Urban Outfitters Reports Fourth Quarter and Annual Results

Mar 15, 2001, 00:00 ET from Urban Outfitters, Inc.

    PHILADELPHIA, March 15 /PRNewswire/ -- Richard A. Hayne, Chairman of the
 Board and President of Urban Outfitters, Inc. (Nasdaq:   URBN), today announced
 sales and earnings for the fourth quarter and the fiscal year ended
 January 31, 2001 ("FY 2001").  The results incorporate the newly adopted FASB
 requirements for accounting for shipping and handling fees and expenses for
 all periods presented.
     Net sales for the quarter were up 13% to $85.6 million from $75.4 million
 for the comparable quarter last year.  Net sales growth was achieved
 principally from the contributions of noncomparable and new stores as
 comparable store sales for the quarter decreased 3%.  In addition, the
 Company's direct response sales increased by 28% over the comparable quarter
 last year as a result of a 49% increase in circulation of its Anthropologie
 catalog, additional Anthropologie e-commerce sales and sales generated by the
 Urban web site which first launched in May 2000.  Wholesale sales increased
 28% for the same period due to the timing of Fall and Holiday customer
 shipments.  Net sales for the twelve months ended January 31, 2001 were up 6%
 to $295.3 million versus $278.1 million during the same twelve months in the
 prior year.  Comparable store sales for the twelve months of FY 2001 decreased
 7% in contrast with last year's 10% comparable store sales gain for the same
 period.  This comparable store sales decrease was more than offset by
 increases in sales from noncomparable and new stores and increases in direct
 response sales principally due to a 44% increase in circulation of the
 Company's Anthropologie catalog.
     Net income for the quarter was $3.4 million or $0.20 per diluted share
 versus $5.5 million or $0.31 per diluted share for the comparable quarter last
 year.  Net income for the twelve months ended January 31, 2001 was
 $10.5 million or $0.61 per diluted share versus $18.7 million or $1.05 per
 diluted share for the comparable period last year.
     "We made it a priority in the fourth quarter to bring our inventories in
 line," said Mr. Hayne.  "In doing so, the resulting clearance markdowns we
 experienced reduced fourth quarter margins.  Our current store inventory mix
 of Spring goods is on plan."
                                                    Fourth Qtr.   Twelve Months
                                                      FY 2001        FY 2001
                                                          (In thousands)
     Retail store sales:
       FY2000 comparable store base                  $ 60,636       $206,839
       Comp store decreases                            (1,723)       (15,267)
       Sales of noncomparable and new stores           14,666         61,486
                                                     $ 73,579       $253,058
     Direct response (catalog and e-commerce)           7,631         21,666
       Total retail segment                            81,210        274,724
     Wholesale sales                                    4,354         20,609
       Total net sales                               $ 85,564       $295,333
     During the fiscal year, the Company opened five new Urban Retail stores
 and six new Anthropologie stores.  In addition, thus far during FY 2002, the
 Company has opened two new Urban Retail stores located in Providence, RI and
 Dallas, TX.  Management plans to open six to eight additional new stores
 during FY 2002.
     For the quarter and twelve months, the Company's gross profit margin
 percentages decreased versus the comparable periods last year.  Retail
 clearance markdowns to move seasonal merchandise reduced gross margins,
 expressed as percentages of sales, by 2.7% for the quarter and by 2.4% for the
 year.  The impact of occupancy costs as a result of the negative comparable
 store sales results and increased occupancy costs of noncomparable and new
 stores accounted for the remainder of the margin decline.  Total inventories
 at January 31, 2001 increased by 29% versus the same date last year,
 principally attributable to new store requirements.  Comparable store
 inventories were flat versus the prior year.
