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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

URBN Reports Record Sales; Record Profits

November 22, 2021 GMT

PHILADELPHIA, Nov. 22, 2021 (GLOBE NEWSWIRE) -- 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 Rent, Nuuly Thrift and Menus & Venues brands, today announced net income of $89 million and record third quarter earnings per diluted share of $0.89 for the three months ended October 31, 2021. For the nine months ended October 31, 2021, net income was $270 million and record first nine-month period earnings per diluted share were $2.71.

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.

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Total Company net sales for the three months ended October 31, 2021, were a record $1.13 billion. Net sales increased 14.6% compared to the three months ended October 31, 2019. Comparable Retail segment net sales increased 14%, driven by strong double-digit growth in digital channel sales, partially offset by mid-single-digit negative retail store sales primarily due to reduced store traffic. By brand, comparable Retail segment net sales increased 55% at the Free People Group, 9% at the Anthropologie Group and 7% at Urban Outfitters. Total Retail segment net sales increased 16%. Wholesale segment net sales decreased 15% primarily from reducing the Free People Group’s sales to promotional wholesale customers.

For the nine months ended October 31, 2021, total Company net sales increased 14.3% compared to the nine months ended October 31, 2019. Comparable Retail segment net sales increased 16%, driven by strong double-digit growth in digital channel sales, partially offset by low 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 23% primarily from reducing the Free People Group’s sales to promotional wholesale customers.

“I’m pleased to announce our teams produced record Q3 sales and earnings,” said Richard A. Hayne, Chief Executive Officer. “We are excited that November ‘comp’ sales to date for all brands have accelerated from their Q3 rate,” finished Mr. Hayne.

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

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 Three Months Ended
 October 31,
 2021  2020  2019
Net sales by brand          
Urban Outfitters$415,877  $394,050  $374,459
Anthropologie Group 431,407   358,482   398,709
Free People Group 264,995   206,669   205,475
Menus & Venues 6,457   3,664   6,794
Nuuly (1) 12,688   6,742   2,032
Total Company$1,131,424  $969,607  $987,469
 Three Months Ended
 October 31,
 2021  2020  2019
Net sales by segment          
Retail Segment$1,043,905  $895,608  $897,130
Wholesale Segment 74,831   67,257   88,307
Nuuly Segment (1) 12,688   6,742   2,032
Total Company$1,131,424  $969,607  $987,469
 Nine Months Ended
 October 31,
 2021  2020  2019
Net sales by brand          
Urban Outfitters$1,207,174  $955,259  $1,046,310
Anthropologie Group 1,235,567   887,683   1,147,977
Free People Group 727,454   492,352   597,606
Menus & Venues 15,922   8,378   20,286
Nuuly (1) 30,447   17,684   2,032
Total Company$3,216,564  $2,361,356  $2,814,211
 Nine Months Ended
 October 31,
 2021  2020  2019
Net sales by segment          
Retail Segment$2,990,413  $2,214,311  $2,558,386
Wholesale Segment 195,704   129,361   253,793
Nuuly Segment (1) 30,447   17,684   2,032
Total Company$3,216,564  $2,361,356  $2,814,211

(1) The Nuuly segment (formerly known as the Subscription segment) is comprised of the Nuuly Rent and Nuuly Thrift brands. Nuuly Rent began operations on July 30, 2019. Nuuly Thrift began operations on October 12, 2021.

For the three months ended October 31, 2021, the gross profit rate increased by 202 basis points compared to the three months ended October 31, 2019. Gross profit dollars increased by $69.6 million to $390.7 million from $321.1 million in the three months ended October 31, 2019. The increase in gross profit rate was primarily due to record low third quarter merchandise markdown rates in the Retail segment and 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.

For the nine months ended October 31, 2021, the gross profit rate increased by 284 basis points compared to the nine months ended October 31, 2019. Gross profit dollars increased by $220.6 million to $1.13 billion from $906.0 million in the nine months ended October 31, 2019. The increase in gross profit rate was primarily due to record low first nine-month period merchandise markdown rates in the Retail segment and leverage in store occupancy expense due to the increased penetration of the digital channel in Retail segment net sales. All three brands achieved record low first nine-month period merchandise markdown rates. This was partially offset by a deleverage 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.

As of October 31, 2021, total inventory increased by $95.5 million, or 18.0%, compared to total inventory as of October 31, 2019. The increase in inventory was due to the increase in net sales and a strategic decision to bring certain product categories in earlier to protect against ongoing supply chain disruptions and delays.

For the three months ended October 31, 2021, selling, general and administrative expenses increased by $29.0 million, or 11.8%, compared to the three months ended October 31, 2019, and expressed as a percentage of net sales, leveraged 60 basis points. 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 overall higher 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.

