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All brands deliver exceptional results, Urban Outfitters
17
Aug '10
Urban Outfitters, Inc., a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands announced earnings of $72 million and $125 million for the three and six months ended July 31, 2010, respectively. Earnings per diluted share were $0.42 for the quarter and $0.72 for the six months ended July 31, 2010.

Total Company net sales rose by 20% over the same quarter last year to $552 million. Comparable retail segment net sales, which include our direct-to-consumer channels, jumped 11% for the quarter while comparable store net sales increased 7% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 13%, 24%, and 9%, respectively for the quarter. Direct-to-consumer net sales soared 36% and wholesale segment net sales rose 16% for the quarter.

"We are delighted to announce record second quarter sales and earnings, with every brand, channel, region and shared service group delivering exceptional results," said Glen T. Senk, Chief Executive Officer. "Given the context of an uncertain economic environment, the Company continues to focus on superior creative execution combined with disciplined inventory and expense management," finished Mr. Senk.

For the three and six months ended July 31, 2010, gross profit margins improved by 173 and 303 basis points, respectively, versus the prior year's comparable periods. The increase in the quarter was primarily due to a lower rate of markdowns to clear seasonal inventories, leveraging of store occupancy expense driven by positive comparable store sales and improvements in initial merchandise margins. The improvements for the six months ended July 31, 2010 were primarily due to improved initial merchandise margins, leveraging of store occupancy expenses and a lower rate of merchandise markdowns.

As of July 31, 2010, inventories grew by $26 million or 12%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 3% at cost.

For the three and six months ended July 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 52 basis points for both periods, versus the comparable periods last year. These decreases were primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the quarter and year to date.

During the three months ended July 31, 2010, the Company's quarterly tax rate decreased to 33.3% from 38.2% in the prior year's comparable quarter. This decrease was due to the favorable impact of foreign operations income as well as a one-time federal rehabilitation credit earned related to our newest building at the company's headquarters at the Navy Yard in Philadelphia, PA. The Company expects the annual effective tax rate to be approximately 35% for the full year.

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