Wholesale segment net sales up at Urban Outfitters

13 Mar '12

4 min read

Urban Outfitters, Inc., a leading lifestyle specialty retail company operating under the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands announced net income of $39.3 million and $185.3 million for the fourth quarter and the year ended January 31, 2012, respectively. Earnings per diluted share were $0.27 for the quarter and $1.19 for the year.

For the fourth quarter of fiscal 2012, total company net sales increased 9% over the same quarter last year to $731 million. Comparable retail segment net sales, which include the Direct-to-Consumer channels, increased 2% for the quarter, while comparable store net sales decreased 1% for the quarter. Comparable retail segment net sales at Urban Outfitters, Free People and Anthropologie increased 3%, 9% and 1%, respectively. Direct-to-Consumer comparable net sales increased 14% and wholesale segment net sales rose 3% for the quarter.

For the year ended January 31, 2012, total Company net sales increased to $2.5 billion, or 9%, over the prior year. Comparable retail segment net sales were flat while comparable store net sales decreased 4%. Direct-to-Consumer comparable net sales rose 14% for the year and wholesale segment net sales increased 11%.

"I am pleased that we managed our inventories to appropriate levels at year end even though our margins during the quarter suffered as a result," said Chief Executive Officer, Richard Hayne. "Our rate of full-priced selling has improved from fourth quarter levels as we seek to re-establish our historic full-price selling penetration."

For the fourth quarter ended January 31, 2012, gross profit margin percentage declined by 955 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 net sales.

For the year ended January 31, 2012, gross profit margin declined by 640 basis points versus the prior year. This decline was principally due to increased merchandise markdowns to clear slow-moving inventory, primarily associated with women's apparel inventory at Anthropologie and Urban Outfitters, as well as deleveraging of store occupancy expense as a result of negative comparable store sales.

As of January 31, 2012, total inventories grew by $21 million or 9%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new stores, our Direct-to-Consumer channel growth and the launch of our BHLDN brand. Total comparable retail segment inventories at cost (which includes our Direct-to-Consumer channel) increased by 2% while total comparable store inventory at cost decreased by 3%.

For the quarter ended January 31, 2012, total selling, general and administrative expenses, expressed as a percentage of net sales, decreased to 21.3%, or 37 basis points, versus the prior year comparable period. This decrease was primarily due to a one-time, non-recurring $6 million net benefit primarily related to equity compensation expense reversals.

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