PHILADELPHIA, PA — Urban Outfitters, Inc. (NASDAQ: URBN this week announced net income of $53 million and record first quarter earnings per diluted share of $0.56 for the three months ended April 30, 2023.
Total Company net sales for the three months ended April 30, 2023, increased 5.9% to a record $1.11 billion. Total Retail segment net sales increased 4%, with comparable Retail segment net sales increasing 5%, partially offset by a 1% negative impact of foreign currency translation. 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. By brand, comparable Retail segment net sales increased 17% at the Free People Group and 13% at the Anthropologie Group and decreased 13% at Urban Outfitters. Wholesale segment net sales decreased 11% driven by a 14% decrease in Free People Group wholesale sales due to a decrease in sales to department stores and specialty customers, while Urban Outfitters wholesale sales increased by $1 million. Nuuly segment net sales increased by $28.6 million driven by a 118% increase in our subscribers as of the current quarter end versus the end of the prior year’s comparable quarter.
“We are pleased to report record first quarter sales and earnings per share driven by a 5% increase in comparable Retail segment sales, strong growth in Nuuly Rent and a significant improvement in gross margins,” said Richard A. Hayne, Chief Executive Officer. “We are equally pleased that Q1’s sales strength has continued quarter-to-date,” finished Mr. Hayne.
Net sales by brand and segment for the three-month periods were as follows:
|Three Months Ended|
|Net sales by brand|
|Free People Group||273,735||245,758|
|Menus & Venues||6,121||5,948|
|Net sales by segment|
As of April 30, 2023, total inventory decreased by $39.6 million, or 6.3%, compared to total inventory as of April 30, 2022. Total Retail segment inventory decreased by 5% primarily due to better inventory control supported by a more reliable supply chain. Wholesale segment inventory decreased by 23% in line with the reduction in wholesale sales.
For the three months ended April 30, 2023, selling, general and administrative expenses increased by $22.8 million, or 8.2%, compared to the three months ended April 30, 2022, and expressed as a percentage of net sales, deleveraged 59 basis points. The deleverage in selling, general and administrative expenses as a rate to sales was primarily related to higher compensation costs, including higher incentive-based compensation costs due to improved Company performance. The dollar growth in selling, general and administrative expenses was due to higher compensation costs, including higher incentive-based compensation costs due to improved Company performance, as well as increased marketing expenses to support increased sales and customer growth.
The Company’s effective tax rate for the three months ended April 30, 2023 was 27.1%, compared to 28.7% in the three months ended April 30, 2022. The decrease in the effective tax rate for the three months ended April 30, 2023 was attributable to the ratio of foreign taxable earnings to global taxable earnings and the favorable impact of general business credits in the current year.
Net income for the three months ended April 30, 2023 was $52.8 million and record first quarter earnings per diluted share was $0.56.
On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program; all shares were repurchased and the authorization was completed by the end of June 2022. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. During the year ended January 31, 2023, the Company repurchased and subsequently retired 4.7 million common shares for approximately $112 million. During the three months ended April 30, 2023, the Company did not repurchase any common shares. As of April 30, 2023, 19.2 million common shares were remaining under the program.
During the three months ended April 30, 2023, the Company opened 5 Free People Group stores (including 2 FP Movement stores) and closed 5 retail locations including: 3 Urban Outfitters stores, 1 Anthropologie Group store and 1 Menus & Venues restaurant. During the three months ended April 30, 2023, 1 Urban Outfitters franchisee-owned store was opened.
Urban Outfitters, Inc. offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 260 Urban Outfitters stores in the United States, Canada and Europe and websites; 237 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 193 Free People stores (including 33 FP Movement stores) in the United States, Canada and Europe, catalogs and websites, 10 Menus & Venues restaurants, 7 Urban Outfitters franchisee-owned stores and 2 Anthropologie Group franchisee-owned stores as of April 30, 2023. 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.
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