     Selling, general and administrative expenses expressed as percentages of
 sales for the quarter and twelve months increased versus the comparable
 periods in the prior year.  Noncomparable and new stores, with lower average
 sales volumes, have higher proportionate expenses than comparable stores and
 accounted for the majority of the increase in dollars.  For the quarter, the
 Company's cost control efforts in its retail store operations offset the
 deleveraging impact of the comparable store sales decreases.  For the fiscal
 year, these cost control efforts were able to offset only a portion of the
 impact of the comparable store sales decreases and the effect of noncomparable
 and new stores.  Anthropologie direct response operations experienced an
 increase in operating expense percentages for the quarter and the
 twelve months primarily due to the deleveraging of catalog production costs
 caused by a reduced response rate to increased catalog circulation.
 Additionally, start-up costs were incurred for the design, production and
 administration of the Urban e-commerce web site (www.urbn.com) which launched
 in May 2000.
     During the fourth quarter, the Company was required to adopt the Financial
 Accounting Standards Board (FASB) Emerging Issues Task Force Issue "Accounting
 for Shipping and Handling Fees and Costs" (EITF 00-10).  Accordingly, shipping
 and handling revenue, which had previously been offset against such costs in
 cost of sales for direct response (catalog and e-commerce) transactions, or
 offset against store level costs within selling, general and administrative
 expenses, are now reclassified into net sales and all such related costs are
 included in cost of sales.  This reclassification had no effect on income from
 operations or net income, but it did require a restatement of net sales, cost
 of sales, gross profit and selling, general and administrative expenses.  A
 schedule providing the restatement of all comparative prior period financial
 statements for the last three fiscal years will be issued following this
     The Company planned its comparable store sales in the first quarter of FY
 2002 in the negative low single digit range and Wholesale sales to be below
 last year's levels.  Earnings for the first quarter were planned to be less
 than last year's $0.17 per diluted share.  Results thus far are slightly below
 plan.  For the full fiscal year, the Company has planned for low single digit
 comparable store sales gains.  If achieved, annual earnings per share would
 increase substantially over FY 2001 levels.  Management currently believes
 these annual results are achievable.
     Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler
 which offers a variety of lifestyle merchandise to highly defined customer
 niches through 44 Urban Retail stores in the United States, Canada, the
 United Kingdom, and Ireland; an Urban web site, www.urbn.com ;
 26 Anthropologie stores in the United States; an Anthropologie catalog and web
 site, www.anthropologie.com ; and a wholesale subsidiary which sells to the
 Company's retail operations, and to more than 1,300 specialty stores, catalogs
 and department stores.
     A conference call will be held today to discuss fourth quarter and annual
 results and will be web cast on www.vcall.com/NASApp/VCall/EventPage?ID=68886
 at 11:00 a.m. EST today.
     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 news release may constitute forward-looking statements.  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:  industry competition factors, unavailability of
 suitable retail space for expansion, difficulty in predicting and responding
 to fashion trend shifts, seasonal fluctuations in gross sales, the departure
 of one or more key senior managers and other risks identified in filings with
 the Securities and Exchange Commission.  The Company disclaims any intent or
 obligation to update forward-looking statements.
                             URBAN OUTFITTERS, INC.
                  Condensed Consolidated Statements of Income
                (in thousands, except share and per share data)
                               Three Months Ended        Twelve Months Ended
                                   January 31,                January 31,
                               2001          2000         2001          2000
     Net sales              $85,564       $75,419     $295,333     $ 278,113
     Cost of sales, including
      certain buying,
      distribution and
      occupancy costs        57,880        47,326      200,002       173,459
           Gross profit      27,684        28,093       95,331       104,654
     Selling, general and
      expenses               21,975        18,695       77,453        67,089
           Income from
            operations        5,709         9,398       17,878        37,565
     Other income (expenses),
      net                        63           141          (91)       (2,716)
           Income before income
            taxes             5,772         9,539       17,787        34,849
     Income tax expense       2,365         4,006        7,292        16,169
          Net income         $3,407        $5,533      $10,495       $18,680
     Net income per common share:
           Basic              $0.20         $0.31        $0.61         $1.07
           Diluted            $0.20         $0.31        $0.61         $1.05
     Weighted average common
      shares outstanding:
           Basic         17,253,486    17,578,664   17,257,186    17,531,971
           Diluted       17,256,715    17,889,378   17,274,830    17,844,356
     Net sales               100.0%        100.0%       100.0%        100.0%
     Cost of sales, including
      certain buying,
      distribution and
      occupancy costs         67.6%         62.7%        67.7%         62.4%
           Gross profit       32.4%         37.3%        32.3%         37.6%
     Selling, general and
      expenses                25.7%         24.8%        26.2%         24.1%
             Income from
              operations       6.7%         12.5%         6.1%         13.5%
     Other income (expenses),
      net                        --          0.1%           --         (1.0%)
           Income before
            income taxes        6.7%        12.6%          6.1%        12.5%
     Income tax expense         2.7%         5.3%          2.5%         5.8%
           Net income           4.0%         7.3%          3.6%         6.7%
                             URBAN OUTFITTERS, INC.
