Urban Outfitters Profit Falls 20%

(RTTNews) - Lifestyle specialty retailer Urban Outfitters, Inc. (URBN) said Monday after the markets closed that its first quarter profit fell 20% from last year, as higher costs and expenses more than offset a 6% increase in revenue.

The company's quarterly earnings per share also came in below analysts' expectations, but its quarterly sales managed to beat analysts' forecast.

"I am pleased to announce record URBN first quarter sales driven by strong performances at both the Anthropologie and Free People brands," said Richard Hayne, Chief Executive Officer of Urban Outfitters. "While Anthropologie and Free People continue to deliver record levels in sales and profits, Urban Outfitters had a disappointing quarter and is working diligently to regain its fashion footing."

Urban Outfitters shares are currently losing 4.15% in after hours trading after closing the day's regular trading session at $36.17, down 4 cents. The shares trade in a 52-week range of $33.95 to $44.96.

Urban Outfitters operates stores under its namesake brand as well as, Anthropologie, Free People, Terrain, and BHLDN brands. Urban Outfitters stores sell women's and men's fashion apparel, footwear, accessories, and gifts, as well as apartment wares, such as rugs and pillows to young adults aged 18 to 28; and Anthropologie stores provide women?s casual apparel and accessories, shoes, gifts, decorative items, and home furnishings to women aged 28 to 45. The company's Free People stores mainly offer Free People branded merchandise mix of casual women's apparel, intimates, shoes, accessories, and gifts to young contemporary women aged 25 to 30.

For the first quarter ended April 30, 2014, the Philadelphia, Pennsylvania-based company reported net income of $37.5 million or $0.26 per share, compared to $47.1 million or $0.32 per share for the year-ago quarter.

On average, 36 analysts polled by Thomson Reuters expected the company to earn $0.27 per share for the first quarter.

Net sales for the first quarter rose 6% to a record $686.31 million from $648.18 million in the same quarter last year. Thirty-two analysts had a consensus revenue estimate of $680.18 million for the first quarter.

Retail segment net sales rose 5% to $640.4 million, while wholesale segment net sales surged 27% to $45.9 million.

Comparable Retail segment net sales, which include the company's comparable direct-to-consumer channel, were flat. Comparable Retail segment net sales increased 25% at Free People and 8% at Anthropologie but dropped 12% at Urban Outfitters.

Gross margin for the first quarter shrank to 34.8% from 36.8% a year earlier, mainly due to a deleverage in store occupancy costs driven by negative store same-store sales at the Urban Outfitters brand and pre-opening rent expense related to new stores. Lower merchandise margins at the Urban Outfitters brand resulting from poor performing product also contributed to the decline.

Selling, general and administrative expenses for the quarter rose 8% from a year ago to $176.7 million.