PHILADELPHIA, May 19, 2020 (GLOBE NEWSWIRE) Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of Anthropologie, BHLDN, Free People, Terrain, Urban Outfitters and Nuuly brands and the Menus & Venues division, today announced a preliminary net loss of $138 million and preliminary loss per diluted share of $1.41 for the three months ended April 30, 2020.

The impact of the coronavirus pandemic (COVID-19) on the Company’s business has resulted in the need to perform impairment assessments of the Company’s long-lived assets. These preliminary financial results include a provisional impairment expense and the corresponding tax effects, all of which are currently being evaluated. While these items are non-cash in nature, a potential change to the provisional impairment expense could materially impact the reported results.

Total Company net sales for the three months ended April 30, 2020, decreased 31.9% over the same period last year to $588 million. Comparable Retail segment net sales decreased 28%, driven by negative retail store sales due to mandated store closures, partially offset by low double-digit growth in the digital channel. By brand, comparable Retail segment net sales decreased 19% at Free People, 24% at Urban Outfitters and 33% at the Anthropologie Group. Total Retail segment net sales decreased 28%. Wholesale segment net sales decreased 74%.

“I am incredibly proud of our teams for their hard work, dedication and resilience over the last two months.  The actions we’ve taken during the quarter to strengthen our balance sheet and help preserve liquidity provides us with financial flexibility during this difficult period,” said Richard A. Hayne, Chief Executive Officer. “I’m confident our proven ability to execute our multi-channel, multi-brand, and multi-category strategy will ensure our future success,” finished Mr. Hayne.

For the three months ended April 30, 2020, the preliminary gross profit rate decreased to 2.0% from 31.1% in the prior year’s comparable period. Preliminary gross profit dollars decreased 95.6% to $11.8 million from $269.1 million. The decrease in preliminary gross profit rate was due to significant store occupancy deleverage, a meaningful increase in inventory obsolescence reserves, an increase in delivery expense and an increase in merchandise markdowns.  While stores were closed for half of the first quarter of fiscal 2021 due to the coronavirus pandemic, store occupancy expense significantly deleveraged as rent and other occupancy costs are unadjusted until agreements are reached with landlords. During the first quarter of fiscal 2021, the Company recorded a $14.5 million provisional store impairment charge and a $43.3 million year-over-year increase in inventory obsolescence reserves due to an increase in aged inventory and an increase in the promotional environment in both the Retail and Wholesale segments. Delivery expense increased primarily due to the increase in penetration of the digital channel, lower average order value and an increase in split shipments.

As of April 30, 2020, total inventory decreased by $72.7 million, or 17.8%, on a year-over-year basis. The decrease in inventory was due to an 18% decrease in Retail segment inventory and a 16% decrease in Wholesale segment inventory.

For the three months ended April 30, 2020, selling, general and administrative expenses decreased by $18.5 million, or 8.1%, compared to the prior year’s comparable period and expressed as a percentage of net sales, increased to 35.8% from 26.5% in the prior year’s comparable period. The deleverage in selling, general and administrative expenses for the three months ended April 30, 2020, was primarily related to deleverage in store and field management expense. The Company made the decision to continue to employ and pay a large portion of regional and store management teams despite store closures and reduced sales during the coronavirus pandemic. Additionally, marketing expenses increased as a percentage of net sales primarily due to the increase in digital channel penetration. Lastly, the Company recorded a significant increase in allowance for doubtful accounts reserves for wholesale customer accounts receivables as a result of the significant disruption and uncertainty currently in the wholesale macro environment.  The decrease in selling, general and administrative expenses was primarily due to the cost savings measures the Company put in place after mandated store closures as a result of the coronavirus pandemic. 

The Company’s preliminary effective tax rate for the three months ended April 30, 2020, was a benefit of 30.3% compared to an expense of 23.7% in the prior year period.

Preliminary net loss for the three months ended April 30, 2020, was $138 million and preliminary loss per diluted share was $1.41.

On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. During the three months ended April 30, 2020, the Company repurchased and subsequently retired 0.5 million common shares for approximately $7 million under this program. These shares were repurchased prior to the known spread of the coronavirus pandemic in the United States which forced the Company to close its stores for an extended period of time. During the year ended January 31, 2020, the Company repurchased and subsequently retired 8.1 million common shares for approximately $217 million under this program. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. As of April 30, 2020, 25.9 million common shares were remaining under the programs.

During the three months ended April 30, 2020, the Company opened a total of four new retail locations including: two Anthropologie Group stores and two Urban Outfitters stores; and closed one Urban Outfitters store. During the three months ended April 30, 2020, no franchisee-owned stores were opened or closed.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 249 Urban Outfitters stores in the United States, Canada and Europe and websites; 233 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 144 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 Menus & Venues restaurants, 5 Urban Outfitters franchisee-owned stores, 1 Anthropologie Group franchisee-owned store and 1 Free People franchisee-owned store, as of April 30, 2020. Free People, Anthropologie Group and Urban Outfitters wholesale sell their products through approximately 2,300 department and specialty stores worldwide, digital businesses and the Company’s Retail segment.