Press Release:
Urban Outfitters Reports 4th Quarter Operating Results
PHILADELPHIA, PA March 12, 2012 – Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands today announced net income of $39.3 million and $185.3 million for the fourth quarter and the year ended January 31, 2012, respectively. Earnings per diluted share were $0.27 for the quarter and $1.19 for the year.
For the fourth quarter of fiscal 2012, total company net sales increased 9% over the same quarter last year to $731 million. Comparable retail segment net sales, which include the Direct-to-Consumer channels, increased 2% for the quarter, while comparable store net sales decreased 1% for the quarter. Comparable retail segment net sales at Urban Outfitters, Free People and Anthropologie increased 3%, 9% and 1%, respectively.
Direct-to-Consumer comparable net sales increased 14% and wholesale segment net sales rose 3% for the quarter.
For the year ended January 31, 2012, total Company net sales increased to $2.5 billion, or 9%, over the prior year. Comparable retail segment net sales were flat while comparable store net sales decreased 4%. Direct-to-Consumer comparable net sales rose 14% for the year and wholesale segment net sales increased 11%.
“I am pleased that we managed our inventories to appropriate levels at year end even though our margins during the quarter suffered as a result,” said Chief Executive Officer, Richard Hayne. “Our rate of full-priced selling has improved from fourth quarter levels as we seek to re-establish our historic full-price selling penetration.”
For the fourth quarter ended January 31, 2012, gross profit margin percentage declined by 955 basis points versus the prior year’s comparable period. This decline was primarily due to increased merchandise markdowns to clear slow-moving women’s apparel inventory at both Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store net sales. For the year ended January 31, 2012, gross profit margin declined by 640 basis points versus the prior year. This decline was principally due to increased merchandise markdowns to clear slow-moving inventory, primarily associated with women’s apparel inventory at Anthropologie and Urban Outfitters, as well as deleveraging of store occupancy expense as a result of negative comparable store sales.
As of January 31, 2012, total inventories grew by $21 million or 9%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new stores, our Direct-to-Consumer channel growth and the launch of our BHLDN brand. Total comparable retail segment inventories at cost (which includes our Direct-to-Consumer channel) increased by 2% while total comparable store inventory at cost decreased by 3%.
For the quarter ended January 31, 2012, total selling, general and administrative expenses, expressed as a percentage of net sales, decreased to 21.3%, or 37 basis points, versus the prior year comparable period. This decrease was primarily due to a one-time, non-recurring $6 million net benefit primarily related to equity compensation expense reversals. This benefit was partially offset by the deleveraging of direct store controllable expenses driven by the negative comparable store net sales.
For the year ended January 31, 2012, selling, general and administration expenses, expressed as a percentage of net sales, increased to 23.3%, or 31 basis points, versus the prior comparable period. This increase was primarily due to higher e-commerce and related marketing investments, as well as, the deleveraging of direct store controllable expenses driven by negative comparable store net sales. The net benefit associated with equity compensation reversals and lower incentive compensation costs were partial offsets.
The Company’s annual effective tax rate for fiscal 2012 increased to 35.9% as compared to 34.6% for fiscal 2011. The fiscal 2011 effective tax rate was favorably affected by a one-time federal rehabilitation credit.
During fiscal 2012, the Company repurchased and retired 20.5 million common shares for approximately $538 million under a Board authorized share repurchase program. These repurchases completed all of the Company’s repurchase authorizations under the program.
During the year ended January 31, 2012, the Company opened a total of 57 new stores including: 21 new Urban Outfitters stores, 15 new Anthropologie stores, 20 new Free People stores and 1 BHLDN store.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 197 Urban Outfitters stores in the United States, Canada and Europe, catalogs and websites; 168 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 62 Free People stores, catalogs and websites, 1 Terrain garden center and website and 1 BHLDN store and website as of January 31, 2012.
