Exhibit 99.1
URBAN OUTFITTERS, INC.
First Quarter Results
Philadelphia, PA – May 12, 2005
For Immediate Release | Contact: | John E. Kyees | ||
Chief Financial Officer | ||||
(215) 564-2313 |
Urban Outfitters Q1 Earnings Jump 63%
Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Urban Outfitters and Free People brands, today announced record first quarter earnings of $27.4 million for the three months ended April 30, 2005, a 63% increase over the comparable quarter last year. First quarter diluted earnings per share rose to $0.32 this year versus $0.20 in the prior year.
As previously stated in our sales release on May 5, 2005, net sales for the first quarter increased by 36% to a record $231.3 million. Fueling this increase over the prior year was:
• | an 11% jump in total Company comparable store sales |
• | a 29% increase in the number of stores in operation |
• | a 54% gain in direct-to-consumer sales |
• | a 69% surge in wholesale sales |
Comparable store sales at Anthropologie, Free People and Urban Outfitters were up 9%, 45% and 13%, respectively; or a combined 11% versus a 32% combined increase during the comparable quarter last year. New and non-comparable store sales increases for the quarter totaled $30.8 million.
“All of our Brands produced excellent results in the first quarter,” stated Richard A. Hayne, Chairman and President. “Strong sales, improved initial merchandise margins and tight expense control combined to drive operating margins above 19%. Given the current response to our product offerings, we remain optimistic about results for the summer season as well,” added Mr. Hayne.
Net sales for the three months were as follows:
Three months ended April 30, | ||||||
2005 | 2004 | |||||
(in thousands) | ||||||
Urban Outfitters store sales | $ | 104,109 | $ | 78,566 | ||
Anthropologie store sales | 87,307 | 66,574 | ||||
Direct-to-consumer sales | 28,722 | 18,601 | ||||
Free People sales | 11,187 | 6,549 | ||||
Total net sales | $ | 231,325 | $ | 170,290 | ||
For the three months, gross profit margins increased by 116 basis points versus the prior year’s comparable quarter. These gains were primarily due to higher initial merchandise margins that more than offset a modest increase in markdowns to clear seasonal merchandise. Store occupancy costs, as a percentage of net sales, were flat compared to the comparable quarter last year due to the change in accounting treatment of lease related expenses.
As of April 30, 2004, total Company inventories grew by $35.1 million on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Comparable store inventories increased by 10%, in line with the Company’s plan.
For the three months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 153 basis points versus the comparable quarter last year. These improvements were primarily a result of the leveraging of store-related and other fixed administrative expenses due to the increase in the comparable store sales.
Thus far this fiscal year, the Company has opened two new Anthropologie stores and two new Urban Outfitters stores. The Company plans to open an additional 26 to 28 stores during the remainder of the fiscal year.
Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 77 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 67 Anthropologie stores in the United States; an Anthropologie catalog and web site; and Free People, the Company’s wholesale division, which sells its product to approximately 1,100 specialty stores, department stores and catalogs, as well as through 2 Free People stores and a web site.
A conference call will be held today to discuss first quarter results and will be web cast at 11:00 a.m. EDT on: http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1017232
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. 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, including any effects of terrorist acts or war, availability of suitable retail space for expansion, timing of store openings, seasonal fluctuations in gross sales, the departure of one or more key senior managers, import risks, including potential disruptions and changes in duties, tariffs and quotas and other risks identified in 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.
