URBN Reports Q4 Results
Urban Outfitters, Inc. (NASDAQ:URBN) reported a net income of $29 million for Q4 2021, with diluted earnings per share at $0.29. However, total net sales decreased by 6.9% to $1.09 billion. Comparable Retail segment net sales fell 7%, impacted by reduced store traffic due to the pandemic, despite strong digital sales growth. For the fiscal year, net sales dropped 13.4%. Gross profit rate declined to 25%, with increased logistics expenses affecting profitability. The company remains optimistic about upcoming seasons based on recent sales trends.
- Strong digital channel sales offsetting some retail declines.
- Free People brand reported a 6% increase in comparable Retail segment net sales.
- Total net sales decreased 6.9% year-over-year.
- Comparable Retail segment net sales declined 11% for the fiscal year.
- Gross profit rate decreased to 25% from 31.1%, impacted by increased logistics costs.
- Wholesale segment net sales dropped 40%.
PHILADELPHIA, March 02, 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 and Menus & Venues brands, today announced net income of
Total Company net sales for the three months ended January 31, 2021, decreased
For the year ended January 31, 2021, total Company net sales decreased
“As we begin our new fiscal year, we are encouraged by the positive sales results all three brands delivered in North America quarter-to-date,” said Richard A. Hayne, Chief Executive Officer. “We’re particularly excited by the recent uptick in demand for ‘going-out’ type apparel and believe this bodes well for our spring and summer seasons,” finished Mr. Hayne.
Net sales by brand and segment for the three and twelve-month periods were as follows:
Three Months Ended | Twelve Months Ended | ||||||||||
January 31, | January 31, | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||
Net sales by brand | |||||||||||
Urban Outfitters | $ | 428,102 | $ | 449,939 | $ | 1,383,361 | $ | 1,496,249 | |||
Anthropologie Group | 431,380 | 491,146 | 1,319,063 | 1,639,123 | |||||||
Free People | 219,279 | 215,765 | 711,631 | 813,371 | |||||||
Menus & Venues | 2,980 | 6,759 | 11,358 | 27,045 | |||||||
Nuuly | 6,652 | 5,969 | 24,336 | 8,001 | |||||||
Total Company | $ | 1,088,393 | $ | 1,169,578 | $ | 3,449,749 | $ | 3,983,789 | |||
Net sales by segment | |||||||||||
Retail Segment | $ | 1,013,889 | $ | 1,090,552 | $ | 3,228,200 | $ | 3,648,938 | |||
Wholesale Segment | 67,852 | 73,057 | 197,213 | 326,850 | |||||||
Subscription Segment | 6,652 | 5,969 | 24,336 | 8,001 | |||||||
Total Company | $ | 1,088,393 | $ | 1,169,578 | $ | 3,449,749 | $ | 3,983,789 | |||
For the three months ended January 31, 2021, the gross profit rate decreased by 198 basis points and the adjusted gross profit rate decreased by 314 basis points versus the prior year’s comparable period. The decrease in adjusted gross profit rate was primarily due to the increase in delivery and logistics expenses due to the penetration of the digital channel as well as increased carrier surcharges. This was partially offset by lower merchandise markdowns in the Retail segment driven by the Urban Outfitters and Free People brands, benefits associated with negotiated rent concessions with landlords and European government assistance programs.
For the year ended January 31, 2021, the gross profit rate decreased to
As of January 31, 2021, total inventory decreased by
For the three months ended January 31, 2021, selling, general and administrative expenses decreased by
For the year ended January 31, 2021, selling, general and administrative expenses decreased by
The Company’s effective tax rate for the three months ended January 31, 2021, was
Net income for the three months and year ended January 31, 2021, was
On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. The Company did not repurchase any shares during the fourth quarter, while during the year ended January 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately
During the year ended January 31, 2021, the Company opened a total of 20 new retail locations including: 7 Urban Outfitters stores, 7 Anthropologie Group stores and 6 Free People stores (including 2 FP Movement stores); and closed 10 retail locations including: 8 Urban Outfitters stores, 1 Anthropologie Group store and 1 Free People store. During the year ended January 31, 2021, six franchisee-owned stores were closed including: four Urban Outfitters stores, one Anthropologie Group store and one Free People store.
Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 247 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; 149 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 Menus & Venues restaurants and 1 Urban Outfitters franchisee-owned store, as of January 31, 2021. Free People 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 fourth quarter results and will be webcast at 5:30 pm. ET at: https://edge.media-server.com/mmc/p/fd34jazh
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, 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, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, 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 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, the departure of one or more key senior executives, import risks, 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, risks associated with digital sales, our ability to maintain and expand our digital sales channels, response to new store concepts, our ability to integrate acquisitions, any material disruptions or security breaches with respect to our technology systems, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate (including the uncertainties associated with the U.S. Tax Cuts and Jobs Act), changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in the Company’s 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.
