PHILADELPHIA, PA — Urban Outfitters, Inc. (NASDAQ: URBN) recently announced a net income of $83.0 million and earnings per diluted share of $0.88 for the three months ended October 31, 2023. For the nine-month period ending the same date, the company reported a net income of $239.9 million and earnings per diluted share of $2.55.
The Philadelphia-based multinational lifestyle retail corporation reported a 9.0% increase in total company net sales for the three-month period, reaching a record $1.28 billion. This growth was largely driven by a 7.3% increase in total Retail segment net sales and a 5.6% increase in comparable Retail segment net sales. The company’s digital channel and retail store sales also saw high single-digit and mid single-digit growth, respectively.
The company’s various brands experienced varying degrees of success during this period. Free People, Anthropologie, and Urban Outfitters saw comparable net sales increases of 22.5%, 13.2%, and 14.2%, respectively. However, Wholesale segment net sales experienced a decrease of 3.6% due to a decline in department store and close out account partner sales of Free People products.
In contrast, Nuuly, the company’s clothing rental service, saw a significant increase in net sales of $30.2 million. This is primarily attributed to a 68% increase in subscribers compared to the end of the prior year’s comparable quarter.
For the nine-month period ending October 31, 2023, the company’s net sales increased by 7.5% to a record $3.67 billion. Total Retail segment net sales rose by 5.9%, with comparable Retail segment net sales increasing by 5.0%.
The gross profit rate for the three-month and nine-month periods ending October 31, 2023, rose by 509 basis points and 401 basis points, respectively. This was due to higher initial merchandise markups, lower merchandise markdowns, and lower inbound transportation costs. Gross profit dollars also increased, rising 27.3% to $454.4 million for the three-month period and 21.5% to $1.28 billion for the nine-month period.
Despite these impressive figures, the company reported an increase in selling, general and administrative expenses for both the three-month and nine-month periods. These increases were mainly due to higher marketing and creative costs to support sales growth and higher incentive-based compensation costs due to improved performance.
However, the company’s effective tax rate decreased from 28.8% to 24.3% and 24.5%, respectively, over the three-month and nine-month periods ended October 31, 2023. This decrease is attributable to the ratio of foreign taxable earnings to global taxable earnings and general business credits.
These strong results reflect Urban Outfitters’ focus on enhancing its product offering, optimizing inventory levels, and leveraging digital channels to drive growth. The company’s record net sales and improved gross profit rate demonstrate its ability to navigate the challenging retail landscape while delivering value to its shareholders.
Additional details and information can be found on the Urban Outfitters website.
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