Urban Outfitters Inc, a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Terrain and Urban Outfitters brands announced earnings of $57 million and $100 million for the three and six months ended July 31, 2008, respectively. Earnings per diluted share were $0.33 for the three and $0.58 for the six months.
Key elements of the results are as follows:
• net sales jumped 30%;
• comparable store net sales rose 13%;
- 7%, 10% and 19% at Anthropologie, Free People and Urban Outfitters, stores, respectively;
• Direct-to-consumer net sales rose 42% and Free People Wholesale net sales increased 14%;
• gross profit improved 43%;
• operating margin leaped 75%; and
• earnings surged 79%.
"All of our brands and channels produced exceptional results during the period," said Glen T. Senk, Chief Executive Officer. "The Company executed superbly throughout the quarter, and we believe we are appropriately positioned for the second half of the year," finished Mr. Senk.
For the three and six months ended July 31, 2008, gross profit margins increased by 373 and 408 basis points, respectively, versus the prior year's comparable periods. Improvements in initial merchandise cost, reductions in markdowns and leverage of store occupancy costs helped achieve this growth for both periods.
As of July 31, 2008, inventories grew by $25.6 million or 14%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable store inventories increased by 3%.
For the three and six months ended July 31, 2008, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 95 and 55 basis points, respectively, versus the comparable periods last year. This rate improvement was led by the leverage of direct store related costs and was driven by the increase in comparable store net sales.
The Company's second quarter tax rate improved to 33.2% from 35.7% in the first quarter of this fiscal year. Management estimates an annual effective tax rate of 35% for the full fiscal year. The prior year's unusually low annual effective tax rate was primarily impacted by the receipt of one-time federal tax incentives for work performed on the development of our new home offices.
During the six months ended July 31, 2008, the Company has opened a total of 24 new stores including: 10 Urban Outfitters stores, 7 Anthropologie stores, 6 Free People stores and 1 Terrain garden center. The Company expects to open 45 new stores during the full fiscal year.