Urban Outfitters Reports Record Q4 Net Income

Urban Outfitters, Inc. (URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands, today announced record net income of $89 million and $282 million for the three months and year ended Jan. 31, 2014, respectively. 

Earnings per diluted share were $0.59 and $1.89 for the three months and year ended Jan. 31, 2014, respectively.

Total company net sales for the fourth quarter of fiscal 2014 increased 6 percent over the same quarter last year to a record $906 million. Comparable Retail segment net sales, which include our comparable direct-to-consumer channel, increased 1 percent.

Comparable Retail segment net sales increased 20 percent at Free People and 10 percent at Anthropologie and decreased 9 percent at Urban Outfitters. Wholesale segment net sales increased 24 percent.

For the year ended January 31, 2014, total company net sales increased 10 percent over the prior year to a record $3.1 billion. Comparable Retail segment net sales increased 6 percent. Wholesale segment net sales increased 20 percent.

"I am pleased to announce that URBN produced record earnings for the fourth quarter and year ending January 31, 2014," said Richard A. Hayne, Chief Executive Officer.  "Looking forward, customer reaction to the new spring fashion offerings at our Anthropologie and Free People brands have been strong, but given the continued challenges facing the Urban Outfitters brand, we remain very cautious about URBN`s first quarter performance," finished Hayne.

Net sales by brand and segment for the three and twelve month periods were as follows:


For the three months ended January 31, 2014, the gross profit rate improved by 4 basis points versus the prior year`s comparable period. The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate.  This improvement was mostly offset by increased markdowns at the Urban Outfitters brand. 

Store occupancy also deleveraged during the quarter due to negative store comparable net sales and pre-opening occupancy expense related to three large New York City Urban Outfitters brand stores scheduled to open in the first half of fiscal 2015. For the year ended January 31, 2014, the gross profit rate improved by 72 basis points versus the prior year`s comparable period. 

The improvement in gross profit rate was primarily due to improved merchandise margins primarily from significant improvement in the Anthropologie brand markdown rate.  This improvement was partially offset by increased markdowns at the Urban Outfitters brand. The increased penetration of our direct-to-consumer channel continued to drive store occupancy leverage and delivery expense deleverage.

As of January 31, 2014, total inventories increased by $29 million, or 10 percent, on a year-over-year basis. The growth in total inventories is primarily related to the acquisition of inventory to stock new and non-comparable stores. Comparable Retail segment inventories increased 3 percent.

For the three months ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased 119 basis points compared to the prior year period. The increase was primarily due to the deleverage in direct and selling support store related expenses resulting from negative store comparable net sales.

For the year ended January 31, 2014, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 28 basis points compared to the prior year period primarily due to increases in marketing expenses.

The company`s effective tax rate for the fourth quarter of fiscal 2014 was 31.7 percent compared to 37.8 percent in the prior year period. The lower quarterly tax rate is primarily due to a federal rehabilitation credit received in the current quarter related to the expansion of the company`s home office and the release of international valuation allowances.

During the year ended January 31, 2014, the company opened a total of 38 new stores including: 16 Urban Outfitters stores, 13 Free People stores and 9 Anthropologie stores; and closed 1 Urban Outfitters store and 2 Anthropologie stores due to lease expirations.

About Urban Outfitters:

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 230 Urban Outfitters stores in the United States, Canada, and Europe, catalogs and websites; 187 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores worldwide, 90 Free People stores in the United States and Canada, catalogs and websites; 2 Bhldn stores and a website and 2 Terrain garden centers and a website, as of January 31, 2014. 


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