PHILADELPHIA, March 06, 2018 (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 and Urban Outfitters brands and the Food and Beverage division, today announced net income of $1 million and $108 million for the three months and year ended January 31, 2018, respectively. Earnings per diluted share were $0.01 and $0.96 for the three months and year ended January 31, 2018, respectively. For the three months ended January 31, 2018, adjusted net income was $75 million and adjusted earnings per diluted share were $0.69. See “Reconciliation of Non-GAAP Financial Measures” included at the end of this release.

Total Company net sales for the fourth quarter of fiscal 2018 increased 5.7% over the same period last year to a record $1.09 billion. Comparable Retail segment net sales increased 4%, driven by strong, double-digit growth in the digital channel partially offset by negative retail store sales. By brand, comparable Retail segment net sales increased 8% at Free People, 5% at the Anthropologie Group and 2% at Urban Outfitters. Wholesale segment net sales increased 6.3%.

For the year ended January 31, 2018, total Company net sales increased to $3.6 billion or 2.0% over the prior year. Comparable Retail segment net sales were flat. Wholesale segment net sales increased 9.5%.

“I am pleased to announce that URBN produced record Q4 sales primarily driven by positive ‘comps’ at all three brands,” said Richard A. Hayne, Chief Executive Officer. “We are particularly pleased with how well the brands transitioned in January. Positive customer reaction to the new spring fashion offerings at all our brands has been strong and makes us optimistic regarding the first half of the year,” finished Mr. Hayne.

Net sales by brand and segment for the three and twelve-month periods were as follows:

For the three months ended January 31, 2018, the gross profit rate decreased by 176 basis points and the adjusted gross profit rate decreased 113 basis points versus the prior year’s comparable period. The decline in the adjusted gross profit rate was primarily driven by deleverage in delivery and logistics expenses and initial merchandise mark-ups. The deleverage in delivery and logistics expenses was primarily due to increased penetration of the digital channel, increased expedited shipments around holiday in order to hit guaranteed delivery dates, and penetration of international and furniture shipments. These decreases were partially offset by lower merchandise markdowns as a result of improved sales performance and well controlled inventory. For the year ended January 31, 2018, the gross profit rate decreased by 259 basis points versus the prior year’s comparable period. The decline in gross profit rate was driven by deleverage in delivery and logistics expenses, initial merchandise mark-ups and merchandise markdowns. The increase in delivery and logistics expenses was primarily due to the increased penetration of the digital channel and penetration of international and furniture shipments.

As of January 31, 2018, total inventory increased by $12.8 million, or 3.8%, on a year-over-year basis. The increase in inventory relates to a 3% increase in comparable Retail segment inventory at cost.

Selling, general and administrative expenses increased by $9.1 million, or 3.8%, and $9.5 million, or 1.1%, during the three months and year ended January 31, 2018, respectively, compared to the prior year’s comparable periods. Adjusted selling, general and administrative expenses, increased by $7.0 million, or 2.9%, during the three months ended January 31, 2018, and expressed as a percentage of net sales, leveraged 62 basis points when compared to the prior year comparable period.  The leverage for the three months and year ended January 31, 2018, was primarily due to the net savings associated with our store reorganization project, partially offset by increased investments in digital marketing. The increase in expenses for both periods primarily related to increased investments in digital marketing.

The Company’s effective tax rate for the fourth quarter of fiscal 2018 was 98.6% compared to 34.9% in the prior year period. The effective tax rate for the year ended January 31, 2018, was 58.6% compared to 35.5% in the prior year comparable period. The increase in the effective tax rate for the three months and year ended January 31, 2018, was primarily due to a one-time charge on our foreign earnings and profits as well as a write down of certain net deferred tax assets in relation to the comprehensive United States tax legislation commonly referred to as the Tax Cuts and Jobs Act of approximately $64.7 million.

Net income for the three months and year ended January 31, 2018, was $1 million and $108 million, respectively, and earnings per diluted share was $0.01 and $0.96, respectively. For the three months ended January 31, 2018, adjusted net income was $75 million and adjusted earnings per diluted share was $0.69.

During the year ended January 31, 2018, the Company repurchased and subsequently retired 8.1 million common shares for approximately $157 million. These repurchases completed the Board’s February 23, 2015, repurchase authorization, leaving 17.9 million common shares remaining under the Board’s August 22, 2017, authorization to repurchase 20 million common shares.

During the year ended January 31, 2018, the Company opened a total of 18 new locations including: 8 Free People stores, 5 Urban Outfitters stores, 4 Anthropologie Group stores and 1 Food and Beverage restaurant; and closed 11 locations including: 3 Free People stores, 2 Urban Outfitters stores, 3 Anthropologie Group stores and 3 Food and Beverage restaurants.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 245 Urban Outfitters stores in the United States, Canada, and Europe and websites; 226 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 132 Free People stores in the United States and Canada, catalogs and websites and 10 Food and Beverage restaurants, as of January 31, 2018. Free People and Anthropologie Group wholesale sell their products through approximately 2,100 department and specialty stores worldwide, third-party websites and the Company’s own retail stores.

A conference call will be held today to discuss fourth quarter results and will be webcast at 5:00 pm. ET at: https://edge.media-server.com/m6/p/fy4y5dd3 

This news release is being made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Certain matters contained in this release may constitute forward-looking statements. When used in this release, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, any effects of war, terrorism, and civil unrest, natural disasters or severe weather conditions, increases in labor costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, the departure of one or more key senior executives, import risks, changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes or increases in duties or quotas, the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, response to new store concepts, our ability to integrate acquisitions, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in the Company’s filings with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.

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URBAN OUTFITTERS, INC.
Condensed Consolidated Statements of Income
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