NET UP AT TWO RETAIL FIRMS
Byline: Jennifer Weitzman
NEW YORK — Urban Outfitters and Lands’ End — two firms sharply focused on entirely different clientele — turned in double-digit profit growth in the fourth quarter.
Still, cautious guidance from Lands’ End helped drag down its shares $7.83, or 14.3 percent, to $46.86. Urban Outfitters dropped $1.56 a share, of 6.4 percent, to close at $22.72.
For the three months ended Jan. 31, Philadelphia-based Urban Outfitters, which offers edgier merchandise for young adults through 81 Urban Outfitters and Anthropologie stores, said income rose 69.4 percent to $5.8 million, or 33 cents a diluted share, beating consensus estimates by 2 cents. That compares to income of $3.4 million, or 20 cents, in the year-ago quarter.
Women’s apparel and accessories, as well as an earlier transition to spring, drove sales up 21.4 percent to $103.9 million from $85.6 million. Sales rose 8.3 percent on a comparable-store basis, inclusive of a 2.9 percent jump for Urban Retail and a 16.8 percent leap at Anthropologie.
The company also said it plans to launch its Free People label as a retail concept with either one or two stores during the current fiscal year. As a wholesale-only unit, Free People’s sales accounted for roughly 5 percent of total corporate sales, or about $17.5 million.
“We wanted to create an environment where our customers actually experience the product,” said David Frankel, president of Urban Outfitters wholesale company, in a telephone interview, “and it is an opportunity to showcase the full product offering,” Another benefit, he said, would be the opportunity to gain expertise in running in-store shops as it looks to expand its department store presence.
For the year, net income escalated 43 percent to $15 million, or 86 cents a diluted share, versus the $10.5 million, or 61 cents, reached in 2000. Sales gained 18.2 percent to $349 million from $295.3 million while comps improved 2.8 percent, comprised of a .5 percent pickup at Urban and a 6.8 percent leap at Anthropologie.
The company filed a Form S-3 with the Securities and Exchange Commission to sell 2 million shares, including 1,550,000 common shares held by the company and 450,000 shares held by stockholders. The underwriters have an option to purchase a maximum of 200,000 additional shares. UO expects to raise roughly $36 million and use the proceeds for retail expansion.
Direct merchandiser Lands’ End also enjoyed a solid quarter as profits soared 44.3 percent to $45.9 million, or $1.51 a diluted share, versus year-ago profits of $31.8 million, or $1.07.
Led by full-price selling of women’s apparel and home products, net sales for the Dodgeville, Wis.-based firm rose 10.6 percent to $596 million from $538.6 million and were up 5.8 percent on a comp basis. And while many other retailers were left slashing prices, LE said sales of full-price merchandise rose 11 percent.
“The initiatives that we started three years ago, and the focused execution of the past year contributed to our success,” David F. Dyer, president and chief executive, said in a statement. “We are establishing the groundwork for future growth with programs such as enhanced customer segmentation, new catalogs and additional Internet innovations.”
For the year, income rose 93.1 percent to $66.9 million, or $2.23 a diluted share, compared to last year’s $34.7 million, or $1.14. Net sales gained 7.3 percent to $1.57 billion from $1.35 billion.
Earnings per share came in a penny below expectations and, for the current fiscal year 2003, LE forecast EPS growth in the high-single to low-double digit percentage range. This would put the firm’s earnings below current consensus estimates of $2.54, a figure 13.9 percent higher than the $2.23 reached this year.
At a recent conference Dyer outlined a number of initiatives to boost results including increases in key item inventory and catalog circulation, the rollout of custom designed jeanswear, a followup of its unique fitting khaki pants, and, in the long run, the introduction of its own full-price retail stores.