sales and low single-digit positive growth in retail store sales. Comparable Retail segment net sales increased 17.1% at Free People and 10.4% at Anthropologie and decreased 13.7% at Urban Outfitters. Wholesale segment net sales increased 3.4% driven by a 6.3% increase in Free People wholesale sales due to an increase in sales to department stores and specialty customers, partially offset by a decrease in Urban Outfitters wholesale sales. Nuuly segment net sales increased by 51.4% primarily driven by a 45% increase in average active subscribers in the current quarter versus the prior year quarter.

    “We are pleased to report record first quarter sales and earnings driven by continued strength at the Anthropologie, Free People, FP Movement and Nuuly brands,” said Richard A. Hayne, Chief Executive Officer. “Customer demand remains robust for our spring and summer fashion, which bodes well for continued sales growth in Q2,” finished Mr. Hayne.

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

     Three Months Ended 
     April 30, 
     2024  2023 
    Net sales by brand     
    Anthropologie(1)$526,385  $473,640 
    Free People(2) 318,691   273,735 
    Urban Outfitters 270,258   308,708 
    Nuuly 77,942   51,470 
    Menus & Venues 7,456   6,121 
    Total Company$1,200,732  $1,113,674 
          
    Net sales by segment     
    Retail Segment$1,062,685  $1,004,101 
    Nuuly Segment 77,942   51,470 
    Wholesale Segment 60,105   58,103 
    Total Company$1,200,732  $1,113,674 


     (1)Anthropologie includes the Anthropologie and Terrain brands.
     (2)Free People includes the Free People and FP Movement brands.


    For the three months ended April 30, 2024, the gross profit rate increased by 68 basis points compared to the three months ended April 30, 2023, and gross profit dollars increased 10.0% to $408.4 million from $371.2 million. For the three months ended April 30, 2024, the adjusted gross profit rate increased by 106 basis points compared to the three months ended April 30, 2023, and adjusted gross profit dollars increased 11.2% to $413.0 million from $371.2 million. The increase in adjusted gross profit rate was primarily due to higher initial merchandise markups for all brands primarily driven by Company cross-functional initiatives, partially offset by higher merchandise markdowns, primarily at the Urban Outfitters brand, and a deleverage in logistics expenses. The deleverage in logistics expenses was primarily driven by the increased penetration of Nuuly segment sales to total Company sales, as well as transition and start-up expenses related to the additional Nuuly fulfillment facility that opened during the three months ended April 30, 2024. The increase in adjusted gross profit dollars was due to higher net sales and the improved adjusted gross profit rate.

    As of April 30, 2024, total inventory decreased by $11.3 million, or 1.9%, compared to total inventory as of April 30, 2023. Total Retail segment inventory decreased 2.3%, while Retail segment comparable inventory decreased 4.7%. Wholesale segment inventory increased by 2.1%.

    For the three months ended April 30, 2024, selling, general and administrative expenses increased by $33.9 million, or 11.3%, compared to the three months ended April 30, 2023, and expressed as a percentage of net sales, deleveraged 87 basis points. The deleverage in selling, general and administrative expenses as a rate to net sales was primarily related to the Urban Outfitters brand not being able to reduce expenses at the same rate of net sales. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support double-digit customer traffic growth and increased sales at the Free People, FP Movement, Anthropologie and Nuuly brands and increased store payroll expenses to support the retail stores comparable sales growth.

    The Company’s effective tax rate for the three months ended April 30, 2024 was 23.6%, compared to 27.1% in the three months ended April 30, 2023. The Company's adjusted effective tax rate for the three months ended April 30, 2024 was 23.4%, compared to 27.1% in the three months ended April 30, 2023. The decrease in the adjusted effective tax rate for the three months ended April 30, 2024 was primarily due to the favorable impact of equity activity in the current year quarter.

