Strong sales and lower merchandise markdowns facilitated
Urban Outfitters Inc
) to post fourth-quarter fiscal 2013 earnings of 56 cents a
share, which more than doubled from earnings of 27 cents in the
comparable year-ago quarter. Despite robust results, earnings
missed the Zacks Consensus Estimate by a penny.
After registering revenue growth of 13.6% in the third
quarter, total net sales of Urban Outfitters climbed 17.3% to
$856.8 million during the fourth quarter, reflecting robust
performance of its Direct-to-Consumer business coupled with
sturdy sales through new store openings and double-digit growth
at wholesale operations. Total revenue surpassed the Zacks
Consensus Estimate of $845 million.
Urban Outfitters' net sales increased 17% to $818.1 million at
the Retail Segment and 22.3% to $38.7 million at the Wholesale
Segment. Within Retail Segment, Retail Stores sales rose 8.6% to
$577.6 million, whereas Direct-to-Consumer sales bolstered 44.1%
to $240.5 million.
Net sales by brands grew 16.5% to $415.5 million at Urban
Outfitters, 11.9% to $334.8 million at Anthropologie and 39.9% to
$97.7 million at Free People.
Comparable retail segment net sales for this Zacks Rank #2
(Buy) stock, including the comparable direct-to-consumer channel,
escalated 11%, reflecting robust sales across all brands.
Comparable retail segment net sales rose by 11% and 7% at
Urban Outfitters and Anthropologie respectively, while it jumped
37% at Free People. Amid the positives, comparable-store net
sales remained flat, reflecting the impact of charges associated
with Direct-to-consumer returns at stores. Excluding the charges,
comparable store net sales increased in the low single-digit.
Urban Outfitters, which competes with
Abercrombie & Fitch Co
), offers a flexible merchandising strategy. The company enjoys
significant domestic and international presence with rapidly
expanding e-Commerce activities.
Going forward, Urban Outfitters remains committed to improve
comparable-store sales performance, sustain investments in
direct-to-consumer business, enhance productivity in existing
channels, add new brands and optimize inventory levels.
On the back of strong sales, gross profit for the quarter
soared 42.6% to $313.7 million, whereas gross margin expanded 650
basis points to 36.6% due to lower merchandise markdowns.
Urban Outfitters is optimistic that fiscal 2013 will present
considerable opportunity for gross margin improvement. The
company expects to enhance margins by approximately 50 basis
points year over year, attributable to product content and lower
Operating income marked a significant improvement during the
quarter and surged by 104.4% to $131.9 million, while operating
margin escalated 660 basis points to 15.4% due to rise in regular
price comp sales and efficient inventory management.
During fiscal 2013, Urban Outfitters opened 49 new outlets,
including 18 Urban Outfitters stores, 15 Free People stores, 14
Anthropologie stores, 1 BHLDN store and 1 Terrain garden center.
The company closed 2 Anthropologie locations during the
It now plans to open 37 stores in fiscal 2014, including 15
Urban Outfitters, 10 Free People, 12 Anthropologie stores.
Urban Outfitters entered into a multi-year agreement with
World Co., Ltd. for the distribution and marketing of its
specialty clothing brand, Free People in Japan. As per the
agreement, World Co., Ltd. will distribute and market the Free
People brand throughout Japan from shop-in-shop locations,
direct-to-consumer sites and stand-alone stores. Moreover, the
firm will distribute merchandise to specialty stores and
department stores wholesale accounts.
Other Financial Aspects
Urban Outfitters ended the quarter with cash and cash
equivalents of $245.3 million, marketable securities of $228.5
million, and shareholders' equity of $1,354.6 million. Management
projects capital expenditures of $210 million for fiscal
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