URBN Reports Record Q1 Sales and Earnings

PHILADELPHIA, May 21, 2024 (GLOBE NEWSWIRE) Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands including the Anthropologie, Free People, FP Movement, Urban Outfitters and Nuuly brands, today announced net income of $61.8 million and record first quarter earnings per diluted share of $0.65 for the three months ended April 30, 2024. For the three months ended April 30, 2024, adjusted net income was $65.5 million and adjusted earnings per diluted share were $0.69. Adjusted net income and earnings per diluted share for the three months ended April 30, 2024, excludes store impairment and lease abandonment charges. See "Reconciliation of Non-GAAP Financial Measures" included at the end of this release.

Total Company net sales for the three months ended April 30, 2024, increased 7.8% to a record $1.20 billion. Total Retail segment net sales increased 5.8%, with comparable Retail segment net sales increasing 4.6%. The increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel sales and low single-digit positive growth in retail store sales. Comparable Retail segment net sales increased 17.1% at Free People and 10.4% at Anthropologie and decreased 13.7% at Urban Outfitters. Wholesale segment net sales increased 3.4% driven by a 6.3% increase in Free People wholesale sales due to an increase in sales to department stores and specialty customers, partially offset by a decrease in Urban Outfitters wholesale sales. Nuuly segment net sales increased by 51.4% primarily driven by a 45% increase in average active subscribers in the current quarter versus the prior year quarter.

“We are pleased to report record first quarter sales and earnings driven by continued strength at the Anthropologie, Free People, FP Movement and Nuuly brands,” said Richard A. Hayne, Chief Executive Officer. “Customer demand remains robust for our spring and summer fashion, which bodes well for continued sales growth in Q2,” finished Mr. Hayne.

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

For the three months ended April 30, 2024, the gross profit rate increased by 68 basis points compared to the three months ended April 30, 2023, and gross profit dollars increased 10.0% to $408.4 million from $371.2 million. For the three months ended April 30, 2024, the adjusted gross profit rate increased by 106 basis points compared to the three months ended April 30, 2023, and adjusted gross profit dollars increased 11.2% to $413.0 million from $371.2 million. The increase in adjusted gross profit rate was primarily due to higher initial merchandise markups for all brands primarily driven by Company cross-functional initiatives, partially offset by higher merchandise markdowns, primarily at the Urban Outfitters brand, and a deleverage in logistics expenses. The deleverage in logistics expenses was primarily driven by the increased penetration of Nuuly segment sales to total Company sales, as well as transition and start-up expenses related to the additional Nuuly fulfillment facility that opened during the three months ended April 30, 2024. The increase in adjusted gross profit dollars was due to higher net sales and the improved adjusted gross profit rate.

As of April 30, 2024, total inventory decreased by $11.3 million, or 1.9%, compared to total inventory as of April 30, 2023. Total Retail segment inventory decreased 2.3%, while Retail segment comparable inventory decreased 4.7%. Wholesale segment inventory increased by 2.1%.

For the three months ended April 30, 2024, selling, general and administrative expenses increased by $33.9 million, or 11.3%, compared to the three months ended April 30, 2023, and expressed as a percentage of net sales, deleveraged 87 basis points. The deleverage in selling, general and administrative expenses as a rate to net sales was primarily related to the Urban Outfitters brand not being able to reduce expenses at the same rate of net sales. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support double-digit customer traffic growth and increased sales at the Free People, FP Movement, Anthropologie and Nuuly brands and increased store payroll expenses to support the retail stores comparable sales growth.

The Company’s effective tax rate for the three months ended April 30, 2024 was 23.6%, compared to 27.1% in the three months ended April 30, 2023. The Company's adjusted effective tax rate for the three months ended April 30, 2024 was 23.4%, compared to 27.1% in the three months ended April 30, 2023. The decrease in the adjusted effective tax rate for the three months ended April 30, 2024 was primarily due to the favorable impact of equity activity in the current year quarter.

Net income for the three months ended April 30, 2024 was $61.8 million and record first quarter earnings per diluted share were $0.65. Adjusted net income for the three months ended April 30, 2024 was $65.5 million and adjusted earnings per diluted share were $0.69.

On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. During the year ended January 31, 2024 and the three months ended April 30, 2024, the Company did not repurchase any common shares. As of April 30, 2024, 19.2 million common shares were remaining under the program.

During the three months ended April 30, 2024, the Company opened a total of 8 new retail locations including: 4 Urban Outfitters stores, 2 Anthropologie stores and 2 Free People stores (including 1 FP Movement store); and closed 4 retail locations including: 2 Urban Outfitters stores, 1 Anthropologie store and 1 Free People store.

Urban Outfitters, Inc. offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 264 Urban Outfitters stores in the United States, Canada and Europe and websites; 238 Anthropologie stores in the United States, Canada and Europe, catalogs and websites; 199 Free People stores (including 39 FP Movement stores) in the United States, Canada and Europe, catalogs and websites, 9 Menus & Venues restaurants, 7 Urban Outfitters franchisee-owned stores and 2 Anthropologie franchisee-owned stores as of April 30, 2024. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores worldwide, digital businesses and the Company’s Retail segment. Nuuly is a women's apparel subscription rental service which offers a wide selection of rental product from the Company's own brands, third-party brands and one-of-a-kind vintage pieces.