GlobeNewswire Inc | Nov 22, 2021 04:05PM EST

November 22, 2021

PHILADELPHIA, Nov. 22, 2021 (GLOBE NEWSWIRE) -- Urban Outfitters, Inc. (NASDAQ:URBN), a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of the Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly Rent, Nuuly Thrift and Menus & Venues brands, today announced net income of $89 million and record third quarter earnings per diluted share of $0.89 for the three months ended October 31, 2021. For the nine months ended October 31, 2021, net income was $270 million and record first nine-month period earnings per diluted share were $2.71.

Due to the material impact of COVID-19 on our business operations in fiscal 2021, including mandated store closures, this release includes a comparison of fiscal 2022 results to fiscal 2020. Management views the comparison of fiscal 2022 results to fiscal 2020 as the more meaningful measurement of the Companys business performance.

Total Company net sales for the three months ended October 31, 2021, were a record $1.13 billion. Net sales increased 14.6% compared to the three months ended October 31, 2019. Comparable Retail segment net sales increased 14%, driven by strong double-digit growth in digital channel sales, partially offset by mid-single-digit negative retail store sales primarily due to reduced store traffic. By brand, comparable Retail segment net sales increased 55% at the Free People Group, 9% at theAnthropologie Group and 7% atUrban Outfitters. Total Retail segment net sales increased 16%. Wholesale segment net sales decreased 15% primarily from reducing the Free People Groups sales to promotional wholesale customers.

For the nine months endedOctober 31, 2021, total Company net sales increased 14.3% compared to the nine months ended October 31, 2019. Comparable Retail segment net sales increased 16%, driven by strong double-digit growth in digital channel sales, partially offset by low double-digit negative retail store sales due to reduced store traffic resulting from temporary store closures and occupancy restrictions inEuropeandCanada. Wholesale segment net sales decreased 23% primarily from reducing the Free People Groups sales to promotional wholesale customers.

Im pleased to announce our teams produced record Q3 sales and earnings, said Richard A. Hayne, Chief Executive Officer. We are excited that November comp sales to date for all brands have accelerated from their Q3 rate, finished Mr. Hayne.

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

Three Months Ended October 31, 2021 2020 2019Net sales by brand Urban Outfitters $ 415,877 $ 394,050 $ 374,459Anthropologie Group 431,407 358,482 398,709Free People Group 264,995 206,669 205,475Menus & Venues 6,457 3,664 6,794Nuuly ^(1) 12,688 6,742 2,032Total Company $ 1,131,424 $ 969,607 $ 987,469

Three Months Ended October 31, 2021 2020 2019Net sales by segment Retail Segment $ 1,043,905 $ 895,608 $ 897,130Wholesale Segment 74,831 67,257 88,307Nuuly Segment ^(1) 12,688 6,742 2,032Total Company $ 1,131,424 $ 969,607 $ 987,469

Nine Months Ended October 31, 2021 2020 2019Net sales by brand Urban Outfitters $ 1,207,174 $ 955,259 $ 1,046,310Anthropologie Group 1,235,567 887,683 1,147,977Free People Group 727,454 492,352 597,606Menus & Venues 15,922 8,378 20,286Nuuly ^(1) 30,447 17,684 2,032Total Company $ 3,216,564 $ 2,361,356 $ 2,814,211

Nine Months Ended October 31, 2021 2020 2019Net sales by segment Retail Segment $ 2,990,413 $ 2,214,311 $ 2,558,386Wholesale Segment 195,704 129,361 253,793Nuuly Segment ^(1) 30,447 17,684 2,032Total Company $ 3,216,564 $ 2,361,356 $ 2,814,211

(1) The Nuuly segment (formerly known as the Subscription segment) is comprised of the Nuuly Rent and Nuuly Thrift brands. Nuuly Rent began operations on July 30, 2019. Nuuly Thrift began operations on October 12, 2021.

For the three months ended October 31, 2021, the gross profit rate increased by 202 basis points compared to the three months ended October 31, 2019. Gross profit dollars increased by $69.6 million to $390.7 million from $321.1 million in the three months ended October 31, 2019. The increase in gross profit rate was primarily due to record low third quarter merchandise markdown rates in the Retail segment and leverage in store occupancy expense primarily due to the increased penetration of the digital channel in Retail segment net sales. All three brands achieved record low third quarter merchandise markdown rates. This was partially offset by an increase in delivery and logistics expenses and lower initial merchandise markups. Delivery expense deleveraged due to increases in carrier costs per package and the increased penetration of the digital channel. Logistics expense deleveraged due to increased wages at our distribution and fulfillment centers in order to attract and retain appropriate levels of employees and the increased penetration of the digital channel. Lower initial merchandise markups are primarily due to higher inbound transportation expenses.

