Editor’s note: Urban Outfitters stock price rose more than 16% in after hours trading after it released Q2 results.
Press Release:
Urban Outfitters, Inc. : Reports Record Q2 Sales and Earnings
PHILADELPHIA, PA August 20, 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 $61 million and $95 million for the three and six months ended July 31, 2012, respectively. Earnings per diluted share were $0.42 and $0.65 for the three and six months ended July 31, 2012, respectively.
Total Company net sales rose by 11% over the same quarter last year to $676 million. Comparable retail segment net sales, which include our comparable direct-to-consumer channel, increased 4% for the quarter, while comparable store net sales decreased 1%. Comparable retail segment net sales at Free People and Urban Outfitters increased 12%, and 6%, respectively, while comparable retail segment net sales at Anthropologie were flat for the quarter. Direct-to-Consumer net sales increased 22% and wholesale segment net sales rose 17% for the quarter.
“I am excited and gratified that our team produced record second quarter sales and profits while reducing ‘comp’ store inventories,” said Chief Executive Officer, Richard A. Hayne. “As we head into the second half of the year we plan for gradual year over year improvement in our business along with further tightening of our store inventories,” finished Mr. Hayne.
Net sales by brand and channel for the three and six month periods were as follows:
For the three months ended July 31, 2012, the gross profit rate declined 30 basis points versus the prior year’s comparable period. The decrease in gross profit rate was primarily due to the deleveraging of initial merchandise costs and store occupancy costs both of which were partially offset by a reduction in merchandise markdowns. The deleverage of initial merchandise cost is due in part to the mix of our assortment as well as an increase in web exclusive product sold through our direct-to-consumer channel. The deleverage of store occupancy costs was related to negative comparable store net sales as well as an increased number of store openings versus the prior year comparable quarter. For the six months ended July 31, 2012, the gross profit rate declined by 76 basis points versus the prior year’s comparable period. The decline in the rate was primarily due to the deleverage of store occupancy costs related to the negative comparable store net sales as well as an increased number of store openings versus the prior comparable quarter.
As of July 31, 2012, total inventories increased by $20 million or 7%, on a year-over-year basis. The growth in total inventories is primarily due to the acquisition of inventory to stock new and non-comparable stores and inventory related to the growth in our direct-to-consumer channel, partially offset by a 5% decrease in comparable store inventories.
For the three months ended July 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, were down 4 basis points. For the six months ended July 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 25 basis points. This increase was primarily due to the deleveraging of direct store controllable expenses driven by the negative comparable store net sales.
During the six months ended July 31, 2012, the Company opened a total of 28 new stores including: 10 Free People stores, 10 Urban Outfitters stores, 6 Anthropologie stores, 1 BHLDN store and 1 Terrain garden center, and closed 1 Anthropologie store.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 207 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 173 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, 72 Free People stores, catalogs and website; 2 BHLDN stores and a website and 2 Terrain garden centers and a website, as of July 31, 2012.