    Net income for the three months ended April 30, 2024 was $61.8 million and record first quarter earnings per diluted share were $0.65. Adjusted net income for the three months ended April 30, 2024 was $65.5 million and adjusted earnings per diluted share were $0.69.

    On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. During the year ended January 31, 2024 and the three months ended April 30, 2024, the Company did not repurchase any common shares. As of April 30, 2024, 19.2 million common shares were remaining under the program.

    During the three months ended April 30, 2024, the Company opened a total of 8 new retail locations including: 4 Urban Outfitters stores, 2 Anthropologie stores and 2 Free People stores (including 1 FP Movement store); and closed 4 retail locations including: 2 Urban Outfitters stores, 1 Anthropologie store and 1 Free People store.

    Urban Outfitters, Inc. offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 264 Urban Outfitters stores in the United States, Canada and Europe and websites; 238 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; 199 Free People stores (including 39 FP Movement stores) in the United States, Canada and Europe, catalogs and websites, 9 Menus & Venues restaurants, 7 Urban Outfitters franchisee-owned stores and 2 Anthropologie franchisee-owned stores as of April 30, 2024. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores worldwide, digital businesses and the Company’s Retail segment. Nuuly is a women's apparel subscription rental service which offers a wide selection of rental product from the Company's own brands, third-party brands and one-of-a-kind vintage pieces.

    A conference call will be held today to discuss first quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/7xcp7gbo/.

    As used in this document, unless otherwise defined, "Anthropologie" refers to the Company's Anthropologie and Terrain brands and "Free People" refers to the Company's Free People and FP Movement brands.

    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: overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, 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, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, including geopolitical instability, impacts of the conflict in the Middle East and impacts of the war between Russia and Ukraine and from related sanctions imposed by the United States, European Union, United Kingdom and others, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises (such as the coronavirus (COVID-19)), labor shortages and increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs, border adjustment taxes or increases in duties or quotas), the unexpected closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our 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 
     April 30, 
     2024  2023 
    Net sales$1,200,732  $1,113,674 
    Cost of sales (excluding store impairment and lease abandonment charges) 787,746   742,443 
    Store impairment and lease abandonment charges 4,601    
    Gross profit 408,385   371,231 
    Selling, general and administrative expenses 333,761   299,848 
    Income from operations 74,624   71,383 
    Other income, net 6,246   1,019 
    Income before income taxes 80,870   72,402 
    Income tax expense 19,105   19,585 
    Net income$61,765  $52,817 
          
    Net income per common share:     
    Basic$0.66  $0.57 
    Diluted$0.65  $0.56 
          
    Weighted-average common shares outstanding:     
    Basic 93,124,568   92,474,688 
    Diluted 95,000,706   93,821,292 
          
          
    AS A PERCENTAGE OF NET SALES     
    Net sales 100.0%  100.0%
    Cost of sales (excluding store impairment and lease abandonment charges) 65.6%  66.7%
    Store impairment and lease abandonment charges 0.4%   
    Gross profit 34.0%  33.3%
    Selling, general and administrative expenses 27.8%  26.9%
    Income from operations 6.2%  6.4%
    Other income, net 0.5%  0.1%
    Income before income taxes 6.7%  6.5%
    Income tax expense 1.6%  1.8%
    Net income 5.1%  4.7%


     
    URBAN OUTFITTERS, INC.
    Condensed Consolidated Balance Sheets
    (amounts in thousands, except share data)
    (unaudited)
     
     April 30,  January 31,  April 30, 
     2024  2024  2023 
    ASSETS        
    Current assets:        
    Cash and cash equivalents$173,995  $178,321  $171,655 
    Marketable securities 312,558   286,744   209,777 
    Accounts receivable, net of allowance for doubtful accounts of $933, $1,465 and $1,453, respectively 88,297   67,008   105,589 
    Inventory 578,990   550,242   590,326 
    Prepaid expenses and other current assets 219,886   200,188   223,894 
    Total current assets 1,373,726   1,282,503   1,301,241 
    Property and equipment, net 1,304,548   1,286,541   1,201,506 
    Operating lease right-of-use assets 910,965   920,396   921,893 
    Marketable securities 287,178   314,152   86,156 
    Other assets 312,285   307,617   281,874 
    Total Assets$4,188,702  $4,111,209  $3,792,670 
             