For the nine months ended October 31, 2021, the gross profit rate increased by 284 basis points compared to the nine months ended October 31, 2019. Gross profit dollars increased by $220.6 million to $1.13 billion from $906.0 million in the nine months ended October 31, 2019. The increase in gross profit rate was primarily due to record low first nine-month period merchandise markdown rates in the Retail segment and leverage in store occupancy expense due to the increased penetration of the digital channel in Retail segment net sales. All three brands achieved record low first nine-month period merchandise markdown rates. This was partially offset by a deleverage in delivery and logistics expenses and lower initial merchandise markups. Delivery expense deleveraged due to increases in carrier costs per package and the increased penetration of the digital channel. Logistics expense deleveraged due to increased wages at our distribution and fulfillment centers in order to attract and retain appropriate levels of employees and the increased penetration of the digital channel. Lower initial merchandise markups are primarily due to higher inbound transportation expenses.

As of October 31, 2021, total inventory increased by $95.5 million, or 18.0%, compared to total inventory as of October 31, 2019. The increase in inventory was due to the increase in net sales and a strategic decision to bring certain product categories in earlier to protect against ongoing supply chain disruptions and delays.

For the three months ended October 31, 2021, selling, general and administrative expenses increased by $29.0 million, or 11.8%, compared to the three months ended October 31, 2019, and expressed as a percentage of net sales, leveraged 60 basis points. The leverage in SG&A as a rate to sales was primarily related to disciplined store payroll management and overall expense control that was partially offset by an increase in digital marketing and creative expenses during the quarter to support the strong digital sales and customer growth. The growth in SG&A dollars was primarily driven by increases in digital marketing and creative expenses during the quarter to support the strong digital sales and customer growth and overall higher performance-based compensation due to the stronger results partially offset by the reduction in direct selling expenses due to the lower retail store net sales.

For the nine months ended October 31, 2021, selling, general, and administrative expense increased by $58.7 million, or 8.2%, compared to the nine months ended October 31, 2019, and expressed as a percentage of net sales, leveraged 133 basis points. The leverage in selling, general and administrative expenses as a rate to sales was primarily related to disciplined store payroll management and overall expense control that was partially offset by a deleverage in digital marketing and creative expenses during the period to support the strong digital sales and customer growth. The increase in dollars was primarily driven by the increase in digital marketing and creative expenses to support the overall growth of the Company partially offset by the reduction in direct selling expenses due to the lower retail store net sales.

The Companys effective tax rate for the three months ended October 31, 2021, was 23.0% compared to 26.6% in the three months ended October 31, 2019. The Companys effective tax rate for the nine months ended October 31, 2021, was 23.6% compared to 25.8% in the nine months ended October 31, 2019. The decrease in the effective tax rate for the three and nine months ended October 31, 2021, was primarily due to the ratio of foreign taxable profits to global taxable profits.

Net income for the three months ended October 31, 2021, was $89 million and record third quarter earnings per diluted share were $0.89. Net income for the nine months ended October 31, 2021, was $270 million and record first nine-month period earnings per diluted share were $2.71.

On August 22, 2017, the Companys Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. On June 4, 2019, the Companys Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the nine months ended October 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately $15 million. During the year endedJanuary 31, 2021, the Company repurchased and subsequently retired 0.5 million common shares for approximately$7 million. These shares were repurchased prior to the known spread of the COVID-19 pandemic inthe United Statesthat forced the Company to close its stores for an extended period of time.As of October 31, 2021, 25.4 million common shares were remaining under the programs.

During the nine months endedOctober 31, 2021, the Company opened a total of 46 new retail locations including: 23 Free People Group stores (including 13 FP Movement stores), 15Urban Outfittersstores and 8Anthropologie Groupstores; and closed 9 retail locations including: 3Anthropologie Group stores, 2 Free People Group stores, 2 Urban Outfitters stores and 2 Menus & Venues restaurants. During the nine months endedOctober 31, 2021, 1 Urban Outfitters franchisee-owned store and 1 Anthropologie Group franchisee-owned store were opened.

Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 260Urban Outfittersstores inthe United States,CanadaandEuropeand websites; 242Anthropologie Groupstores inthe United States,CanadaandEurope, catalogs and websites; 170 Free People Group stores inthe United States,CanadaandEurope, catalogs and websites, 9 Menus & Venues restaurants, 2Urban Outfittersfranchisee-owned stores and 1 Anthropologie Group franchisee-owned store, as ofOctober 31, 2021. Free People, FP MovementandUrban Outfitterswholesale sell their products through department and specialty stores worldwide, digital businesses and the Companys Retail segment.

