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OFFON

URBAN OUTFITTERS, INC.

(URBN)
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URBN Q2: Record Sales, Record Profits (Form 8-K)

08/25/2021 | 11:41am EST

URBN Q2: Record Sales, Record Profits

PHILADELPHIA, PA, August 24, 2021 - 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 $127 million and earnings per diluted share of $1.28 for the three months ended July 31, 2021. For the six months ended July 31, 2021, net income was $181 million and earnings per diluted share were $1.82.

Due to the material impact of COVID-19 on our business operations in fiscal 2021, including mandated store closures, this release includes a comparison of fiscal 2022 results to fiscal 2020. Management views the comparison of fiscal 2022 results to fiscal 2020 as the more meaningful measurement of the Company's business performance.

Total Company net sales for the three months ended July 31, 2021, were a record $1.16 billion. Net sales increased 20.3% compared to the three months ended July 31, 2019. Comparable Retail segment net sales increased 22%, driven by strong double-digit growth in digital channel sales, partially offset by low single-digit negative retail store sales due to reduced store traffic. By brand, comparable Retail segment net sales increased 53% at the Free People Group, 20% at Urban Outfitters and 14% at the Anthropologie Group. Total Retail segment net sales increased 24%. Wholesale segment net sales decreased 30% primarily from reducing the Free People Group's sales to promotional wholesale customers.

For the six months ended July 31, 2021, total Company net sales increased 14.1% compared to the six months ended July 31, 2019. Comparable Retail segment net sales increased 17%, driven by strong double-digit growth in digital channel sales, partially offset by double-digit negative retail store sales due to reduced store traffic resulting from temporary store closures and occupancy restrictions in Europe and Canada. Wholesale segment net sales decreased 27% primarily from reducing the Free People Group's sales to promotional wholesale customers.

'We're pleased to report record second quarter sales and earnings driven by extraordinary performance at all three brands,' said Richard A. Hayne, Chief Executive Officer. 'Congratulations to all Brand, Creative and Shared teams for the exceptional execution that led to a 110% increase in earnings per share over fiscal 2020,' finished Mr. Hayne.

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

Three Months Ended

July 31,

2021

2020

2019

Net sales by brand

Urban Outfitters

$

441,616

$

323,889

$

355,045

Anthropologie Group

450,593

295,126

394,280

Free People Group

249,708

178,019

205,940

Menus & Venues

5,869

1,560

7,064

Nuuly (1)

9,939

4,672

-

Total Company

$

1,157,725

$

803,266

$

962,329

Three Months Ended

July 31,

2021

2020

2019

Net sales by segment

Retail Segment

$

1,089,022

$

757,471

$

878,693

Wholesale Segment

58,764

41,123

83,636

Subscription Segment (1)

9,939

4,672

-

Total Company

$

1,157,725

$

803,266

$

962,329

Six Months Ended

July 31,

2021

2020

2019

Net sales by brand

Urban Outfitters

$

791,297

$

561,209

$

671,851

Anthropologie Group

804,160

529,201

749,268

Free People Group

462,459

285,683

392,131

Menus & Venues

9,465

4,714

13,492

Nuuly (1)

17,759

10,942

-

Total Company

$

2,085,140

$

1,391,749

$

1,826,742

Six Months Ended

July 31,

2021

2020

2019

Net sales by segment

Retail Segment

$

1,946,508

$

1,318,703

$

1,661,256

Wholesale Segment

120,873

62,104

165,486

Subscription Segment (1)

17,759

10,942

-

Total Company

$

2,085,140

$

1,391,749

$

1,826,742

(1)

The Subscription segment (which is comprised of the Nuuly brand) began operations on July 30, 2019.

For the three months ended July 31, 2021, the gross profit rate increased by 478 basis points compared to the three months ended July 31, 2019. Gross profit dollars increased by $119.4 million to $435.3 million from $315.9 million in the three months ended July 31, 2019. The increase in gross profit rate was primarily due to record low second quarter merchandise markdown rates in the Retail segment and a leverage in store occupancy expense primarily due to the increased penetration of the digital channel in Retail segment net sales. All three brands recorded lower merchandise markdown rates with the Urban Outfitters and Anthropologie brands achieving record low second quarter merchandise markdown rates. This was partially offset by a deleverage in delivery and logistics expenses. Delivery and logistics expense deleverage was primarily driven by the increased penetration of the digital channel. Logistics expense also deleveraged due to increased wages at our distribution and fulfillment centers in order to attract and retain appropriate levels of employees.