                     Condensed Consolidated Balance Sheets
                (in thousands, except share and per share data)
                                                              January 31,
                                                          2001           2000
     Current assets:
      Cash and cash equivalents                        $16,286        $12,727
      Marketable securities                                314         11,225
      Accounts receivable, net of allowance for
       doubtful accounts of $500 and $518, respectively  3,444          4,825
      Inventories                                       34,786         26,868
      Prepaid expenses and other current assets         10,143         10,433
     Total current assets                               64,973         66,078
     Property and equipment, net                        97,901         72,819
     Marketable securities                                  --          8,646
     Other assets                                        5,842          5,958
                                                      $168,716       $153,501
                 Liabilities and Shareholders' Equity
     Current liabilities:
       Accounts payable                                $19,387        $16,760
       Accrued expenses and other current liabilities   13,931         11,312
     Total current liabilities                          33,318         28,072
       Deferred rent                                     5,786          4,513
     Total liabilities                                  39,104         32,585
     Shareholders' equity:
      Preferred shares; $.0001 par value, 10,000,000
       authorized, none issued                              --             --
      Common shares; $.0001 par value, 50,000,000
       shares authorized, 17,253,486 and 17,358,186
       issued and outstanding, respectively                  2              2
      Additional paid-in capital                        16,268         17,680
      Retained earnings                                114,109        103,614
      Accumulated other comprehensive loss                (767)          (380)
     Total shareholders' equity                        129,612        120,916
                                                      $168,716       $153,501
                             URBAN OUTFITTERS, INC.
                Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
                                                          Twelve Months Ended
                                                              January 31,
                                                          2001           2000
     Cash flows from operating activities:
      Net income                                       $10,495        $18,680
      Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization                   11,997          8,667
        Provision for losses of MXG Media, Inc.             --          4,354
        Changes in assets and liabilities:
         Decrease (increase) in receivables              1,381             (1)
         Increase in inventories                        (7,918)        (4,987)
         Decrease (increase) in prepaid expenses
          and other assets                                 406         (6,968)
         Increase in payables, accrued expenses
          and other liabilities                          6,519          4,516
     Net cash provided by operating activities          22,880         24,261
     Cash flows from investing activities:
      Capital expenditures                             (36,877)       (38,149)
      Purchases of marketable securities                  (600)       (12,159)
      Sales and maturities of marketable securities     19,930         17,267
      Advances to MXG Media, Inc.                           --         (8,150)
      Repayment of advances by MXG Media, Inc.              --          7,550
     Net cash used in investing activities             (17,547)       (33,641)
     Cash flows from financing activities:
      Exercise of stock options                             --          5,570
      Purchases and retirement of common stock          (1,412)       ( 8,715)
     Net cash used in financing activities              (1,412)        (3,145)
     Effect of exchange rate changes on cash and
      cash equivalents                                    (362)            87
     Increase (decrease) in cash and cash equivalents    3,559        (12,438)
     Cash and cash equivalents at beginning of period   12,727         25,165
     Cash and cash equivalents at end of period       $ 16,286       $ 12,727

SOURCE Urban Outfitters, Inc.