For the nine months ended October 31, 2021, selling, general, and administrative expense increased by $58.7 million, or 8.2%, compared to the nine months ended October 31, 2019, and expressed as a percentage of net sales, leveraged 133 basis points. 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 October 31, 2021, was 23.0% compared to 26.6% in the three months ended October 31, 2019. The Company’s effective tax rate for the nine months ended October 31, 2021, was 23.6% compared to 25.8% in the nine months ended October 31, 2019. The decrease in the effective tax rate for the three and nine months ended October 31, 2021, was primarily due to the ratio of foreign taxable profits to global taxable profits.

Net income for the three months ended October 31, 2021, was $89 million and record third quarter earnings per diluted share were $0.89. Net income for the nine months ended October 31, 2021, was $270 million and record first nine-month period earnings per diluted share were $2.71.

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 nine months ended October 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately $15 million. 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 October 31, 2021, 25.4 million common shares were remaining under the programs.

During the nine months ended October 31, 2021, the Company opened a total of 46 new retail locations including: 23 Free People Group stores (including 13 FP Movement stores), 15 Urban Outfitters stores and 8 Anthropologie Group stores; and closed 9 retail locations including: 3 Anthropologie Group stores, 2 Free People Group stores, 2 Urban Outfitters stores and 2 Menus & Venues restaurants. During the nine months ended October 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 260 Urban Outfitters stores in the United States, Canada and Europe and websites; 242 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 170 Free People Group stores in the United States, Canada and Europe, catalogs and websites, 9 Menus & Venues restaurants, 2 Urban Outfitters franchisee-owned stores and 1 Anthropologie Group franchisee-owned store, as of October 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 third quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/s3fpctjt  

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 
 October 31, 
 2021  2020  2019 
            
Net sales$1,131,424  $969,607  $987,469 
Cost of sales 740,686   646,666   666,367 
Gross profit 390,738   322,941   321,102 
Selling, general and administrative expenses 274,836   224,433   245,833 
Income from operations 115,902   98,508   75,269 
Other (loss) income, net (551)  (890)  576 
Income before income taxes 115,351   97,618   75,845 
Income tax expense 26,496   20,914   20,193 
Net income$88,855  $76,704  $55,652 
            
Net income per common share:           
Basic$0.90  $0.78  $0.57 
Diluted$0.89  $0.78  $0.56 
            
Weighted-average common shares outstanding:           
Basic 98,202,399   97,784,661   97,972,864 
Diluted 99,415,838   98,583,032   98,628,169 
            
            
AS A PERCENTAGE OF NET SALES           
Net sales 100.0%  100.0%  100.0%
Cost of sales 65.5%  66.7%  67.5%
Gross profit 34.5%  33.3%  32.5%
Selling, general and administrative expenses 24.3%  23.1%  24.9%
Income from operations 10.2%  10.2%  7.6%
Other (loss) income, net (0.0%)  (0.1%)  0.1%
Income before income taxes 10.2%  10.1%  7.7%
Income tax expense 2.3%  2.2%  2.1%
Net income 7.9%  7.9%  5.6%
            

URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Operations
(amounts in thousands, except share and per share data)
(unaudited)

 Nine Months Ended 
 October 31, 
 2021  2020  2019 
            
Net sales$3,216,564  $2,361,356  $2,814,211 
Cost of sales (excluding store impairment) 2,089,910   1,774,006   1,908,178 
Store impairment    14,528    
Gross profit 1,126,654   572,822   906,033 
Selling, general and administrative expenses 771,396   603,630   712,683 
Income (loss) from operations 355,258   (30,808)  193,350 
Other (loss) income, net (2,503)  (1,261)  6,754 
Income (loss) before income taxes 352,755   (32,069)  200,104 
Income tax expense (benefit) 83,091   (4,731)  51,547 
Net income (loss)$269,664  $(27,338) $148,557 
            
Net income (loss) per common share:           
Basic$2.75  $(0.28) $1.48 
Diluted$2.71  $(0.28) $1.47 
            
Weighted-average common shares outstanding:           
Basic 98,209,796   97,823,948   100,458,726 
Diluted 99,447,551   97,823,948   101,147,025 
            
            
AS A PERCENTAGE OF NET SALES           
Net sales 100.0%  100.0%  100.0%
Cost of sales (excluding store impairment) 65.0%  75.1%  67.8%
Store impairment    0.6%   
Gross profit 35.0%  24.3%  32.2%
Selling, general and administrative expenses 24.0%  25.6%  25.3%
Income (loss) from operations 11.0%  (1.3%)  6.9%
Other (loss) income, net (0.0%)  (0.1%)  0.2%
Income (loss) before income taxes 11.0%  (1.4%)  7.1%
Income tax expense (benefit) 2.6%  (0.2%)  1.8%
Net income (loss) 8.4%  (1.2%)  5.3%
            

URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)

 October 31,  January 31,  October 31,  October 31, 
 2021  2021  2020  2019 
ASSETS               
Current assets:               
Cash and cash equivalents$236,354  $395,635  $624,945  $167,070 
Marketable securities 188,375   174,695   2   170,697 
Accounts receivable, net of allowance for doubtful accounts of $1,313, $4,028, $3,098 and $1,084, respectively 114,208   89,952   87,187   99,971 
Inventory 627,103   389,618   489,234   531,565 
Prepaid expenses and other current assets 203,213   173,432   170,193   143,710 
Total current assets 1,369,253   1,223,332   1,371,561   1,113,013 
Property and equipment, net 1,088,287   967,422   930,564   890,538 
Operating lease right-of-use assets 1,030,776   1,114,762   1,101,495   1,119,280 
Marketable securities 269,780   123,662   9,350   83,121 
Deferred income taxes and other assets 132,510   117,167   117,705   114,641 
Total Assets$3,890,606  $3,546,345  $3,530,675  $3,320,593 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Current liabilities:               
Accounts payable$315,481  $237,386  $349,793  $232,901 
Current portion of operating lease liabilities 240,074   254,703   255,122   213,911 
Accrued expenses, accrued compensation and other current liabilities 493,446   414,043   341,983   264,240 
Total current liabilities 1,049,001   906,132   946,898   711,052 
Non-current portion of operating lease liabilities 986,026   1,074,009   1,069,434   1,119,340 
Long-term debt           
Deferred rent and other liabilities 108,848   88,846   83,024   60,348 
Total Liabilities 2,143,875   2,068,987   2,099,356   1,890,740 
                
Shareholders’ equity:               
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued           
Common shares; $.0001 par value, 200,000,000 shares authorized, 97,863,862, 97,815,985, 97,786,381 and 97,975,343 shares issued and outstanding, respectively10  10  10  10 
Additional paid-in-capital 18,671   19,360   15,669   5,201 
Retained earnings 1,744,772   1,475,108   1,446,534   1,454,333 
Accumulated other comprehensive loss (16,722)  (17,120)  (30,894)  (29,691)
Total Shareholders’ Equity 1,746,731   1,477,358   1,431,319   1,429,853 
Total Liabilities and Shareholders’ Equity$3,890,606  $3,546,345  $3,530,675  $3,320,593 
                


URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)

 Nine Months Ended 
 October 31, 
 2021  2020  2019 
Cash flows from operating activities:           
Net income (loss)$269,664  $(27,338) $148,557 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:           
Depreciation and amortization 77,985   78,308   83,617 
Non-cash lease expense 144,347   147,198   142,210 
(Benefit) provision for deferred income taxes (5,086)  (15,293)  211 
Share-based compensation expense 19,068   17,030   16,807 
Store impairment    14,528    
Loss on disposition of property and equipment, net 193   706   819 
Changes in assets and liabilities:           
Receivables (24,387)  1,137   (19,550)
Inventory (238,094)  (79,462)  (161,255)
Prepaid expenses and other assets (10,087)  (35,403)  (37,228)
Payables, accrued expenses and other liabilities 161,251   235,618   100,534 
Operating lease liabilities (172,575)  (122,360)  (153,320)
Net cash provided by operating activities 222,279   214,669   121,402 
Cash flows from investing activities:           
Cash paid for property and equipment (159,008)  (89,153)  (171,121)
Cash paid for marketable securities (442,249)  (93,945)  (299,322)
Sales and maturities of marketable securities 237,879   384,999   382,629 
Net cash (used in) provided by investing activities (363,378)  201,901   (87,814)
Cash flows from financing activities:           
Borrowings under debt    220,000    
Repayments of debt    (220,000)   
Proceeds from the exercise of stock options 2,815      974 
Share repurchases related to share repurchase program (14,888)  (7,036)  (217,421)
Share repurchases related to taxes for share-based awards (7,684)  (3,802)  (5,574)
Net cash used in financing activities (19,757)  (10,838)  (222,021)
Effect of exchange rate changes on cash and cash equivalents 1,575   (2,626)  (2,757)
(Decrease) increase in cash and cash equivalents (159,281)  403,106   (191,190)
Cash and cash equivalents at beginning of period 395,635   221,839   358,260 
Cash and cash equivalents at end of period$236,354  $624,945  $167,070 
Contact:Oona McCullough
 Executive Director of Investor Relations
 (215) 454-4806