For the six months ended July 31, 2021, the gross profit rate increased by 327 basis points compared to the six months ended July 31, 2019. Gross profit dollars increased by $151.0 million to $735.9 million from $584.9 million in the six months ended July 31, 2019. The increase in gross profit rate was primarily due to record low first half merchandise markdown rates in the Retail segment and a leverage in store occupancy expense due to the increased penetration of the digital channel in Retail segment net sales. All three brands recorded record low first half merchandise markdown rates. This was partially offset by a deleverage in delivery and logistics expenses. Delivery and logistics expense deleverage was primarily driven by the increased penetration of the digital channel. Logistics expense also deleveraged due to increased wages at our distribution and fulfillment centers in order to attract and retain appropriate levels of employees.

As of July 31, 2021, total inventory increased by $43.1 million, or 9.8%, compared to total inventory as of July 31, 2019. The increase in inventory was due to the increase in net sales.

For the three months ended July 31, 2021, selling, general and administrative expenses increased by $31.6 million, or 13.3%, compared to the three months ended July 31, 2019, and expressed as a percentage of net sales, decreased to 23.3%

from 24.7% in the three months ended July 31, 2019. The leverage in selling, general and administrative expenses as a rate to sales was primarily related to disciplined store payroll management and overall expense control that was partially offset by a deleverage in digital marketing and creative expenses during the quarter to support the strong digital sales and customer growth. The increase in dollars was primarily driven by the increase in digital marketing and creative expenses partially offset by the reduction in direct selling expenses due to the lower retail store net sales.

For the six months ended July 31, 2021, selling, general, and administrative expense increased by $29.7 million, or 6.4%, compared to the prior year's comparable period and expressed as a percentage of net sales, decreased to 23.8% from 25.5% in the six months ended July 31, 2019. The leverage in selling, general and administrative expenses as a rate to sales was primarily related to disciplined store payroll management and overall expense control that was partially offset by a deleverage in digital marketing and creative expenses during the period to support the strong digital sales and customer growth. The increase in dollars was primarily driven by the increase in digital marketing and creative expenses to support the overall growth of the Company partially offset by the reduction in direct selling expenses due to the lower retail store net sales.

The Company's effective tax rate for the three months ended July 31, 2021, was 22.4% compared to 26.0% in the three months ended July 31, 2019. The Company's effective tax rate for the six months ended July 31, 2021, was 23.8% compared to 25.2% in the six months ended July 31, 2019. The decrease in the effective tax rate for the three and six months ended July 31, 2021, was primarily due to the ratio of foreign taxable profits to global taxable profits.

Net income for the three months ended July 31, 2021, was $127 million and record second quarter earnings per diluted share were $1.28. Net income for the six months ended July 31, 2021, was $181 million and record first half earnings per diluted share were $1.82.

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 six months ended July 31, 2021, the Company did not repurchase any shares. During the year ended January 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately $7 million. These shares were repurchased prior to the known spread of the COVID-19 pandemic in the United States that forced the Company to close its stores for an extended period of time. As of July 31, 2021, 25.9million common shares were remaining under the programs.

During the six months ended July 31, 2021, the Company opened a total of 28 new retail locations including: 15 Free People Group stores (including 7 FP Movement stores), 9 Urban Outfitters stores and 4 Anthropologie Group stores; and closed 6 retail locations including: 2Free People Group stores, 2 Anthropologie Group stores, 1 Urban Outfitters store and 1 Menus & Venues restaurant. During the six months ended July 31, 2021, 1 Urban Outfitters franchisee-owned store and 1 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 255 Urban Outfitters stores in the United States, Canada and Europe and websites; 239 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 162 Free People Group stores in the United States, Canada and Europe, catalogs and websites, 10 Menus & Venues restaurants, 2 Urban Outfitters franchisee-owned stores and 1 Anthropologie Group franchisee-owned store, as of July 31, 2021. 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 second quarter results and will be webcast at 5:30 pm. ET at: https://edge.media-server.com/mmc/p/di4txumm

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 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, 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 Operations

(amounts in thousands, except share and per share data)

(unaudited)