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(Tables follow)
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
(unaudited)
Three Months Ended April 30, | ||||||||
2005 | 2004 | |||||||
Net sales | $ | 231,325 | $ | 170,290 | ||||
Cost of sales, including certain buying, distribution and occupancy costs | 133,708 | 100,396 | ||||||
Gross profit | 97,617 | 69,894 | ||||||
Selling, general and administrative expenses | 52,839 | 41,498 | ||||||
Income from operations | 44,778 | 28,396 | ||||||
Other income (expense), net | 764 | (44 | ) | |||||
Income before income taxes | 45,542 | 28,352 | ||||||
Income tax expense | 18,102 | 11,483 | ||||||
Net income | $ | 27,440 | $ | 16,869 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.34 | $ | 0.21 | ||||
Diluted | $ | 0.32 | $ | 0.20 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 81,678,227 | 80,295,942 | ||||||
Diluted | 84,634,170 | 82,944,664 | ||||||
PERCENT OF NET SALES | ||||||||
Net sales | 100 | % | 100 | % | ||||
Cost of sales, including certain buying, distribution and occupancy costs | 57.8 | 59.0 | ||||||
Gross profit | 42.2 | 41.0 | ||||||
Selling, general and administrative expenses | 22.8 | 24.3 | ||||||
Income from operations | 19.4 | 16.7 | ||||||
Other income (expense), net | 0.3 | — | ||||||
Income before income taxes | 19.7 | 16.7 | ||||||
Income tax expense | 7.8 | 6.8 | ||||||
Net income | 11.9 | % | 9.9 | % | ||||
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
April 30, 2005 | January 31, 2005 | April 30, 2004 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 22,124 | $ | 29,731 | $ | 25,597 | |||||
Marketable securities | 132,681 | 125,953 | 70,476 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $621, $586 and $819, respectively | 13,754 | 8,364 | 7,446 | ||||||||
Inventories | 113,477 | 98,996 | 78,399 | ||||||||
Prepaid expenses, deferred taxes and other current assets | 21,820 | 24,824 | 16,959 | ||||||||
Total current assets | 303,856 | 287,868 | 198,877 | ||||||||
Property and equipment, net | 203,163 | 192,792 | 158,976 | ||||||||
Marketable securities | 68,622 | 63,457 | 58,547 | ||||||||
Deferred income taxes and other assets | 12,581 | 12,567 | 9,522 | ||||||||
$ | 588,222 | $ | 556,684 | $ | 425,922 | ||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 38,846 | $ | 39,102 | $ | 37,929 | |||||
Accrued expenses, accrued compensation and other current liabilities | 52,140 | 59,169 | 38,673 | ||||||||
Total current liabilities | 90,986 | 98,271 | 76,602 | ||||||||
Deferred rent and other liabilities | 57,609 | 56,169 | 36,309 | ||||||||
Total liabilities | 148,595 | 154,440 | 112,911 | ||||||||
Shareholders’ equity: | |||||||||||
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued | — | — | — | ||||||||
Common shares; $.0001 par value, 200,000,000 shares authorized, 81,847,376, 81,447,444 and 80,387,942 issued and outstanding, respectively | 8 | 8 | 8 | ||||||||
Additional paid-in capital | 119,061 | 109,430 | 89,860 | ||||||||
Unearned compensation | (4,777 | ) | (5,058 | ) | — | ||||||
Retained earnings | 322,834 | 295,394 | 221,774 | ||||||||
Accumulated other comprehensive income | 2,501 | 2,470 | 1,369 | ||||||||
Total shareholders’ equity | 439,627 | 402,244 | 313,011 | ||||||||
$ | 588,222 | $ | 556,684 | $ | 425,922 | ||||||
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended April 30, | ||||||||
2005 | 2004 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 27,440 | $ | 16,869 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 8,799 | 7,241 | ||||||
Tax benefit of stock option exercises | 2,932 | 4,318 | ||||||
Stock-based compensation expense | 281 | — | ||||||
Changes in assets and liabilities: | ||||||||
Increase in receivables | (5,384 | ) | (740 | ) | ||||
Increase in inventories | (14,440 | ) | (15,206 | ) | ||||
Decrease in prepaid expenses and other assets | 3,006 | 1,732 | ||||||
(Decrease) increase in payables, accrued expenses and other liabilities | (5,898 | ) | 12,035 | |||||
Net cash provided by operating activities | 16,736 | 26,249 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (18,451 | ) | (12,188 | ) | ||||
Purchases of marketable securities | (157,835 | ) | (135,967 | ) | ||||
Sales and maturities of marketable securities | 145,145 | 142,305 | ||||||
Net cash used in investing activities | (31,141 | ) | (5,850 | ) | ||||
Cash flows from financing activities: | ||||||||
Exercise of stock options | 6,699 | 2,262 | ||||||
Net cash provided by financing activities | 6,699 | 2,262 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 99 | (383 | ) | |||||
(Decrease) increase in cash and cash equivalents | (7,607 | ) | 22,278 | |||||
Cash and cash equivalents at beginning of period | 29,731 | 3,319 | ||||||
Cash and cash equivalents at end of period | $ | 22,124 | $ | 25,597 | ||||