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
(amounts in thousands, except share and per share data)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||
January 31, | January 31, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Net sales | $ | 1,088,393 | $ | 1,169,578 | $ | 3,449,749 | $ | 3,983,789 | ||||
Cost of sales (excluding store impairment) | 798,341 | 821,174 | 2,572,347 | 2,729,352 | ||||||||
Store impairment | 968 | 14,611 | 15,496 | 14,611 | ||||||||
Gross profit | 289,084 | 333,793 | 861,906 | 1,239,826 | ||||||||
Selling, general and administrative expenses | 254,304 | 281,307 | 857,934 | 993,990 | ||||||||
Goodwill impairment | — | 13,911 | — | 13,911 | ||||||||
Income from operations | 34,780 | 38,575 | 3,972 | 231,925 | ||||||||
Other income (loss), net | 802 | 1,041 | (459 | ) | 7,795 | |||||||
Income before income taxes | 35,582 | 39,616 | 3,513 | 239,720 | ||||||||
Income tax expense | 7,008 | 20,077 | 2,277 | 71,624 | ||||||||
Net income | $ | 28,574 | $ | 19,539 | $ | 1,236 | $ | 168,096 | ||||
Net income per common share: | ||||||||||||
Basic | $ | 0.29 | $ | 0.20 | $ | 0.01 | $ | 1.68 | ||||
Diluted | $ | 0.29 | $ | 0.20 | $ | 0.01 | $ | 1.67 | ||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 97,798,872 | 97,976,236 | 97,817,651 | 99,833,011 | ||||||||
Diluted | 99,085,513 | 98,934,004 | 98,522,776 | 100,588,677 | ||||||||
AS A PERCENTAGE OF NET SALES | ||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of sales (excluding store impairment) | 73.3 | % | 70.2 | % | 74.6 | % | 68.5 | % | ||||
Store impairment | 0.1 | % | 1.3 | % | 0.4 | % | 0.4 | % | ||||
Gross profit | 26.6 | % | 28.5 | % | 25.0 | % | 31.1 | % | ||||
Selling, general and administrative expenses | 23.4 | % | 24.1 | % | 24.9 | % | 25.0 | % | ||||
Goodwill impairment | — | 1.1 | % | — | 0.3 | % | ||||||
Income from operations | 3.2 | % | 3.3 | % | 0.1 | % | 5.8 | % | ||||
Other income, net | 0.1 | % | 0.1 | % | 0.0 | % | 0.2 | % | ||||
Income before income taxes | 3.3 | % | 3.4 | % | 0.1 | % | 6.0 | % | ||||
Income tax expense | 0.7 | % | 1.7 | % | 0.1 | % | 1.8 | % | ||||
Net income | 2.6 | % | 1.7 | % | 0.0 | % | 4.2 | % | ||||
URBAN OUTFITTERS, INC.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
(unaudited)
January 31, | January 31, | ||||||
2021 | 2020 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 395,635 | $ | 221,839 | |||
Marketable securities | 174,695 | 211,453 | |||||
Accounts receivable, net of allowance for doubtful accounts of | 89,952 | 88,288 | |||||
Inventory | 389,618 | 409,534 | |||||
Prepaid expenses and other current assets | 173,432 | 122,282 | |||||
Total current assets | 1,223,332 | 1,053,396 | |||||
Property and equipment, net | 967,422 | 890,032 | |||||
Operating lease right-of-use assets | 1,114,762 | 1,170,531 | |||||
Marketable securities | 123,662 | 97,096 | |||||
Deferred income taxes and other assets | 117,167 | 104,578 | |||||
Total Assets | $ | 3,546,345 | $ | 3,315,633 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 237,386 | $ | 167,871 | |||
Current portion of operating lease liabilities | 254,703 | 221,593 | |||||
Accrued expenses, accrued compensation and other current liabilities | 414,043 | 249,306 | |||||
Total current liabilities | 906,132 | 638,770 | |||||
Non-current portion of operating lease liabilities | 1,074,009 | 1,137,495 | |||||
Long-term debt | — | — | |||||
Deferred rent and other liabilities | 88,846 | 84,013 | |||||
Total Liabilities | 2,068,987 | 1,860,278 | |||||
Shareholders’ equity: | |||||||
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued | — | — | |||||
Common shares; $.0001 par value, 200,000,000 shares authorized, 97,815,985 and 97,976,815 issued and outstanding, respectively | 10 | 10 | |||||
Additional paid-in-capital | 19,360 | 9,477 | |||||
Retained earnings | 1,475,108 | 1,473,872 | |||||
Accumulated other comprehensive loss | (17,120 | ) | (28,004 | ) | |||
Total Shareholders’ Equity | 1,477,358 | 1,455,355 | |||||
Total Liabilities and Shareholders’ Equity | $ | 3,546,345 | $ | 3,315,633 | |||
URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
