Urban Outfitters produces record second quarter sales

21 Aug '12

3 min read

Urban Outfitters Inc announced net income of $61 million and $95 million for the three and six months ended July 31, 2012, respectively. Earnings per diluted share were $0.42 and $0.65 for the three and six months ended July 31, 2012, respectively.

Total Company net sales rose by 11% over the same quarter last year to $676 million. Comparable retail segment net sales, which include our comparable direct-to-consumer channel, increased 4% for the quarter, while comparable store net sales decreased 1%. Comparable retail segment net sales at Free People and Urban Outfitters increased 12%, and 6%, respectively, while comparable retail segment net sales at Anthropologie were flat for the quarter. Direct-to-Consumer net sales increased 22% and wholesale segment net sales rose 17% for the quarter.

"I am excited and gratified that our team produced record second quarter sales and profits while reducing 'comp' store inventories," said Chief Executive Officer, Richard A. Hayne. "As we head into the second half of the year we plan for gradual year over year improvement in our business along with further tightening of our store inventories," finished Mr. Hayne.

For the three months ended July 31, 2012, the gross profit rate declined 30 basis points versus the prior year's comparable period. The decrease in gross profit rate was primarily due to the deleveraging of initial merchandise costs and store occupancy costs both of which were partially offset by a reduction in merchandise markdowns. The deleverage of initial merchandise cost is due in part to the mix of our assortment as well as an increase in web exclusive product sold through our direct-to-consumer channel. The deleverage of store occupancy costs was related to negative comparable store net sales as well as an increased number of store openings versus the prior year comparable quarter. For the six months ended July 31, 2012, the gross profit rate declined by 76 basis points versus the prior year's comparable period. The decline in the rate was primarily due to the deleverage of store occupancy costs related to the negative comparable store net sales as well as an increased number of store openings versus the prior comparable quarter.

As of July 31, 2012, total inventories increased by $20 million or 7%, on a year-over-year basis. The growth in total inventories is primarily due to the acquisition of inventory to stock new and non-comparable stores and inventory related to the growth in our direct-to-consumer channel, partially offset by a 5% decrease in comparable store inventories.

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