Form 8-K URBAN OUTFITTERS INC For: May 24

May 25, 2022 11:31 AM EDT

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Exhibit 99.1

URBAN OUTFITTERS, INC.

First Quarter Results

Philadelphia, PA – May 24, 2022

 

For Immediate Release

 

Contact:

 

Oona McCullough

 

 

 

 

Executive Director of Investor Relations

 

 

 

 

(215) 454-4806

URBN Reports Q1 Results

PHILADELPHIA, PA, May 24, 2022 – Urban Outfitters, Inc. (NASDAQ: URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of the Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands, today announced net income of $32 million and earnings per diluted share of $0.33 for the three months ended April 30, 2022.

Total Company net sales for the three months ended April 30, 2022, increased 13.4% over the same period last year to a record $1.05 billion. Total Retail segment net sales increased 12%, with comparable Retail segment net sales increasing 11%. The relative proportion of Retail segment sales attributable to store and digital channels changed significantly due in large part to the temporary store closures and occupancy restrictions in the United States, Europe and Canada in the prior year quarter due to the COVID-19 pandemic. With those restrictions not present in the current year quarter, Retail segment comparable sales increased due to double-digit growth in retail store sales due to increased store traffic, partially offset by mid-single-digit negative digital channel sales. By brand, comparable Retail segment net sales increased 18% at the Anthropologie Group, 15% at the Free People Group and 1% at Urban Outfitters. Wholesale segment net sales increased 6%, driven by a 9% increase in Free People Group wholesale sales. Nuuly segment net sales increased by $15.0 million driven by a significant increase in our subscriber base.

“We are pleased to announce record Q1 sales driven by an 11% Retail segment ‘comp’,” said Richard A. Hayne, Chief Executive Officer. “Unfortunately, the impact of inflation on our costs of doing business more than offset the benefit of record revenues,” finished Mr. Hayne.

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

 

 

Three Months Ended

 

 

April 30,

 

 

2022

 

 

2021

 

Net sales by brand

 

 

 

 

 

 

 

Anthropologie Group

$

419,677

 

 

$

353,567

 

Urban Outfitters

 

357,702

 

 

 

349,681

 

Free People Group

 

245,758

 

 

 

212,751

 

Nuuly

 

22,849

 

 

 

7,820

 

Menus & Venues

 

5,948

 

 

 

3,596

 

Total Company

$

1,051,934

 

 

$

927,415

 

 

 

 

 

 

 

 

 

Net sales by segment

 

 

 

 

 

 

 

Retail Segment

$

963,435

 

 

$

857,486

 

Wholesale Segment

 

65,650

 

 

 

62,109

 

Nuuly Segment

 

22,849

 

 

 

7,820

 

Total Company

$

1,051,934

 

 

$

927,415

 

 

 

 


 

 

 

 

 

 

For the three months ended April 30, 2022, the gross profit rate decreased by 169 basis points compared to the three months ended April 30, 2021. Gross profit dollars increased 7.5% to $323.3 million compared to the three months ended April 30, 2021. The decrease in gross profit rate was primarily due to lower initial merchandise markups driven largely by higher inbound transportation expenses and raw materials costs.

As of April 30, 2022, total inventory increased by $152.2 million, or 31.9%, compared to total inventory as of April 30, 2021, and Retail segment comparable inventory at cost increased by 35%, which were driven by three factors. First, inventory costs have increased due to higher product costs driven largely by higher inbound transportation expenses and raw materials costs. Second, due to ongoing global supply chain constraints, we are extending our lead times and holding more inventory. Finally, the Urban Outfitters brand’s sales came in lower than planned resulting in increased inventory levels at this point in time.

For the three months ended April 30, 2022, selling, general and administrative expenses increased by $49.9 million, or 22.0%, compared to the three months ended April 30, 2021, and expressed as a percentage of net sales, deleveraged 184 basis points. The deleverage in SG&A as a rate to sales and growth in SG&A dollars was primarily related to the increased penetration of retail store sales in the current year quarter as we incurred store payroll expenses to support the retail store sales growth.