Twelve Months Ended | ||||||
January 31, | ||||||
2021 | 2020 | |||||
Cash flows from operating activities: | ||||||
Net income | $ | 1,236 | $ | 168,096 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 103,771 | 112,256 | ||||
Non-cash lease expense | 197,088 | 190,652 | ||||
(Benefit) provision for deferred income taxes | (14,270 | ) | 1,451 | |||
Share-based compensation expense | 20,300 | 21,109 | ||||
Goodwill impairment | — | 13,911 | ||||
Store impairment | 15,496 | 14,611 | ||||
Loss on disposition of property and equipment, net | 779 | 1,643 | ||||
Changes in assets and liabilities: | ||||||
Receivables | (1,223 | ) | (7,825 | ) | ||
Inventory | 22,381 | (39,101 | ) | |||
Prepaid expenses and other assets | (25,239 | ) | (16,308 | ) | ||
Payables, accrued expenses and other liabilities | 152,905 | 22,661 | ||||
Operating lease liabilities | (187,410 | ) | (209,263 | ) | ||
Net cash provided by operating activities | 285,814 | 273,893 | ||||
Cash flows from investing activities: | ||||||
Cash paid for property and equipment | (159,242 | ) | (217,433 | ) | ||
Cash paid for marketable securities | (338,918 | ) | (397,220 | ) | ||
Sales and maturities of marketable securities | 396,260 | 428,508 | ||||
Net cash used in investing activities | (101,900 | ) | (186,145 | ) | ||
Cash flows from financing activities: | ||||||
Borrowings under debt | 220,000 | — | ||||
Repayments of debt | (220,000 | ) | — | |||
Proceeds from the exercise of stock options | 495 | 974 | ||||
Share repurchases related to share repurchase program | (7,036 | ) | (217,421 | ) | ||
Share repurchases related to taxes for share-based awards | (3,876 | ) | (5,600 | ) | ||
Net cash used in financing activities | (10,417 | ) | (222,047 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | 299 | (2,122 | ) | |||
Increase (decrease) in cash and cash equivalents | 173,796 | (136,421 | ) | |||
Cash and cash equivalents at beginning of period | 221,839 | 358,260 | ||||
Cash and cash equivalents at end of period | $ | 395,635 | $ | 221,839 | ||
Supplemental cash flow information: | ||||||
Cash paid during the year for: | ||||||
Income taxes | $ | 25,572 | $ | 74,429 | ||
Non-cash investing activities—Accrued capital expenditures | $ | 36,926 | $ | 10,497 | ||
Important Information Regarding Non-GAAP Financial Measures
In addition to evaluating the financial condition and results of our operations in accordance with U.S. generally accepted accounting principles (“GAAP”), from time to time our management evaluates and analyzes results and any impact on the Company of certain events outside of normal, or “core,” business and operations, by considering adjusted financial measures not prepared in accordance with GAAP. Examples of items that we consider non-core include store and goodwill impairment charges and income tax expense related to valuation allowances attributable to net losses of certain foreign operations. In order to improve the transparency of our disclosures, provide a meaningful presentation of results from our core business operations and improve period-over-period comparability, we have included certain adjusted financial measures that exclude the impact of these non-core business items.
We believe these adjusted financial measures are important indicators of our recurring results of operations because they exclude items that may not be indicative of, or are unrelated to, our underlying results of operations and provide a useful baseline for analyzing trends in our underlying business. Management uses adjusted financial measures for planning, forecasting and evaluating business and financial performance.
Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company’s financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company’s financial position, results of operations or cash flows and should therefore be considered in assessing the Company’s actual and future financial condition and performance. These adjusted financial measures are not consistent with GAAP and may not be calculated the same as similarly titled measures used by other companies.