Three Months Ended

July 31,

2021

2020

2019

Net sales

$

1,157,725

$

803,266

$

962,329

Cost of sales

722,460

565,228

646,454

Gross profit

435,265

238,038

315,875

Selling, general and administrative expenses

269,412

168,619

237,814

Income from operations

165,853

69,419

78,061

Other (loss) income, net

(1,797

)

(533

)

3,498

Income before income taxes

164,056

68,886

81,559

Income tax expense

36,794

34,486

21,239

Net income

$

127,262

$

34,400

$

60,320

Net income per common share:

Basic

$

1.29

$

0.35

$

0.61

Diluted

$

1.28

$

0.35

$

0.61

Weighted-average common shares outstanding:

Basic

98,315,441

97,778,749

99,095,562

Diluted

99,601,292

98,104,918

99,602,465

AS A PERCENTAGE OF NET SALES

Net sales

100.0

%

100.0

%

100.0

%

Cost of sales

62.4

%

70.4

%

67.2

%

Gross profit

37.6

%

29.6

%

32.8

%

Selling, general and administrative expenses

23.3

%

21.0

%

24.7

%

Income from operations

14.3

%

8.6

%

8.1

%

Other (loss) income, net

(0.1

%)

(0.0

%)

0.4

%

Income before income taxes

14.2

%

8.6

%

8.5

%

Income tax expense

3.2

%

4.3

%

2.2

%

Net income

11.0

%

4.3

%

6.3

%

URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Operations

(amounts in thousands, except share and per share data)

(unaudited)

Six Months Ended

July 31,

2021

2020

2019

Net sales

$

2,085,140

$

1,391,749

$

1,826,742

Cost of sales (excluding store impairment)

1,349,224

1,127,340

1,241,811

Store impairment

-

14,528

-

Gross profit

735,916

249,881

584,931

Selling, general and administrative expenses

496,560

379,197

466,850

Income (loss) from operations

239,356

(129,316

)

118,081

Other (loss) income, net

(1,952

)

(371

)

6,178

Income (loss) before income taxes

237,404

(129,687

)

124,259

Income tax expense (benefit)

56,595

(25,645

)

31,354

Net income (loss)

$

180,809

$

(104,042

)

$

92,905

Net income (loss) per common share:

Basic

$

1.84

$

(1.06

)

$

0.91

Diluted

$

1.82

$

(1.06

)

$

0.91

Weighted-average common shares outstanding:

Basic

98,213,555

97,843,796

101,722,244

Diluted

99,463,468

97,843,796

102,427,040

AS A PERCENTAGE OF NET SALES

Net sales

100.0

%

100.0

%

100.0

%

Cost of sales (excluding store impairment)

64.7

%

81.0

%

68.0

%

Store impairment

-

1.0

%

-

Gross profit

35.3

%

18.0

%

32.0

%

Selling, general and administrative expenses

23.8

%

27.3

%

25.5

%

Income (loss) from operations

11.5

%

(9.3

%)

6.5

%

Other (loss) income, net

(0.1

%)

(0.0

%)

0.3

%

Income (loss) before income taxes

11.4

%

(9.3

%)

6.8

%

Income tax expense (benefit)

2.7

%

(1.8

%)

1.7

%

Net income (loss)

8.7

%

(7.5

%)

5.1

%

URBAN OUTFITTERS, INC.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

July 31,

January 31,

July 31,

July 31,

2021

2021

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

464,811

$

395,635

$

662,860

$

162,018

Marketable securities

156,982

174,695

501

171,398

Accounts receivable, net of allowance for doubtful accounts

of $1,302, $4,028, $4,123 and $939, respectively

94,402

89,952

60,441

95,131

Inventory

483,148

389,618

351,771

440,087

Prepaid expenses and other current assets

196,070

173,432

195,393

131,763

Total current assets

1,395,413

1,223,332

1,270,966

1,000,397

Property and equipment, net

1,047,751

967,422

889,126

867,434

Operating lease right-of-use assets

1,068,919

1,114,762

1,134,678

1,085,543

Marketable securities

113,249

123,662

9,216

78,857

Deferred income taxes and other assets

117,556

117,167

121,292

105,814

Total Assets

$

3,742,888

$

3,546,345

$

3,425,278

$

3,138,045

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

240,245

$

237,386

$

207,261

$

181,955

Current portion of operating lease liabilities

243,338

254,703

270,326

209,072

Accrued expenses, accrued compensation and other

current liabilities

462,782

414,043

293,629

235,106

Total current liabilities

946,365

906,132

771,216

626,133

Non-current portion of operating lease liabilities

1,030,212

1,074,009

1,102,250

1,090,623

Long-term debt

-

-

120,000

-

Deferred rent and other liabilities

96,891

88,846

81,219

59,885

Total Liabilities

2,073,468

2,068,987

2,074,685

1,776,641

Shareholders' equity:

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

authorized, none issued

-

-

-

-

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

authorized, 98,357,090, 97,815,985, 97,779,586 and

97,965,012 shares issued and outstanding, respectively

10

10

10

10

Additional paid-in-capital

26,581

19,360

9,956

-

Retained earnings

1,655,917

1,475,108

1,369,830

1,398,681

Accumulated other comprehensive loss

(13,088

)

(17,120

)

(29,203

)

(37,287

)

Total Shareholders' Equity

1,669,420

1,477,358

1,350,593

1,361,404

Total Liabilities and Shareholders' Equity

$

3,742,888

$

3,546,345

$

3,425,278

$

3,138,045

URBAN OUTFITTERS, INC.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

Six Months Ended

July 31,

2021

2020

2019

Cash flows from operating activities:

Net income (loss)

$

180,809

$

(104,042

)

$

92,905

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

Depreciation and amortization

51,223

53,388

55,395

Non-cash lease expense

95,097

97,655

94,173

(Benefit) provision for deferred income taxes

(1,275

)

(17,074

)

1,107

Share-based compensation expense

11,968

11,257

11,461

Store impairment

-

14,528

-

Loss on disposition of property and equipment, net

121

679

593

Changes in assets and liabilities:

Receivables

(4,349

)

27,912

(15,032

)

Inventory

(93,049

)

58,002

(71,899

)

Prepaid expenses and other assets

4,272

(62,170

)

(23,121

)

Payables, accrued expenses and other liabilities

61,586

94,196

16,009

Operating lease liabilities

(111,210

)

(59,115

)

(100,338

)

Net cash provided by operating activities

195,193

115,216

61,253

Cash flows from investing activities:

Cash paid for property and equipment

(105,624

)

(72,103

)

(116,465

)

Cash paid for marketable securities

(165,927

)

(92,949

)

(235,094

)

Sales and maturities of marketable securities

148,582

383,056

320,411

Net cash (used in) provided by investing activities

(122,969

)

218,004

(31,148

)

Cash flows from financing activities:

Borrowings under debt

-

220,000

-

Repayments of debt

-

(100,000

)

-

Proceeds from the exercise of stock options

2,816

-

974

Share repurchases related to share repurchase program

-

(7,036

)

(217,421

)

Share repurchases related to taxes for share-based awards

(7,562

)

(3,742

)

(5,429

)

Net cash (used in) provided by financing activities

(4,746

)

109,222

(221,876

)

Effect of exchange rate changes on cash and cash equivalents

1,698

(1,421

)

(4,471

)

Increase (decrease) in cash and cash equivalents

69,176

441,021

(196,242

)

Cash and cash equivalents at beginning of period

395,635

221,839

358,260

Cash and cash equivalents at end of period

$

464,811

$

662,860

$

162,018

Disclaimer

Urban Outfitters Inc. published this content on 25 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 August 2021 15:40:01 UTC.


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Financials (USD)
Sales 2022 4 571 M - -
Net income 2022 345 M - -
Net cash 2022 470 M - -
P/E ratio 2022 9,32x
Yield 2022 -
Capitalization 3 163 M 3 163 M -
EV / Sales 2022 0,59x
EV / Sales 2023 0,50x
Nbr of Employees 14 250
Free-Float 61,4%
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Technical analysis trends URBAN OUTFITTERS, INC.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 16
Last Close Price 32,32 $
Average target price 42,07 $
Spread / Average Target 30,2%
EPS Revisions
Managers and Directors
Richard Allan Hayne Chairman & Chief Executive Officer
Francis John Conforti Co-President & Chief Operating Officer
Margaret A. Hayne Co-President, Director & Chief Creative Officer
Melanie Marein-Efron Chief Financial Officer
Dave Hayne Chief Technology Officer
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