    LIABILITIES AND SHAREHOLDERS’ EQUITY        
    Current liabilities:        
    Accounts payable$321,443  $253,342  $263,558 
    Current portion of operating lease liabilities 224,100   226,645   233,085 
    Accrued expenses, accrued compensation and other current liabilities 488,681   514,218   431,033 
    Total current liabilities 1,034,224   994,205   927,676 
    Non-current portion of operating lease liabilities 849,917   851,853   845,643 
    Other non-current liabilities 142,227   152,611   168,669 
    Total Liabilities 2,026,368   1,998,669   1,941,988 
             
    Shareholders’ equity:        
    Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued        
    Common shares; $.0001 par value, 200,000,000 shares authorized, 93,379,211, 92,787,522, and 92,677,835 shares issued and outstanding, respectively9  9  9 
    Additional paid-in-capital 31,572   37,943   15,133 
    Retained earnings 2,175,500   2,113,735   1,878,878 
    Accumulated other comprehensive loss (44,747)  (39,147)  (43,338)
    Total Shareholders’ Equity 2,162,334   2,112,540   1,850,682 
    Total Liabilities and Shareholders’ Equity$4,188,702  $4,111,209  $3,792,670 


     
    URBAN OUTFITTERS, INC.
    Condensed Consolidated Statements of Cash Flows
    (amounts in thousands)
    (unaudited)
     
     Three Months Ended 
     April 30, 
     2024  2023 
    Cash flows from operating activities:     
    Net income$61,765  $52,817 
    Adjustments to reconcile net income to net cash provided by operating activities:     
    Depreciation and amortization 27,761   23,879 
    Non-cash lease expense 51,470   50,859 
    Provision for deferred income taxes 12,735   2,457 
    Share-based compensation expense 7,599   7,735 
    Amortization of tax credit investment 4,380   3,976 
    Store impairment and lease abandonment charges 4,601    
    Loss on disposition of property and equipment, net 135   222 
    Changes in assets and liabilities:     
    Receivables (21,512)  (35,030)
    Inventory (29,818)  (1,649)
    Prepaid expenses and other assets (37,542)  (35,045)
    Payables, accrued expenses and other liabilities 36,663   22,257 
    Operating lease liabilities (59,686)  (56,201)
    Net cash provided by operating activities 58,551   36,277 
    Cash flows from investing activities:     
    Cash paid for property and equipment (41,091)  (32,904)
    Cash paid for marketable securities (95,799)  (74,101)
    Sales and maturities of marketable securities 91,081   69,456 
    Initial cash payment for tax credit investment    (20,000)
    Net cash used in investing activities (45,809)  (57,549)
    Cash flows from financing activities:     
    Proceeds from the exercise of stock options 475    
    Share repurchases related to taxes for share-based awards (14,445)  (7,850)
    Tax credit investment liability payments (1,341)  (468)
    Net cash used in financing activities (15,311)  (8,318)
    Effect of exchange rate changes on cash and cash equivalents (1,757)  (15)
    Decrease in cash and cash equivalents (4,326)  (29,605)
    Cash and cash equivalents at beginning of period 178,321   201,260 
    Cash and cash equivalents at end of period$173,995  $171,655 
     
     
    Important Information Regarding Non-GAAP Financial Measures


    In addition to evaluating the financial condition and results of our operations in accordance with U.S. generally accepted accounting principles (“GAAP”), from time to time our management evaluates and analyzes results and any impact on the Company of certain events outside of normal, or “core,” business and operations, by considering adjusted financial measures not prepared in accordance with GAAP. Examples of items that we consider non-core include store impairment and lease abandonment charges. In order to improve the transparency of our disclosures, provide a meaningful presentation of results from our core business operations and improve period-over-period comparability, we have included certain adjusted financial measures for fiscal 2025 that exclude the impact of these non-core business items.