The Company’s effective tax rate for the three months ended April 30, 2022, was 28.7% compared to 27.0% in the three months ended April 30, 2021. The increase in the effective tax rate for the three months ended April 30, 2022, was primarily driven by the ratio of foreign taxable earnings to global taxable earnings.

Net income for the three months ended April 30, 2022, was $32 million and earnings per diluted share were $0.33.

On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the three months ended April 30, 2022, the Company repurchased and subsequently retired 2.4 million common shares for approximately $62 million. As of April 30, 2022, 21.5 million common shares were remaining under the programs.

During the three months ended April 30, 2022, the Company opened a total of five new retail locations including: two Free People Group stores (including one FP Movement store), two Urban Outfitters stores and one Menus & Venues restaurant; and closed three retail locations including: one Free People Group store, one Urban Outfitters store and one Anthropologie Group store. During the three months ended April 30, 2022, two Urban Outfitters franchisee-owned stores and one Anthropologie Group franchisee-owned store were opened.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 262 Urban Outfitters stores in the United States, Canada and Europe and websites; 237 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 174 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 Menus & Venues restaurants, 4 Urban Outfitters franchisee-owned stores and 2 Anthropologie Group franchisee-owned stores as of April 30, 2022. 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.

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/rorxqy7f

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 impacts of public health crises such as the coronavirus (COVID-19) pandemic, overall economic and market conditions (including inflation) and worldwide political events and the resultant impact on consumer spending patterns, 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), terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, 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, 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 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,

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Net sales

$

1,051,934

 

 

$

927,415

 

Cost of sales

 

728,633

 

 

 

626,764

 

          Gross profit

 

323,301

 

 

 

300,651

 

Selling, general and administrative expenses

 

277,064

 

 

 

227,148

 

          Income from operations

 

46,237

 

 

 

73,503

 

Other loss, net

 

(1,989

)

 

 

(155

)

         Income before income taxes

 

44,248

 

 

 

73,348

 

Income tax expense

 

12,715

 

 

 

19,801

 

          Net income

$

31,533

 

 

$

53,547

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

       Basic

$

0.33

 

 

$

0.55

 

       Diluted

$

0.33

 

 

$

0.54

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

       Basic

 

95,479,927

 

 

 

98,108,245

 

       Diluted

 

96,347,211

 

 

 

99,322,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AS A PERCENTAGE OF NET SALES

 

 

 

 

 

 

 

Net sales

 

100.0

%

 

 

100.0

%

Cost of sales

 

69.3

%

 

 

67.6

%

         Gross profit

 

30.7

%

 

 

32.4

%

Selling, general and administrative expenses

 

26.3

%

 

 

24.5

%

          Income from operations

 

4.4

%

 

 

7.9

%

Other loss, net

 

(0.2

%)

 

 

(0.0

%)

         Income before income taxes

 

4.2

%

 

 

7.9

%

Income tax expense

 

1.2

%

 

 

2.1

%

          Net income

 

3.0

%

 

 

5.8

%

 

 

 

 

 

 

 

 


 

 

 

 

 

URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 

 

April 30,

 

 

January 31,

 

 

April 30,

 

 

2022

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

    Cash and cash equivalents

$

71,640

 

 

$

206,575

 

 

$

364,247

 

    Marketable securities

 

187,563

 

 

 

239,420

 

 

 

164,430

 

    Accounts receivable, net of allowance for doubtful accounts

         of $1,153, $1,348 and $2,155, respectively

 

97,058

 

 

 

63,760

 

 

 

85,307

 

    Inventory

 

629,953

 

 

 

569,699

 

 

 

477,777

 

    Prepaid expenses and other current assets

 

221,905

 

 

 

206,293

 

 

 

189,268

 

            Total current assets

 

1,208,119

 

 

 

1,285,747

 

 

 

1,281,029

 

Property and equipment, net

 

1,149,772

 

