Urban Outfitters Inc. turned sales increases into an even bigger gain on the bottom line — with sales strength at Anthropologie and Free People overcoming declines at the company’s namesake business.
Net income for the third quarter jumped 123 percent to $83 million, or 88 cents a share, from $37.2 million, or 40 cents a year earlier.
That put earnings per share 6 cents ahead of the 82 cents analysts projected, according to FactSet. Investors were muted in their response and traded shares of the retailer up 1.9 percent to $37.
Sales for the three months ended Oct. 31 rose 9 percent to $1.3 billion from $1.2 billion.
Richard Hayne, chief executive officer, said in a statement: “As we enter the holiday season the consumer continues to react positively to our assortments and marketing campaigns at four out of five of our brands, which leaves us confident we can continue to drive revenue and earnings growth in the fourth quarter.”
The company’s gross profit rate increased by 509 basis points for the quarter, with gross profit dollars increasing 27.3 percent to $454.4 million.
The firm attributed this mostly to “higher initial merchandise markups and lower merchandise markdowns in the retail segment at Anthropologie, Free People and Urban Outfitters. The improvement in initial merchandise markups was primarily driven by lower inbound transportation costs.”
Still there is work to do at the Urban Outfitters division, which saw sales fall 11 percent to $323.4 million in the quarter.
The Anthropologie and Terrain brands collectively drove sales up 13.6 percent to $549.8 million and Free People rose 18.2 percent to $331.8 million.
The Nuuly rental and resale market’s topline expanded by 85.7 percent to $65.5 million as the service increased subscribers by 68 percent.