Urban Outfitter Notches Record Sales in Q1, Beats Wall Street on Earnings

Andrew Klips |

Urban OutfittersUrban Outfitters (URBN) reported after Monday’s closing bell that sales climbed to record levels in the first quarter as same-store-sales at its Free People locations soared to help the retailer best analysts’ earnings predictions, although revenue came up a tad short.

Urban Outfitters operates teen-oriented stores under its namesake brand as well as Anthropologie, BHLDN, Free People and Terrain.

For the quarter ended April 30, the Philadelphia-based company said that net sales increased to $648.2 million, up 14 percent from $568.9 million in the same period last year. Net income totaled $47 million, or 32 cents per share, compared to $33.9 million, or 23 cents per share, in Q1 2012.

Wall Street expected Urban Outfitters to report EPS of 29 cents on revenue of $656 million.

It was the fourth straight quarter of improving profits at the company. Comparable retail sales, which the company defines as sales at stores open more than one year combined with its ecommerce business, improved by 9 percent in the first quarter. Sales at Free People shops zoomed 44 percent higher, while Urban Outfitter locations – the companies largest contributor – were up 6 percent and Anthropologie stores – the second largest brand – climbed 8 percent.

Adding to the coffers, online sales were up 14 percent and sales through the company’s wholesale arm rose 16 percent.

Fewer markdowns benefited gross margin, which improved 125 basis points to 36.8 percent. Selling, general and administrative expenses increased to $168.8 million from $149.6 million last year, but, as a percentage of sales, were lowered to 25.5 percent from 26.3 percent.

"Our brands delivered solid growth across all channels in the first quarter, especially in our direct-to-consumer channel," said Richard A. Hayne, chief executive at Urban Outfitters. Hayne added that the company intends to continue making investments to support the “robust” growth of those operations.

During the quarter, seven new stores were opened, comprised of three Free People stores, two Urban Outfitter stores and two Anthropologie store. One Urban Outfitter location was closed, leaving the company with 216 UO stores, 182 Anthropologie stores and 80 Free People locations. The other brands are tiny in comparison with only two BHLDN and two Terrain garden centers.

Shares of URBN are up about 13 percent so far in 2013, including closing modestly down at $44.49 in regular trading on Monday. Investors are apparently focusing on the revenue miss, rather than the 39 percent increase in earnings. In early extended trading, shares have slipped lower by more than 3 percent at $43.02.

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Companies

Symbol Name Price Change % Volume
LAYN Layne Christensen Company 8.11 0.14 1.76 75,348
URBN Urban Outfitters Inc. 35.13 0.12 0.34 1,886,466

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