Urban Outfitters, Inc.

F Y '22 Q3 RESULTS

Introduction

Urban Outfitters, Inc. "URBN" is providing fiscal 2022 third quarter

commentary ahead of our earnings call scheduled for November 22nd at 5:15pm.

We remind you that any forward-looking statements made in this commentary

are subject to our safeharbor statement found in our SEC filings.

This commentary is comparing fiscal 2022 results to fiscal 2020. Due to the material impact of COVID-19 on our business operations in fiscal 2021, including mandated store closures, management views the comparison of fiscal 2022 results to fiscal 2020 as the more meaningful measurement of our business performance. For a selected comparison of fiscal 2022 results to fiscal 2021, please refer to the Appendix at the end of this document.

Our third quarter earnings release and related financial information are

available on our website, www.urbn.com.

Table of Contents

Key Financial Highlights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Sales by Segment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Sales by Brand.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-8Gross Profit by Segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Selling, General & Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Operating Income by Segment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Income Statement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Balance Sheet.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Cash Flows.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Inventory Detail.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Capital Spending.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Shares Outstanding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Global Store Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Global Store Count & Square Footage.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Key Financial Highlights

Three Months Ended

October 31, 2021

October 31, 2019

URBN Net Sales Change

14.6%

1.4%

Gross Profit*

34.5%

32.5%

Selling, General

and Admin. Expenses*

24.3%

24.9%

Income from Operations*

10.2%

7.6%

Earnings Per Diluted Share

$ 0.89

$ 0.56

*expressed as a percent of net sales

URBN sales for the third quarter increased by 15% to a record $1.13 billion. The increase in sales was due to a 16% increase in Retail segment sales, partially offset by a 15% decline in Wholesale segment sales. Retail segment sales comp increased 14%.

Gross profit dollars increased by 22% to $391 million for the quarter, while gross profit rate increased 202 bps to 34.5%. The increase in gross profit rate was primarily due to record low third 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 achieved record low third quarter merchandise markdown rates. This was partially offset by an increase in delivery and logistics expenses and lower initial merchandise markups. Delivery expense deleveraged due to increases in carrier costs per package and the increased penetration of the digital channel. Logistics expense deleveraged due to increased wages at our distribution and fulfillment centers in order to attract and retain appropriate levels of employees and the increased penetration of the digital channel. Lower initial merchandise markups are primarily due to higher inbound transportation expenses.

Selling general & administrative ('SG&A') expenses increased by 12% to $275 million while SG&A as a % of sales leveraged by 60 bps to 24.3%. The leverage in SG&A as a rate to sales was primarily related to disciplined store payroll management and overall expense control that was partially offset by an increase in digital marketing and creative expenses during the quarter to support the strong digital sales and customer growth. The growth in SG&A dollars was primarily driven by increases in digital marketing and creative expenses during the quarter to support the strong digital sales and customer growth and higher overall performance-based compensation due to the stronger results partially offset by the reduction in direct selling expenses due to the lower retail store net sales.

Operating income dollars increased by 54% to $116 million while operating income rate increased by 262 bps to 10.2%. The increase in dollars was due to the increase in sales, the improved gross profit rate and the leverage in SG&A expenses in the quarter.

Net income for the quarter was $89 million or $0.89 per diluted share.

FY'22 Q3 RESULTS | 04

Sales by Segment

($ in millions)

Three Months Ended

Variance

(unaudited)

October 31, 2021

October 31, 2019

$

%

Total Sales

$

1,131.4

$

987.5

$

143.9

15%

Retail Segment

$

1,043.9

$

897.2

$

146.7

16%

URBN Comp

$

990.9

$

868.7

$

122.2

14%

Anthropologie Group

419.5

386.4

33.1

9%

Free People Group

182.6

117.5

65.1

55%

Urban Outfitters

383.0

359.6

23.4

7%

Menus & Venues

5.8

5.2

0.6

11%

Retail Segment Comp

By Geography

North America

867.9

768.1

99.8

13%

Europe and ROW

123.0

100.6

22.4

22%

URBN Non-Comp

$

53.0

$

28.5

$

24.5

86%

Wholesale Segment

$

74.8

$

88.3

$

(13.5)

-15%

Anthropologie Group

-

4.3

(4.3) -100%

Free People Group

69.0

82.4

(13.4)

-16%

Urban Outfitters

5.8

1.6

4.2

266%

Nuuly Segment

$

12.7

$

2.0

$

10.7

524%

Total Company or URBN sales for the third quarter increased by 15% to a record $1.13 billion. URBN Retail segment sales increased 16% to $1.04 billion, with comparable sales increasing 14%. Retail segment comparable sales increased due to strong double-digit growth in digital channel sales due to increases in sessions, average order value and conversion rate. Higher digital sales were partially offset by mid single-digit negative retail store sales as lower traffic, units per transaction and conversion rates more than offset higher average unit retail.

URBN Wholesale segment sales for the third quarter declined 15% to $75 million, driven by a 16%, or $13 million, decline in Free People Group wholesale sales primarily due to reducing the brand's sales to promotional wholesale customers.

FY'22 Q3 RESULTS | 05

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Disclaimer

Urban Outfitters Inc. published this content on 22 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 November 2021 21:36:24 UTC.