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Urban Outfitters reports record Q3 sales

18
Nov '11
Urban Outfitters Inc., a leading lifestyle specialty retail company operating under the Anthropologie, Free People, BHLDN, Terrain and Urban Outfitters brands announced net income of $50.7 million and $146.0 million for the three and nine months ended October 31, 2011, respectively. Earnings per diluted share were $0.33 for the quarter and $0.91 for the nine months ended October 31, 2011.

For the third quarter of fiscal 2012, total company net sales increased 6% over the same quarter last year to $610 million. Comparable retail segment net sales, which include the direct-to-consumer channels, decreased 3% for the quarter, while comparable store net sales decreased 7% for the quarter.

Comparable retail segment net sales at Free People increased 14%, were flat at Urban Outfitters, and decreased 7% at Anthropologie. Direct-to-consumer comparable net sales increased 15% and wholesale segment net sales rose 13% for the quarter.

"We have made progress in many categories during the quarter," said Chief Executive Officer, Glen T. Senk. "We anticipate additional improvements through continued product focus, aggressive inventory management and the organization changes we announced last week."

For the three months ended October 31, 2011, gross profit margin percentage declined by 571 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns to clear slow moving women's apparel inventory at both Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store sales.

For the nine months ended October 31, 2011, gross profit margin percentage declined by 507 basis points versus the prior year's comparable period. This decline was primarily due to increased merchandise markdowns noted above.

As of October 31, 2011, total inventories grew by $78 million or 27%, on a year-over-year basis. Total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 18% at cost while total comparable store inventory increased by 13% at cost. The balance of the increase was driven by the acquisition of inventory to stock new retail stores.

For the three months ended October 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 53 basis points versus the prior year comparable period due primarily to the deleverage of direct selling and supervisory costs driven by negative comparable sales.

For the nine months ended October 31, 2011, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 60 basis points versus the prior year comparable period primarily due to ecommerce and related catalog investments, as well as, the deleverage of direct selling and supervisory costs driven by negative comparable store sales.

On August 25, 2011, our Board of Directors approved a share repurchase program that authorized the repurchase of 10.0 million additional common shares subject to prevailing market conditions. During the three months ended October 31, 2011, the Company repurchased and retired 13.3 million common shares for approximately $322 million.


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