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Record breaking third quarter for Urban Outfitters
13
Nov '09
Urban Outfitters, Inc., a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Terrain and Urban Outfitters brands announced earnings of $62 million and $142 million for the three and nine months ended October 31, 2009, respectively. Earnings per diluted share were $0.36 for the quarter and $0.83 for the nine months ended October 31, 2009.

As stated in the Company's previous sales release on November 5, 2009, for the third quarter of fiscal 2010, net sales increased by 6% over the same quarter last year to $506 million. Comparable retail segment net sales, which include our Direct-to-consumer channels, increased 2%. Comparable store net sales at Anthropologie rose 3% while Free People and Urban Outfitters declined 13% and 5%, respectively. Comparable store net sales declined 2%. Direct-to-consumer net sales jumped 21% and Wholesale Segment net sales declined 10%.

"We are proud to announce a record breaking quarter and a solid 19% operating margin," said Glen T. Senk, Chief Executive Officer. "We continued to exhibit exceptional inventory and expense discipline while simultaneously making strategic investments in design, supply chain, technology, Direct-to-consumer initiatives and our European infrastructure. These results highlight our ability to deliver compelling merchandise and a unique shopping experience under difficult market conditions," finished Mr. Senk.

For the three months ended October 31, 2009, gross profit margin increased by 65 basis points, versus the prior year's comparable quarter. This increase was primarily due to significant improvements in initial merchandise margins, which were partially offset by increased merchandise markdowns to clear seasonal inventories. For the nine months ended October 31, 2009, gross profit margin decreased by 69 basis points, versus the prior year's comparable period. This decrease was primarily due to merchandise markdowns to clear seasonal inventories and a higher rate of store occupancy expense driven by the decrease in comparable store sales. This decrease was partially offset by improvements in initial merchandise margins.

As of October 31, 2009, inventories decreased by $18 million or 8%, on a year-over-year basis as comparable store inventory declines more than offset additions to inventories for new stores. Total comparable store inventories decreased by 15% at cost and 8% in units leaving the Company well positioned for the upcoming holiday season.

For the three and nine months ended October 31, 2009, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 63 and 79 basis points, respectively, versus the comparable periods last year. The increases were primarily due to the deleveraging of fixed store costs related to the decline in comparable store sales as well as the accrual of additional incentive-based bonus related to our expectation to meet targeted improvements in annual performance and earnings.

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