PHILADELPHIA, PA — Urban Outfitters, Inc. (NASDAQ: URBN) has reported strong financial results for the second quarter ending July 31, 2024. The company achieved net income of $117.5 million and earnings per diluted share of $1.24 for the quarter. For the first six months of the fiscal year, net income reached $179.3 million with earnings per diluted share of $1.89.
Total company net sales for the quarter climbed 6.3% to a record $1.35 billion. The Retail segment saw a 3.1% increase in net sales, driven by a 2.0% rise in comparable retail segment net sales. This growth was fueled by low single-digit increases in both digital channel and retail store sales. Segment highlights include a 7.1% increase in sales at Free People and a 6.7% rise at Anthropologie, while Urban Outfitters experienced a 9.3% decline.
The Nuuly segment also performed well, with net sales surging 62.6% due to a 55% increase in average active subscribers. Meanwhile, the Wholesale segment saw a 15.1% increase in net sales, primarily driven by a 17.5% rise in Free People wholesale sales. This was partially offset by a decline in Urban Outfitters wholesale sales.
CEO Richard A. Hayne expressed his satisfaction with the quarterly performance, stating, “We are pleased to report record second quarter sales fueled by strength across all three segments – Retail, Nuuly, and Wholesale.” He added, “Equally impressive, four of our five brands delivered record operating profits during the second quarter.”
For the first half of the year, total company net sales increased 7.0% to $2.55 billion. Comparable retail segment net sales grew by 3.2%, with notable increases at Free People (11.5%) and Anthropologie (8.4%), though Urban Outfitters saw an 11.4% decline. The Nuuly segment continued its robust growth, with a 57.2% increase in net sales.
Gross profit for the quarter rose 8.3% to $493.3 million, driven by higher initial merchandise markups across all segments and improved cross-functional initiatives. However, the Urban Outfitters brand saw higher merchandise markdowns, which slightly offset these gains. For the first six months, gross profit increased 9.1% to $901.7 million.
Selling, general, and administrative expenses for the quarter rose by $24.7 million, or 7.6%, due to increased marketing expenses and higher store payroll costs to support sales growth. For the six months, these expenses grew by $58.6 million, or 9.4%.
Urban Outfitters also made strategic moves in inventory management and store operations. As of July 31, 2024, total inventory increased by 3.1%, with Retail segment inventory growing by the same percentage. The company opened 19 new retail locations during the first half of the year, including 9 Free People stores, 5 Urban Outfitters stores, and 5 Anthropologie stores. Nine retail locations were closed.
The company’s effective tax rate for the quarter was 23.0%, slightly down from 23.2% in the same period last year. For the first six months, the tax rate decreased to 23.2% from 24.5%, mainly due to favorable equity activity.
In terms of shareholder returns, Urban Outfitters repurchased and retired 1.2 million shares for approximately $52 million during the first half of the year. As of July 31, 2024, 18.0 million common shares remained under the current share repurchase program authorized in June 2019.
Urban Outfitters’ second quarter results reflect strong performance across multiple segments and strategic initiatives aimed at sustaining growth. The company continues to focus on expanding its retail footprint and enhancing its product offerings to meet evolving consumer demands.
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