A conference call will be held today to discuss third quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/s3fpctjt

This news release is being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.Certain matters contained in this release may contain forward-looking statements. When used in this release, the words project, believe, plan, will, anticipate, expect and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the impacts of public health crises such as the coronavirus (COVID-19) pandemic, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as Brexit), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, increases in labor costs, increases in raw material costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs, border adjustment taxes or increases in duties or quotas), the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our filings with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.

(Tables follow)

URBAN OUTFITTERS, INC.Condensed Consolidated Statements of Operations(amounts in thousands, except share and per share data)(unaudited)

Three Months Ended October 31, 2021 2020 2019 Net sales $ 1,131,424 $ 969,607 $ 987,469 Cost of sales 740,686 646,666 666,367 Gross profit 390,738 322,941 321,102 Selling, general andadministrative 274,836 224,433 245,833 expensesIncome from operations 115,902 98,508 75,269 Other (loss) income, (551 ) (890 ) 576 netIncome before income 115,351 97,618 75,845 taxesIncome tax expense 26,496 20,914 20,193 Net income $ 88,855 $ 76,704 $ 55,652 Net income per common share:Basic $ 0.90 $ 0.78 $ 0.57 Diluted $ 0.89 $ 0.78 $ 0.56 Weighted-averagecommon shares outstanding:Basic 98,202,399 97,784,661 97,972,864 Diluted 99,415,838 98,583,032 98,628,169 AS A PERCENTAGE OF NET SALESNet sales 100.0 % 100.0 % 100.0 %Cost of sales 65.5 % 66.7 % 67.5 %Gross profit 34.5 % 33.3 % 32.5 %Selling, general andadministrative 24.3 % 23.1 % 24.9 %expensesIncome from operations 10.2 % 10.2 % 7.6 %Other (loss) income, (0.0 %) (0.1 %) 0.1 %netIncome before income 10.2 % 10.1 % 7.7 %taxesIncome tax expense 2.3 % 2.2 % 2.1 %Net income 7.9 % 7.9 % 5.6 %

URBAN OUTFITTERS, INC.Condensed Consolidated Statements of Operations(amounts in thousands, except share and per share data)(unaudited)

Nine Months Ended October 31, 2021 2020 2019 Net sales $ 3,216,564 $ 2,361,356 $ 2,814,211 Cost of sales (excluding 2,089,910 1,774,006 1,908,178 store impairment)Store impairment ? 14,528 ? Gross profit 1,126,654 572,822 906,033 Selling, general and 771,396 603,630 712,683 administrative expensesIncome (loss) from 355,258 (30,808 ) 193,350 operationsOther (loss) income, net (2,503 ) (1,261 ) 6,754 Income (loss) before income 352,755 (32,069 ) 200,104 taxesIncome tax expense 83,091 (4,731 ) 51,547 (benefit)Net income (loss) $ 269,664 $ (27,338 ) $ 148,557 Net income (loss) per common share:Basic $ 2.75 $ (0.28 ) $ 1.48 Diluted $ 2.71 $ (0.28 ) $ 1.47 Weighted-average common shares outstanding:Basic 98,209,796 97,823,948 100,458,726 Diluted 99,447,551 97,823,948 101,147,025 AS A PERCENTAGE OF NET SALESNet sales 100.0 % 100.0 % 100.0 %Cost of sales (excluding 65.0 % 75.1 % 67.8 %store impairment)Store impairment ? 0.6 % ? Gross profit 35.0 % 24.3 % 32.2 %Selling, general and 24.0 % 25.6 % 25.3 %administrative expensesIncome (loss) from 11.0 % (1.3 %) 6.9 %operationsOther (loss) income, net (0.0 %) (0.1 %) 0.2 %Income (loss) before income 11.0 % (1.4 %) 7.1 %taxesIncome tax expense 2.6 % (0.2 %) 1.8 %(benefit)Net income (loss) 8.4 % (1.2 %) 5.3 %

URBAN OUTFITTERS, INC.Condensed Consolidated Balance Sheets(amounts in thousands, except share data)(unaudited)