    We believe these adjusted financial measures are important indicators of our recurring results of operations because they exclude items that may not be indicative of, or are unrelated to, our underlying results of operations and provide a useful baseline for analyzing trends in our underlying business. Management uses adjusted financial measures for planning, forecasting and evaluating business and financial performance.

    Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company’s financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company’s financial position, results of operations or cash flows and should therefore be considered in assessing the Company’s actual and future financial condition and performance. These adjusted financial measures are not consistent with GAAP and may not be calculated the same as similarly titled measures used by other companies.

     
    URBAN OUTFITTERS, INC.
    Reconciliation of Non-GAAP Financial Measures
    (amounts in thousands, except per share data)
    (unaudited)
     
    Reconciliation of Total Company Adjusted Gross Profit:         
     Three Months Ended 
     April 30, 
     2024  2023 
     $'s % of Net Sales  $'s % of Net Sales 
              
    Gross profit (GAAP)$408,385  34.0% $371,231  33.3%
    Adjustments:         
    Store impairment and lease abandonment charges (a) 4,601        
    Adjusted gross profit (Non-GAAP)$412,986  34.4% $371,231  33.3%


    Reconciliation of Total Company Adjusted Income from Operations:         
     Three Months Ended 
     April 30, 
     2024  2023 
     $'s % of Net Sales  $'s % of Net Sales 
              
    Income from operations (GAAP)$74,624  6.2% $71,383  6.4%
    Adjustments:         
    Store impairment and lease abandonment charges (a) 4,601        
    Adjusted income from operations (Non-GAAP)$79,225  6.6% $71,383  6.4%


     
    URBAN OUTFITTERS, INC.
    Reconciliation of Non-GAAP Financial Measures
    (amounts in thousands, except per share data)
    (unaudited)
     
    Reconciliation of Total Company Adjusted Income Tax Expense and Adjusted Effective Tax Rate:
     Three Months Ended
     April 30,
     2024 2023
     $'s   $'s  
            
    Income before income taxes (GAAP)$80,870   $72,402  
    Adjustments:       
    Store impairment and lease abandonment charges (a) 4,601      
    Adjusted income before income taxes (Non-GAAP)$85,471   $72,402  
            
    Income tax expense (GAAP)$19,105   $19,585  
    Adjustments:       
    Provision for income taxes on adjustments (b) 876      
    Adjusted income tax expense (Non-GAAP)$19,981   $19,585  
            
    Effective income tax rate (GAAP) 23.6%   27.1% 
    Adjustments (0.2%)     
    Adjusted effective income tax rate (Non-GAAP) 23.4%   27.1% 


    Reconciliation of Total Company Adjusted Net Income and Adjusted Diluted EPS:
     Three Months Ended 
     April 30, 
     2024  2023 
     $'s % of Net Sales  $'s % of Net Sales 
              
    Net income (GAAP)$61,765  5.1% $52,817  4.7%
    Adjustments:         
    Store impairment and lease abandonment charges (a) 4,601        
    Provision for income taxes on adjustments (b) (876)       
    Adjusted net income (Non-GAAP)$65,490  5.5% $52,817  4.7%
              
    Diluted EPS (GAAP)$0.65    $0.56   
    Adjustments, net of tax 0.04        
    Adjusted diluted EPS (Non-GAAP)$0.69    $0.56   
              
    (a) Store impairment charges relate to one retail location during the three months ended April 30, 2024. During the three months ended April 30, 2024, the Company also recorded lease abandonment charges for one retail location for which it has ceased operations but the lease has not been terminated. 
              
    (b) The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments. 
      


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

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