Urban Outfitters Inc. on Monday reported net income of $60 million for the third quarter ended Oct. 31, a 17.6 percent increase from $51 million in the same period of 2011. Net income for the nine months ended Oct. 31 was $155 million, a 6.9 percent jump over $146 million for the prior year’s nine-month period. Earnings per diluted share were 40 cents and $1.06 for the three and nine months, respectively.
The retailer said net sales rose 14 percent to a record $693 million in the third quarter, versus $609.9 million in the year-ago quarter. Comparable retail segment net sales, which include the direct-to-consumer channel, increased by 8 percent for the quarter, while same-store net sales decreased by 1 percent. Comp-store sales at Free People rose 24 percent; Urban Outfitters, 7 percent, and Anthropologie, 6 percent. Direct-to-consumer net sales increased by 36 percent and wholesale segment net sales rose by 7 percent.
Frank J. Conforti, chief financial officer, said Hurricane Sandy impacted the last four days of the quarter, with “106 of our stores affected by Sandy. Closures ranged from a few hours to a week. The direct-to-consumer channel was negatively impacted by power outages in the Northeast. Sandy could have affected our total retail segment comps by up to 1 percentage point.”
As of Oct. 31, total inventories increased by $28 million, or 8 percent, on a year-over-year basis. Comparable retail segment inventories were flat and store inventories fell by 6 percent. Selling, general and administrative expenses as a percentage of net sales for the three months rose by 75 basis points due to higher incentive-based compensation.
The direct-to-consumer channel in September had the highest sales of any month in its history. International direct sales shot up 66 percent, with Australia posting a 155 percent gain. Freepeople.co.uk was launched this year and Urban Outfitters unveiled three new stores in Germany in addition to launching urbanoutfitters.co.ge. “The European business has produced double-digit increases with 20 stores,” said Tedford Marlow, ceo of Urban Outfitters Group.
Chairman, president and chief executive officer Richard Hayne said, “The European direct-to-consumer business is the fastest growing business.”
Conforti said the company in 2013 plans to open 49 new stores, including 18 Urban Outfitters units, 15 Free People stores, 14 Anthropologie locations and one store each for Terrain and BHLDN.
Margaret Hayne, Richard’s wife and president of Free People, said the brand opened an 800-square-foot in-store shop at Nordstrom’s Seattle flagship with exclusive product, fixtures and displays that it hopes to replicate in other Nordstrom units.
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