Urban Outfitters Reports Record Sales

Urban Outfitters, Inc. (NASDAQ:URBN), a portfolio of global consumer brands comprised of Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands and our Food and Beverage division, today announced net income of $64 million and $218 million for the three months and year ended January 31, 2017, respectively. Earnings per diluted share were $0.55 and $1.86 for the three months and year ended January 31, 2017, respectively.

Total Company net sales for the fourth quarter of fiscal 2017 increased 2% over the same quarter last year to a record $1.03 billion. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, were flat. By brand, comparable Retail segment net sales increased 2.0% at Urban Outfitters and 1.2% at Free People, but decreased 2.9% at the Anthropologie Group. Comparable Retail segment sales were driven by strong, double-digit growth in the direct-to-consumer channel, which were offset by negative retail store comparable net sales. Wholesale segment net sales decreased by 1%, as the prior year period benefitted from late shipments of third quarter bookings.

For the year ended January 31, 2017, total company net sales increased to $3.5 billion or 3% over the prior year. Comparable Retail segment net sales increased 1%. Wholesale segment net sales increased 11%.

“We are pleased to announce record fourth quarter and full year sales driven mostly by the continued success in the direct-to-consumer channel,” said Richard A. Hayne, Chief Executive Officer. “As we enter a new year, we will continue to shift our efforts and spend into our fastest growing channel,” finished Mr. Hayne.

For the three months ended January 31, 2017, the gross profit rate decreased by 142 basis points versus the prior year’s comparable period. The decline in gross profit rate was driven by deleverage in customer delivery and logistics expense rates primarily due to the increased penetration of the direct-to-consumer channel and deleverage in maintained margins due to lower initial mark-up and higher markdowns at both the Anthropologie and Urban Outfitters brands.

Store occupancy as a rate of sales was flat for the quarter, which includes approximately $4 million of store impairment charges in the current year and approximately $7 million of store impairment charges in the prior year. The current year store impairment charges related to one Urban Outfitters store and two Free People stores, all located in the United States.

For the year ended January 31, 2017, the gross profit rate increased by 21 basis points versus the prior year’s comparable period. The increase in gross profit rate was primarily driven by improvement in the Urban Outfitters brand maintained margins due to lower merchandise markdowns compared to the prior year. This increase was partially offset by a lower gross profit rate at the Free People brand, which was primarily driven by lower maintained margins due to higher merchandise markdowns, and total Company deleverage in customer delivery and logistics expense primarily related to the increased penetration of our direct-to-consumer channel.

As of January 31, 2017, total inventory increased by $8 million, or 3%, on a year-over-year basis. The increase in inventory relates to inventory to support non-comp stores. On a year-over-year basis, total Company selling square footage increased 5%.  Comparable Retail segment inventory decreased 2% at cost.

For the three months and year ended January 31, 2017, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 40 basis points and 93 basis points when compared to the prior year’s comparable periods, respectively. The deleverage in the quarter related to an increase in direct store expenses. These expenses primarily relate to recently opened expanded format Anthropologie and Free People stores. The deleverage for the full year ended January 31, 2017, was primarily due to direct store expenses to support our square footage growth and expanded format stores and an increase in direct marketing expenses to support our direct-to-consumer channel growth.
more at:  http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-newsArticle&ID=2252259

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