were higher Thursday after the company more than doubled its fourth-quarter profit, surpassing Wall Street's consensus forecast.
The company was also optimistic about full-year 2004 earnings, saying it expects to increase revenue by 20% and add at least 24 new stores, with a new focus on mall-based locations.
Urban Outfitters, which operates the Urban Outfitters, Anthropologie and Free People brands, earned $18.4 million, or 45 cents a share, in the fourth quarter, compared with $8.4 million, or 21 cents a share, a year ago. Analysts had been expecting 42 cents a share. Total sales increased 50% to $176.1 million from $117.6 million a year ago, helped by a 21% increase in quarterly same-store sales.
"The fourth-quarter was the prefect ending for our record-shattering year," the company said on a conference call with analysts. In the full year, Urban Outfitters earned $48.4 million, or $1.20 a share, up from $27.4 million, or 71 cents a share, a year ago. Total sales increased to $548.4 million, from $422.8 million last year.
Shares of the company were lately up $1 or 2.35%, at $43.54. They have skyrocketed 362% in the past year and are approaching their all-time high of $45.47 reached on Feb. 12.
The company, which targets its merchandise to consumers in their mid-20's, said quarterly sales were driven by full-priced merchandise which had higher initial markups. The company also said average transaction prices were up. Lastly, improved inventory management reduced the need to use markdowns to clear out slow-moving merchandise. Apparel and accessories were the company's best categories in the quarter.
Additionally, Urban Outfitters had a 29% sales increase in its wholesale Free People brand business, partly because its total customer base rose 17%.
The Philadelphia-based company said its operating margin was up 398 basis points, while gross profit margin increased 433 basis points. Urban Outfitters cited higher initial merchandise margins, decreased markdowns and improved occupancy expenses. At the same time, selling, general and administrative expenses -- as a percentage of sales -- decreased by 175 basis points, the company said.
Urban Outfitters noted that at year-end, it had surpassed its three-year goal set just one year ago to increase operating margins by 300 basis points. Operating margins were 14.7% in the full year.
In the next three years, Urban Outfitters said there is potential for a 250 basis-point improvement in operating margins, which would put the company on track to achieving 17% to 18% annual operating margins.
"There's no reason why we can't be there," the company said.
Urban Outfitter also said that the new mall-based stores it opened in the last year have outperformed its other locations, causing it look for new mall-based locations in 2004. The company opened 11 new stores in the fourth quarter, bringing the total for the year to 21.
The company is planning to open 24 to 27 new stores in 2004; one will be a Free People store with the rest spilt between the Urban Outfitters and Anthropologie brands. Ten to 12 of the stores will be opened in the first half of the year. The company said just three will be on-street locations. Total capex spending in the full year will be $40 million.
Ultimately, the company said it would like to have 150 Urban Outfitter stores and 200 Anthropologie stores in North America. The company currently has 61 Urban Outfitter stores and 52 Anthropologie stores. It has one Free People store, while the rest of the brand is sold to about 1,100 specialty stores.
The company said it is too early to talk about Free People as a true third retail concept, but added that it is "just at the beginning of the potential" for the brand. Urban Outfitters plans to partner with companies like
in the future.
Looking ahead, "The extremely positive comparable store sales trend established during the fourth quarter has continued into the new year," the company said in a statement. "As such, we are now very optimistic about our spring business and expect all three of our brands to significantly exceed their first-quarter sales plan."
Analysts expect the company to earn 22 cents a share in the first quarter, which would compare with a profit of 15 cents a share in the prior-year period.