PHILADELPHIA, Aug 20, 2019 (GLOBE NEWSWIRE via COMTEX) -- Urban Outfitters, Inc. /zigman2/quotes/208403734/composite URBN +3.51% , a leading lifestyle products and services company which operates a portfolio of global consumer brands comprised of Anthropologie, BHLDN, Free People, Terrain, Urban Outfitters and Nuuly brands and the Food and Beverage division, today announced net income of $60 million and $93 million for the three and six months ended July 31, 2019, respectively. Earnings per diluted share were $0.61 and $0.91 for the three and six months ended July 31, 2019, respectively.
Total Company net sales for the three months ended July 31, 2019, decreased 3.0% over the same period last year to $962 million. Comparable Retail segment net sales decreased 3%, driven by negative retail store sales, partially offset by growth in the digital channel. By brand, comparable Retail segment net sales increased 6% at Free People and decreased 3% at the Anthropologie Group and 5% at Urban Outfitters. Wholesale segment net sales decreased 8%.
"I am pleased to report that customer reaction to our early fall apparel assortments have improved significantly from our second quarter results," said Richard A. Hayne, Chief Executive Officer. "Third quarter-to-date 'comp' sales are positive at all three brands," finished Mr. Hayne.
Net sales by brand and segment for the three and six-month periods were as follows:
Three Months Ended Six Months Ended July 31, July 31, 2019 2018 2019 2018 Net sales by brand Anthropologie Group $ 394,280 $ 401,275 $ 749,268 $ 748,360 Urban Outfitters 355,045 379,327 671,851 702,005 Free People 205,940 206,413 392,131 387,720 Food and Beverage 7,064 5,439 13,492 10,057 Total Company $ 962,329 $ 992,454 $ 1,826,742 $ 1,848,142 Net sales by segment Retail Segment $ 878,693 $ 902,027 $ 1,661,256 $ 1,677,591 Wholesale Segment 83,636 90,427 165,486 170,551 Total Company $ 962,329 $ 992,454 $ 1,826,742 $ 1,848,142
For the three and six months ended July 31, 2019, the gross profit rate decreased by 304 basis points and 242 basis points versus the prior year's comparable periods, respectively. The decrease in gross profit rate for both periods was driven by higher markdowns, deleverage in delivery and logistics expenses and store occupancy deleverage. The higher markdowns were largely driven by underperforming women's apparel at the Anthropologie and Urban Outfitters brands. The deleverage in delivery and logistics expenses is primarily due to the increase in penetration of the digital channel. The deleverage in store occupancy was due to negative store and Retail segment comparable net sales.
As of July 31, 2019, total inventory increased by $64.4 million, or 17.2%, on a year-over-year basis. Comparable Retail segment inventory increased 5% at cost. The remainder of the increase was primarily related to an increase in inventory in transit.
Selling, general and administrative expenses decreased by $1.2 million, or 0.5%, during the three months ended July 31, 2019, compared to the prior year's comparable period. Selling, general and administrative expenses increased by $1.1 million, or 0.2%, during the six months ended July 31, 2019, compared to the prior year's comparable period. As a percentage of net sales, selling, general and administrative expenses deleveraged by 62 basis points and 36 basis points during the three and six months ended July 31, 2019, when compared to the prior year's comparable periods, respectively. The deleverage in both periods was primarily driven by increased marketing expenses to support our digital sales growth as well as the launch of our new monthly women's apparel subscription rental service, Nuuly.
The Company's effective tax rate for the three months ended July 31, 2019, was 26.0% compared to 21.7% in the prior year period. The Company's effective tax rate for the six months ended July 31, 2019, was 25.2% compared to 22.3% in the prior year period. The increase in the effective tax rate for the three and six-month periods was primarily due to the ratio of foreign taxable profits to global taxable profits and the prior year favorable impact of equity activity.
Net income for the three and six months ended July 31, 2019, was $60 million and $93 million, respectively, and earnings per diluted share was $0.61 and $0.91, respectively.
On February 1, 2019, the Company adopted an accounting standards update that amended the previous accounting standards for lease accounting. The adoption resulted in the recognition of approximately $1.3 billion of lease liabilities and corresponding right-of-use assets of approximately $1.1 billion, with the offsetting balance representing a reduction in the previously recognized deferred rent balance. The adoption did not result in a material impact on the Company's Condensed Consolidated Statements of Income.
On August 22, 2017, the Company's Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. During the six months ended July 31, 2019, the Company repurchased and subsequently retired 8.1 million common shares for approximately $217 million under this program. During the year ended January 31, 2019, the Company repurchased and subsequently retired 3.5 million common shares for approximately $121 million under this program. On June 4, 2019, the Company's Board of Directors authorized the repurchase of 20 million common shares under a new share repurchase program. As of July 31, 2019, 26.3 million common shares were remaining under the programs.
During the six months ended July 31, 2019, the Company opened a total of seven new retail locations including: three Anthropologie Group stores, three Free People stores and one Urban Outfitters store; and closed five retail locations including: two Anthropologie Group stores, one Free People store and two Food and Beverage restaurants. During the six months ended July 31, 2019, one Anthropologie Group franchisee-owned store was opened.
Urban Outfitters, Inc., offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands comprised of 246 Urban Outfitters stores in the United States, Canada and Europe and websites; 228 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 137 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 Food and Beverage restaurants, 4 Urban Outfitters franchisee-owned stores, 1 Anthropologie Group franchisee-owned store and 1 Free People franchisee-owned store, as of July 31, 2019. Free People, Anthropologie Group and Urban Outfitters wholesale sell their products through approximately 2,200 department and specialty stores worldwide, digital businesses and the Company's Retail segment.
A conference call will be held today to discuss second quarter results and will be webcast at 5:15 pm. ET at: https://edge.media-server.com/mmc/p/2bvghd8c
This news release is being made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Certain matters contained in this release may constitute forward-looking statements. When used in this release, the words "project," "believe," "plan," "will," "anticipate," "expect" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, the effects of the implementation of the United Kingdom's referendum to withdraw membership from the European Union (commonly referred to as "Brexit"), including currency fluctuations, economic conditions, and legal or regulatory changes, any effects of war, terrorism and civil unrest, natural disasters or severe or unseasonable weather conditions, increases in labor costs, increases in raw material costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, the departure of one or more key senior executives, import risks, changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes or increases in duties or quotas, the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, risks associated with digital sales, our ability to maintain and expand our digital sales channels, response to new store concepts, our ability to integrate acquisitions, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate, the impact of the U.S. Tax Cuts and Jobs Act, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in the Company's filings with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.
URBAN OUTFITTERS, INC.