Urban Outfitters(US:URBN)2021-12-09 16:00Retail Segment Performance - Retail segment net sales accounted for approximately 93.0% of consolidated net sales for the nine months ended October 31, 2021, compared to 93.8% for the comparable period in fiscal 2021 [111]. - North American Retail segment net sales accounted for approximately 28.1% of consolidated net sales for the nine months ended October 31, 2021, down from approximately 31.7% for the comparable period in fiscal 2021 [107]. - The Anthropologie Group's North American Retail segment net sales accounted for approximately 36.6% of consolidated net sales for the nine months ended October 31, 2021, compared to approximately 35.9% for the comparable period in fiscal 2021 [109]. - The Free People Group's North American Retail segment net sales accounted for approximately 16.4% of consolidated net sales for the nine months ended October 31, 2021, up from approximately 15.0% for the comparable period in fiscal 2021 [110]. - Retail segment comparable net sales increased by 14.1%, with significant growth in the Free People Group (32.1%) and Anthropologie Group (19.2%) during the third quarter of fiscal 2022 [127]. - Net sales for the nine months ended October 31, 2021, were $3.22 billion, a $855.2 million increase from $2.36 billion in the same period of fiscal 2021, driven by a 35.0% increase in Retail segment net sales [136]. - Retail segment comparable net sales increased by $700.1 million, or 32.1%, with Free People Group achieving a 44.5% increase, Anthropologie Group 37.8%, and Urban Outfitters 21.3% [137]. Financial Performance - Total net sales increased by 14.6% over the third quarter of fiscal 2020, reaching $1,131.4 million, driven by a 16.6% increase in Retail segment net sales [124]. - Gross profit rate improved to 34.5% for the third quarter of fiscal 2022, compared to 33.3% for the third quarter of fiscal 2021, with gross profit increasing to $390.7 million [129]. - Gross profit for the first nine months of fiscal 2022 increased to $1,126.7 million, representing 35.0% of net sales, up from 24.3% in the same period of fiscal 2021 [140]. - Income from operations for the third quarter of fiscal 2022 was 10.2% of net sales, amounting to $115.9 million, compared to 10.2% or $98.5 million in the same quarter of fiscal 2021 [132]. - Income from operations for the first nine months of fiscal 2022 was $355.3 million, or 11.0% of net sales, compared to a loss of $30.8 million, or 1.3% of net sales, in the same period of fiscal 2021 [142]. - Selling, general and administrative expenses increased by $50.4 million, or 22.5%, to $274.8 million in the third quarter of fiscal 2022, with expenses as a percentage of net sales rising to 24.3% [131]. - Selling, general and administrative expenses rose by $167.8 million, or 27.8%, to $771.4 million, but as a percentage of net sales, it decreased to 24.0% from 25.6% [141]. - Cash provided by operating activities for the nine months ended October 31, 2021, was $222.3 million, compared to $214.7 million in the prior year [144]. - The effective tax rate for the first nine months of fiscal 2022 was 23.6%, compared to a benefit of 14.8% in the same period of fiscal 2021 [142]. Strategic Decisions and Future Plans - The COVID-19 pandemic continued to negatively impact store operations during the first nine months of fiscal 2022, leading to reduced store traffic and supply chain disruptions [100]. - The Company made a strategic decision to bring certain product categories in earlier in the third quarter of fiscal 2022 to minimize the impact of supply chain disruptions on customer demand [100]. - The Company continued to qualify for certain government assistance programs that partially offset related expenses during fiscal 2022 [101]. - The company plans for future growth through domestic and international expansion, including new store openings and digital channel growth [116]. - Projected openings for fiscal 2022 include 17 new Urban Outfitters stores and 29 new Free People Group stores, totaling 56 projected openings across all brands [117]. - The company plans to open approximately 56 new retail locations and invest in new products and markets during fiscal 2022 [151]. Inventory and Supply Chain - Total inventory increased by $95.5 million, or 18.0%, compared to total inventory as of October 31, 2019, due to increased net sales and strategic decisions to mitigate supply chain disruptions [124]. - The Company recorded additional reserves for inventory obsolescence and an allowance for doubtful accounts for Wholesale segment customer accounts receivable during fiscal 2021 [99]. - The Nuuly segment, which includes a rental service and resale marketplace, accounted for less than 1.0% of consolidated net sales for the nine months ended October 31, 2021 [119]. - The Company operates under three reportable segments: Retail, Wholesale, and Nuuly, with the Retail segment being the largest contributor to net sales [93].