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Urban Outfitters delivers record Q3 sales & earnings results

16
Nov '10
Urban Outfitters Inc, a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands announced earnings of $73 million and $198 million for the three and nine months ended October 31, 2010, respectively. Earnings per diluted share were $0.43 for the quarter and $1.16 for the nine months ended October 31, 2010.

Total Company net sales rose by 13% over the same quarter last year to $574 million. Comparable retail segment net sales, which include our direct-to-consumer channels, improved 6% for the quarter while comparable store net sales grew 1% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 5%, 29%, and 5%, respectively for the quarter. Direct-to-consumer comparable net sales soared 31% and wholesale segment net sales rose 13% for the quarter.

"We are proud to deliver record third quarter sales and earnings results," said Glen T. Senk, Chief Executive Officer. "In a dynamic environment, the consistency of our performance is a reflection of our team's discipline, creativity, and skill," finished Mr. Senk.

For the three months ended October 31, 2010, gross profit margin declined by 39 basis points versus the prior year's comparable period. This decrease was primarily due to higher shipping costs associated with an increased penetration of international direct-to-consumer business as well as the impact of pre-opening occupancy expense due to the timing of store openings. During the quarter merchandise margins were flat to the prior year comparable period. For the nine months ended October 31, 2010, gross profit margin improved by 176 basis points versus the prior year's comparable period. The increase for the nine month period was primarily due to improved merchandise margins and leveraging of store occupancy expense driven by positive comparable store sales.

As of October 31, 2010, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 8% at cost while total comparable store inventory increased by 1% at cost. Total inventories grew by $55 million or 23%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new retail stores.

For the three months ended October 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 27 basis points. This increase was primarily due to higher fulfillment costs related to the increased penetration of international direct-to-consumer sales, investments in systems and international infrastructure. For the nine months ended October 31, 2010, selling, general and administration expenses, expressed as a percentage of net sales, decreased by 21 basis points versus the prior comparable period. This decrease was primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the nine months ended October 31, 2010.


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