This summary is based on the first quarter fiscal 2007 earnings call conducted by Urban Outfitters, Inc. (URBN: chart) on May 11, 2006.
Key Investors Issues
-Net income reduced to $20.3 million as against $27.4 million in the prior year quarter.
-EPS was 12 cents compared to 16 cents in the first quarter of 2006.
-Net sales were $270 million as compared to $231.3 million in the first quarter of 2006.
-Inventory at the end of the quarter stood at $140.7 million.
-The company plans to open 35 to 38 stores new stores this year.
First Quarter Fiscal 2007 Financial Highlights
Net sales increased 17% to $270 million as compared to $231.3 million a year ago.
Urban Outfitters store sales accounted for $117.1 million, Anthropologie store sales accounted for $99.9 million, Direct-to-consumer sales accounted for $33.5 million and Free People sales accounted for $19.5 million.
The major factor driving sales during the period was a 22% increase in the number of stores in operation.
During the quarter, the company opened seven new stores including five new Urban Outfitters and two new Anthropologie stores. In contrast, the company opened four new stores in last year’s first quarter. Sales generated from these new stores and other non-comparable stores accounted for $32.4 million in additional revenues this quarter. As of April 30, retail selling square feet in stores opened for business totaled 1.5 million versus 1.3 million last year. This was a year-on-year gain of 21% in selling square feet.
Sales were also boosted by the surge in the Free People wholesale business.
Total health wholesale sales jumped by 65% to $17.7 million. Driving this dramatic gain was a 54% increase in the average wholesale order size coupled with a slight increase in wholesales average unit selling price.
Another factor driving sales was the 17% growth in direct-to-consumer sales.
Direct sales in the period grew by $4.8 million to a total of $33.5 million. This was accomplished by distributing more catalogues during the period, growing the average order value by 9% and increasing the total number of visitors to the brands'' websites by 28%. Also driving direct sales in the quarter was the mailing of Anthropologie''s very successful dress catalogue that dropped in March and early April.
Comparable store sales were lower by 3%.
This was offset by increased number of stores, the growth in wholesale and the direct to consumer businesses. Comparable store sales were lower by 2% at the Anthropologie brand and 4% at the Urban Outfitters brand versus a 9% and 13% gain in the previous year’s first quarter.
The Free People retail stores registered a 14% increase in comparable store sales.
The Anthropologie brand posted a 3% increase in the average unit selling price (AUR). This was offset by 4% fewer transactions at comparable stores and a slight decrease in the number of units sold per transaction (UPT). At the Urban brand, lower comparable store sales resulted from a 3% drop in the AUR caused by more markdowns, a 4% decrease in the number of comparable store transactions and a 3% gain in UPTs. The Urban European division delivered good comparable store sales increase of 11%. This gain was primarily transaction driven.
Total company apparel and home divisional sales showed small comparable store gains.
The Urban Renewal division of Urban Outfitters and the accessory divisions across all brands were very weak. By region the stores on the coasts performed better than the Midwest stores. This was consistent with sales patterns during the early stages of past fashion shifts, when customers on the coasts typically embraced fashion change faster than the customers in the interior.
Comparable Store Sales by Month
April was significantly better than either February or March. This was due in part to the shift in Easter and in part to the receipt of more appropriate merchandise.
Total operational margins dropped by 761 basis points to 11.7% of net sales. 
