Impressive performance from Urban Outfitters' brands
Urban Outfitters, Inc., a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands announced record first quarter earnings of $53 million or net income of $0.31 per diluted share for the three months ended April 30, 2010.
As stated in the Company's previous sales release on May 6, 2010, total Company sales for the first quarter rose to $480 million, a 25% increase from the comparable quarter in the prior year. Comparable retail segment sales, which include our direct-to-consumer channel, rose 16% for the quarter while comparable store sales increased 11% for the quarter. Comparable retail segment sales at Anthropologie, Free People, Terrain and Urban Outfitters increased 22%, 25%, 22% and 9%, respectively for the quarter. Direct-to-consumer sales soared 42% and wholesale segment sales grew 4% for the quarter.
"We are delighted to begin the new fiscal year with a series of record-breaking results for the quarter," said Glen T. Senk, Chief Executive Officer. "I believe our ability to deliver this performance within the greater context of our long term goals of investing in store productivity, ecommerce penetration, international expansion and new brands is all the more impressive," finished Mr. Senk.
For the three months ended April 30, 2010, gross profit margins improved by 459 basis points versus the comparable period last year. This increase is primarily due to improvements in initial merchandise margins, a lower rate of merchandise markdowns and leveraging of store occupancy expenses driven by positive comparable store sales during the current quarter.
As of April 30, 2010, inventories increased by $32.1 million, or 17% on a year-over-year basis. The increase is due to the addition of inventory to stock new retail stores. For the quarter ended April 30, 2010, total comparable retail segment inventories at cost, which include our Direct-to-consumer channel, increased by 3%.
During the first quarter, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 55 basis points versus the comparable period last year. This decrease was primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable store net sales during the quarter. The favorable leveraging of store related costs more than offset an increase in incentive-based compensation due to improved company performance.
Earnings per share increased by 72% to $0.31 per diluted share for the three months ended April 30, 2010. The Company's annual effective tax rate was 35.9% versus 36.1% for the prior comparable period. The company expects further improvement in the annual effective tax rate for the remainder of the current fiscal year.
During the three months ended April 30, 2010, the Company opened a total of nine new stores including: two new Urban Outfitters stores, five new Anthropologie stores and two new Free People stores. As of February 1st, the Company converted one Free People store to a new Free People wholesale showroom. The Company expects to open approximately 45 new stores during the fiscal year.
Urban Outfitters Inc