 

 

1,145,085

 

 

 

988,973

 

Operating lease right-of-use assets

 

967,639

 

 

 

1,000,255

 

 

 

1,093,037

 

Marketable securities

 

179,458

 

 

 

223,557

 

 

 

100,680

 

Deferred income taxes and other assets

 

137,322

 

 

 

136,703

 

 

 

115,888

 

           Total Assets

$

3,642,310

 

 

$

3,791,347

 

 

$

3,579,607

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

    Accounts payable

$

296,673

 

 

$

304,246

 

 

$

251,944

 

    Current portion of operating lease liabilities

 

227,533

 

 

 

236,315

 

 

 

246,226

 

    Accrued expenses, accrued compensation and other

         current liabilities

 

395,949

 

 

 

440,912

 

 

 

393,430

 

           Total current liabilities

 

920,155

 

 

 

981,473

 

 

 

891,600

 

Non-current portion of operating lease liabilities

 

913,380

 

 

 

951,080

 

 

 

1,060,228

 

Deferred rent and other liabilities

 

112,854

 

 

 

113,054

 

 

 

93,270

 

           Total Liabilities

 

1,946,389

 

 

 

2,045,607

 

 

 

2,045,098

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

    Preferred shares; $.0001 par value, 10,000,000 shares

         authorized, none issued

 

 

 

 

 

 

 

 

    Common shares; $.0001 par value, 200,000,000 shares

         authorized, 94,434,621, 96,431,044 and

         98,235,127 shares issued and outstanding, respectively

9

 

 

10

 

 

10

 

    Additional paid-in-capital

 

 

 

 

 

 

 

17,585

 

    Retained earnings

 

1,740,508

 

 

 

1,770,560

 

 

 

1,528,655

 

    Accumulated other comprehensive loss

 

(44,596

)

 

 

(24,830

)

 

 

(11,741

)

           Total Shareholders’ Equity

 

1,695,921

 

 

 

1,745,740

 

 

 

1,534,509

 

           Total Liabilities and Shareholders’ Equity

$

3,642,310

 

 

$

3,791,347

 

 

$

3,579,607

 


 


 

 

 

 

URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

31,533

 

 

$

53,547

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26,702

 

 

 

25,633

 

Non-cash lease expense

 

 

47,980

 

 

 

45,422

 

Provision for deferred income taxes

 

 

7,420

 

 

 

37

 

Share-based compensation expense

 

 

7,102

 

 

 

4,570

 

Loss on disposition of property and equipment, net

 

 

85

 

 

 

121

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

(34,109

)

 

 

4,760

 

Inventory

 

 

(64,511

)

 

 

(87,427

)

Prepaid expenses and other assets

 

 

(22,913

)

 

 

(1,355

)

Payables, accrued expenses and other liabilities

 

 

(15,184

)

 

 

43,442

 

Operating lease liabilities

 

 

(63,662

)

 

 

(51,644

)

Net cash (used in) provided by operating activities

 

 

(79,557

)

 

 

37,106

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash paid for property and equipment

 

 

(73,723

)

 

 

(42,589

)

Cash paid for marketable securities

 

 

(18,703

)

 

 

(94,889

)

Sales and maturities of marketable securities

 

 

106,043

 

 

 

73,848

 

Net cash provided by (used in) investing activities

 

 

13,617

 

 

 

(63,630

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

 

 

 

1,073

 

Share repurchases related to share repurchase program

 

 

(62,052

)

 

 

 

Share repurchases related to taxes for share-based awards

 

 

(6,636

)

 

 

(7,418

)

Net cash used in financing activities

 

 

(68,688

)

 

 

(6,345

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(307

)

 

 

1,481

 

Decrease in cash and cash equivalents

 

 

(134,935

)

 

 

(31,388

)

Cash and cash equivalents at beginning of period

 

 

206,575

 

 

 

395,635

 

Cash and cash equivalents at end of period

 

$

71,640

 

 

$

364,247

 

 

 

 



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