Urban Outfitters Inc. (URBN) Monday reported an increase in profit for the first quarter, helped mainly by higher sales and margins. Earnings for the quarter topped Wall Street estimates, while revenues fell short of expectations.
"Our brands delivered solid growth across all channels in the first quarter, especially in our direct-to-consumer channel," said Chief Executive Officer Richard Hayne.
"Our focus on the direct-to-consumer channel has paid off nicely and we plan to continue to make the investments necessary to support its robust growth," added Hayne.
Urban Outfitters operates stores under its namesake brand, as well as Anthropologie, and Free People, among others. The company also operates a wholesale business under the Free People brand, and as well markets its brands online.
During the quarter, comparable retail segment net sales, which include the company's comparable direct-to-consumer channel, increased 9 percent. Comparable retail segment net sales increased 44 percent at Free People, 6 percent at Urban Outfitters and 8 percent at Anthropologie.
The Philadelphia, Pennsylvania-based company reported quarterly net income of $47 million or $0.32 per share, compared with $34 million or $0.23 per share last year.
On average, thirty-one analysts polled by Thomson Reuters expected earnings of $0.29 per share for the quarter. Analysts' estimates typically exclude special items.
Gross margin for the quarter improved 125 basis points from last year, due mainly to a reduction in merchandise markdowns stemming from improvements at Anthropologie. The company also improved its initial merchandise margins and leveraged store occupancy expenses.
Net sales for the quarter rose 14 percent to $648 million from $569 million last year. Twenty-eight analysts on consensus estimated revenues of $655.08 million for the quarter.
Selling, general and administrative expenses, expressed as a percentage of net sales, decreased 70 basis points, on improvements in direct store controllable and selling support expenses led by the strong positive retail segment sales.
During the quarter, the company opened a total of seven new stores including three Free People stores, two Urban Outfitters stores and two Anthropologie stores, and closed one Urban Outfitters store.
As of April 30, 2013, the company operated 216 Urban Outfitters stores, 182 Anthropologie stores, 80 Free People stores, 2 BHLDN stores and 2 Terrain garden centers.
The company's stock closed Monday at $44.49, down 0.11%, on a volume of 2.5 million shares. In after hours, the stock dropped $1.49 or 3.35%.
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