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Urban Outfitters gross profit declines for Q2
17
Aug '11
Urban Outfitters Inc, a leading lifestyle specialty retail company operating under the Anthropologie, Free People, BHLDN, Terrain and Urban Outfitters brands, announced net income of $57 million and $95 million for the three and six months ended July 31, 2011, respectively. Earnings per diluted share were $0.35 for the quarter and $0.59 for the six months ended July 31, 2011.

Total Company net sales rose by 10% over the same quarter last year to $609 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 1% for the quarter while comparable store net sales decreased 2% for the quarter. Comparable retail segment net sales at Free People and Urban Outfitters increased 18%, and 1%, respectively while comparable retail segment net sales at Anthropologie were flat for the quarter. Direct-to-consumer comparable net sales increased 15% and wholesale segment net sales rose 7% for the quarter.

"We remain confident in our strategies and believe we made great executional progress during the quarter," said Chief Executive Officer, Glen T. Senk. "We anticipate gradual improvements in our comparable sales over the balance of the fiscal year and into Spring 2012," Mr. Senk finished.

For the three months ended July 31, 2011, gross profit margin percentage declined by 459 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns to clear slow moving women's apparel inventory at both Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store sales. For the six months ended July 31, 2011, gross profit margin percentage declined by 474 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns noted above.

As of July 31, 2011, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 12% at cost while total comparable store inventory increased by 9% at cost. Total inventories grew by $60 million or 25%, on a year-over-year basis. Approximately half of the dollar increase was due to non comparable receipts versus the prior year, specifically; early receipts in the final week of July and higher in-transit, fabric and BHLDN inventories. The balance of the increase is driven by the acquisition of inventory to stock new retail stores and to support Direct-to-Consumer growth.

For the three months ended July 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 32 basis points versus the prior year comparable period due primarily to ecommerce and related catalog investments. Investments in both technology and in our distribution and fulfillment facilities in Europe also contributed to the increase. For the six months ended July 31, 2011, selling, general and administrative expenses, expressed as a percentage of netsales, increased by 62 basis points versus the prior year comparable period primarily due to ecommerce and related catalog investments.


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