URBAN OUTFITTERS, INC.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands, except per share data)
(unaudited)
Reconciliation of Adjusted Gross Profit: | |||||||||||||
Three Months Ended | |||||||||||||
January 31, | |||||||||||||
2021 | 2020 | ||||||||||||
$'s | % of Net Sales | $'s | % of Net Sales | ||||||||||
Gross profit (GAAP) | $ | 289,084 | 26.6 | % | $ | 333,793 | 28.5 | % | |||||
Adjustments: | |||||||||||||
Store impairment charges (a) | 968 | 14,611 | |||||||||||
Adjusted gross profit (Non-GAAP) | $ | 290,052 | 26.7 | % | $ | 348,404 | 29.8 | % | |||||
Reconciliation of Adjusted Income from Operations: | |||||||||||||
Three Months Ended | |||||||||||||
January 31, | |||||||||||||
2021 | 2020 | ||||||||||||
$'s | % of Net Sales | $'s | % of Net Sales | ||||||||||
Income from operations (GAAP) | $ | 34,780 | 3.2 | % | $ | 38,575 | 3.3 | % | |||||
Adjustments: | |||||||||||||
Store impairment charges (a) | 968 | 14,611 | |||||||||||
Goodwill impairment charge (b) | — | 13,911 | |||||||||||
Adjusted income from operations (Non-GAAP) | $ | 35,748 | 3.3 | % | $ | 67,097 | 5.7 | % | |||||
Reconciliation of Adjusted Income Tax Expense and Adjusted Effective Tax Rate: | |||||||||||||
Three Months Ended | |||||||||||||
January 31, | |||||||||||||
2021 | 2020 | ||||||||||||
$'s | $'s | ||||||||||||
Income before income taxes (GAAP) | $ | 35,582 | $ | 39,616 | |||||||||
Adjustments: | |||||||||||||
Store impairment charges (a) | 968 | 14,611 | |||||||||||
Goodwill impairment charge (b) | — | 13,911 | |||||||||||
Adjusted income before income taxes (Non-GAAP) | $ | 36,550 | $ | 68,138 | |||||||||
Income tax expense (GAAP) | $ | 7,008 | $ | 20,077 | |||||||||
Adjustments: | |||||||||||||
Provision for income taxes on adjustments (c) | 250 | 6,799 | |||||||||||
Impact of income tax valuation allowances (d) | — | (7,809 | ) | ||||||||||
Adjusted income tax expense (Non-GAAP) | $ | 7,258 | $ | 19,067 | |||||||||
Effective income tax rate (GAAP) | 19.7 | % | 50.7 | % | |||||||||
Adjustments | 0.2 | (22.7 | ) | ||||||||||
Adjusted effective income tax rate (Non-GAAP) | 19.9 | % | 28.0 | % | |||||||||
URBAN OUTFITTERS, INC.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands, except per share data)
(unaudited)
Reconciliation of Adjusted Net Income and Adjusted Diluted EPS: | |||||||||||||
Three Months Ended | |||||||||||||
January 31, | |||||||||||||
2021 | 2020 | ||||||||||||
$'s | % of Net Sales | $'s | % of Net Sales | ||||||||||
Net income (GAAP) | $ | 28,574 | 2.6 | % | $ | 19,539 | 1.7 | % | |||||
Adjustments: | |||||||||||||
Store impairment charges (a) | 968 | 14,611 | |||||||||||
Goodwill impairment charge (b) | — | 13,911 | |||||||||||
Provision for income taxes on adjustments (c) | (250 | ) | (6,799 | ) | |||||||||
Impact of income tax valuation allowances (d) | — | 7,809 | |||||||||||
Adjusted net income (Non-GAAP) | $ | 29,292 | 2.7 | % | $ | 49,071 | 4.2 | % | |||||
Diluted EPS (GAAP) | $ | 0.29 | $ | 0.20 | |||||||||
Adjustments, net of tax | 0.01 | 0.30 | |||||||||||
Adjusted diluted EPS (Non-GAAP) | $ | 0.30 | $ | 0.50 | |||||||||
(a) Store impairment charges relate to three retail locations during the three months ended January 31, 2021 and eight retail locations during the three months ended January 31, 2020. The Company assessed the current and future performance of its retail locations and it was determined that these locations would not be able to generate sufficient cash flow over the expected remaining lease term to recover the carrying value of the property and equipment. | |||||||||||||
(b) The Company evaluated the fair value of the Menus & Venues division as compared to the carrying value and determined that the goodwill assigned to the reporting unit is impaired in full. | |||||||||||||
(c) The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments. | |||||||||||||
(d) During the three months ended January 31, 2020, the Company recorded income tax expense related to valuation allowances attributable to net losses of certain foreign operations. |
Contact: | Oona McCullough |
Director of Investor Relations | |
(215) 454-4806 |
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