October 31, January 31, October 31, October 31, 2021 2021 2020 2019 ASSETS Current assets: Cash and cash $ 236,354 $ 395,635 $ 624,945 $ 167,070 equivalentsMarketable 188,375 174,695 2 170,697 securitiesAccountsreceivable, netof allowance fordoubtful accounts 114,208 89,952 87,187 99,971 of $1,313,$4,028, $3,098and $1,084,respectivelyInventory 627,103 389,618 489,234 531,565 Prepaid expensesand other current 203,213 173,432 170,193 143,710 assetsTotal current 1,369,253 1,223,332 1,371,561 1,113,013 assetsProperty and 1,088,287 967,422 930,564 890,538 equipment, netOperating leaseright-of-use 1,030,776 1,114,762 1,101,495 1,119,280 assetsMarketable 269,780 123,662 9,350 83,121 securitiesDeferred incometaxes and other 132,510 117,167 117,705 114,641 assetsTotal Assets $ 3,890,606 $ 3,546,345 $ 3,530,675 $ 3,320,593 LIABILITIES ANDSHAREHOLDERS? EQUITYCurrent liabilities:Accounts payable $ 315,481 $ 237,386 $ 349,793 $ 232,901 Current portionof operating 240,074 254,703 255,122 213,911 lease liabilitiesAccrued expenses,accruedcompensation and 493,446 414,043 341,983 264,240 other currentliabilitiesTotal current 1,049,001 906,132 946,898 711,052 liabilitiesNon-currentportion of 986,026 1,074,009 1,069,434 1,119,340 operating leaseliabilitiesLong-term debt ? ? ? ? Deferred rent and 108,848 88,846 83,024 60,348 other liabilitiesTotal Liabilities 2,143,875 2,068,987 2,099,356 1,890,740 Shareholders? equity:Preferred shares;$.0001 par value,10,000,000 shares ? ? ? ? authorized, noneissuedCommon shares;$.0001 par value,200,000,000sharesauthorized,97,863,862, 10 10 10 10 97,815,985,97,786,381 and97,975,343 sharesissued andoutstanding,respectivelyAdditional 18,671 19,360 15,669 5,201 paid-in-capitalRetained earnings 1,744,772 1,475,108 1,446,534 1,454,333 Accumulated othercomprehensive (16,722 ) (17,120 ) (30,894 ) (29,691 )lossTotalShareholders? 1,746,731 1,477,358 1,431,319 1,429,853 EquityTotal Liabilitiesand Shareholders? $ 3,890,606 $ 3,546,345 $ 3,530,675 $ 3,320,593 Equity

URBAN OUTFITTERS, INC.Condensed Consolidated Statements of Cash Flows(amounts in thousands) (unaudited)

Nine Months Ended October 31, 2021 2020 2019 Cash flows from operating activities:Net income (loss) $ 269,664 $ (27,338 ) $ 148,557 Adjustments to reconcile net income(loss) to net cash provided by operating activities:Depreciation and amortization 77,985 78,308 83,617 Non-cash lease expense 144,347 147,198 142,210 (Benefit) provision for deferred (5,086 ) (15,293 ) 211 income taxesShare-based compensation expense 19,068 17,030 16,807 Store impairment ? 14,528 ? Loss on disposition of property and 193 706 819 equipment, netChanges in assets and liabilities: Receivables (24,387 ) 1,137 (19,550 )Inventory (238,094 ) (79,462 ) (161,255 )Prepaid expenses and other assets (10,087 ) (35,403 ) (37,228 )Payables, accrued expenses and other 161,251 235,618 100,534 liabilitiesOperating lease liabilities (172,575 ) (122,360 ) (153,320 )Net cash provided by operating 222,279 214,669 121,402 activitiesCash flows from investing activities:Cash paid for property and equipment (159,008 ) (89,153 ) (171,121 )Cash paid for marketable securities (442,249 ) (93,945 ) (299,322 )Sales and maturities of marketable 237,879 384,999 382,629 securitiesNet cash (used in) provided by (363,378 ) 201,901 (87,814 )investing activitiesCash flows from financing activities:Borrowings under debt ? 220,000 ? Repayments of debt ? (220,000 ) ? Proceeds from the exercise of stock 2,815 ? 974 optionsShare repurchases related to share (14,888 ) (7,036 ) (217,421 )repurchase programShare repurchases related to taxes (7,684 ) (3,802 ) (5,574 )for share-based awardsNet cash used in financing (19,757 ) (10,838 ) (222,021 )activitiesEffect of exchange rate changes on 1,575 (2,626 ) (2,757 )cash and cash equivalents(Decrease) increase in cash and cash (159,281 ) 403,106 (191,190 )equivalentsCash and cash equivalents at 395,635 221,839 358,260 beginning of periodCash and cash equivalents at end of $ 236,354 $ 624,945 $ 167,070 period

Contact: Oona McCullough Executive Director of Investor Relations (215) 454-4806