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:

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)