This summary is based on the second quarter fiscal 2009 earnings call conducted by Urban Outfitters Inc. (URBN: chart) on August 14, 2008.
Management:
Chairman and President: Richard A. Hayne
CEO and Director: Glen T. Senk
CFO: John E. Kyees
President of Urban Brand, Worldwide: Tedford G. Marlow
President, Free People Brand: Meg Hayne
Chief Talent Officer: Bill Cody
Key Investor Issues:
- Q2 net sales increased by $106 million from $348 million in the year ago quarter.
- Second quarter EPS jumped from 19 cents to 33 cents.
- Half-year net sales rose from $663 million a year ago to $849 million.
Second-Quarter Financial Highlights:
Anthropologie, Free People and Urban Outfitters achieved comp increases of 7%, 10% and 19% respectively.
- Free People’s wholesale revenue increased by 14%, being the 19th consecutive quarter of double-digit sales growth.
- The second quarter income from operations grew by 75% to a record-breaking $83 million, or an operating margin of 18.3%.
- The company’s Q2 earnings increased by 79% versus the same period last year to a record $57 million, resulting in EPS of 33 cents.
New and non-comparable store sales contributed $47 million, accounting for 44% of total revenue growth.
- The company successfully normalized its store opening schedule.
- The company opened 12 new stores in the quarter; six Anthropologie stores, three Free People stores and three Urban Outfitters stores.
- This compares with five store openings during the same period last year.
- For the six months ended July 31, 2008, the company has opened a total of 24 new stores.
- This includes 10 Urban Outfitters stores, seven Anthropologie stores, six Free People stores and one Terrain garden center.
The company achieved double-digit comps every month of the quarter.
- A gain in momentum throughout the period was driven by Urban Outfitter’s strong back-to-school trend.
- Eighty-eight percent of the company’s stores were comp positive for the period.
- All regions experienced healthy gains with the Northeast leading the gain for all brands.
- The comp performance was driven by a 13% increase in the number of transactions, with gains of 6%, 1% and 17% at Anthropologie, Free People and Urban Outfitters respectively.
- The company’s average unit selling price increased 4% in total, with a decrease of 3% at Anthropologie and increases of 12% and 10% at Free People and Urban Outfitters respectively.
- The units per transaction decreased by 3% in total; Anthropologie rose 4% while Free People and Urban Outfitters retreated 3% and 7% respectively.
- At Anthropologie, the change in average unit selling price and units per transaction was mainly driven by an increase in accessories penetrations.
- At Urban Outfitters, the metrics were especially fueled by a lower penetration of markdown sales.
Throughout the quarter, all merchandise divisions were ‘comp’ positive in all brands.
- The management reported that accessories set the pace for the second quarter in a row.
- Meaningful trends were recorded across the board at all brands in the women’s apparel business as well.
The direct sales for the quarter increased by 42% to more than $60 million.
- The increase in circulation was however 8%.
- Compared with the same period last year, the penetration of direct-to-consumer sales to total company sales increased from 12.2% to 13.3%.
- The websites visits firmed 35% to 15.7 million, a gain of more than 4 million visits.
