Urban Outfitters Inc., a leading lifestyle specialty retail company operating under the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters brands, announced net income of $60 million and $155 million for the three and nine months ended October 31, 2012, respectively. Earnings per diluted share were $0.40 and $1.06 for the three and nine months ended October 31, 2012, respectively.
Total Company net sales rose by 14% over the same quarter last year to $693 million. Comparable retail segment net sales, which include our comparable direct-to-consumer channel, increase by 8% for the quarter, while comparable store net sales decreased by 1%.
Comparable retail segment net sales at Free People, Urban Outfitters and Anthropologie increase by 24%, 7% and 6%, respectively, for the quarter. Direct-to-consumer net sales increased by 36% and wholesale segment net sales rose by 7% for the quarter.
"Favorable customer response to our product offerings and better marketing resulted in record third quarter sales and significant margin improvement," said Chief Executive Officer, Richard A. Hayne. "We see this trend continuing into the fourth quarter which bodes well for our Holiday season," finished Mr. Hayne.
For the three months ended October 31, 2012, the gross profit rate improved by 222 basis points versus the prior year's comparable period. The increase in gross profit rate was primarily due to a reduction in merchandise markdowns. For the nine months ended October 31, 2012, the gross profit rate improved by 29 basis points versus the prior year's comparable period. The increase in the rate was primarily due to a reduction in merchandise markdowns partially offset by the deleverage of store occupancy costs related to the negative comparable store net sales.
As of October 31, 2012, total inventories increased by $28 million or 8%, on a year-over-year basis. The growth in total inventories is primarily related to the acquisition of inventory to stock new and non-comparable stores and to support the significant growth in the direct-to-consumer channel. Comparable retail segment inventories were flat and comparable store inventories decreased by 6% as of October 31, 2012.
For the three months ended October 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 75 basis points. The increase was primarily due to higher incentive-based compensation in the current quarter. For the nine months ended October 31, 2012, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 41 basis points. This increase was primarily due to the deleveraging of direct store controllable expenses driven by the negative comparable store net sales.
During the nine months ended October 31, 2012, the Company opened a total of 39 new stores including: 15 Free People stores, 12 Urban Outfitters stores, 10 Anthropologie stores, 1 BHLDN store and 1 Terrain garden center, and closed 1 Anthropologie store.
Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 209 Urban Outfitters stores.
