UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 000-22754 Urban Outfitters, Inc. (Exact Name of Registrant as Specified in Its Charter) Pennsylvania 23-2003332 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 5000 South Broad Street, Philadelphia, PA 19112-1495 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (215) 454-5500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, par value $.0001 per share URBN NASDAQ Global Select Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common shares, $0.0001 par value—97,965,012 shares outstanding on June 4, 2019. TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed Consolidated Balance Sheets as of April 30, 2019, January 31, 2019 and April 30, 2018 1 Condensed Consolidated Statements of Income for the three months ended April 30, 2019 and 2018 2 Condensed Consolidated Statements of Comprehensive Income for the three months ended April 30, 2019 and 2018 3 Condensed Consolidated Statements of Shareholders’ Equity for the three months ended April 30, 2019 and 2018 4 Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2019 and 2018 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures about Market Risk 26 Item 4. Controls and Procedures 26 PART II OTHER INFORMATION Item 1. Legal Proceedings 27 Item 1A. Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and the Use of Proceeds 27 Item 6. Exhibits 28 Signatures 29 PART I FINANCIAL INFORMATION Item 1. Financial Statements URBAN OUTFITTERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) (unaudited) April 30, January 31, April 30, 2019 2019 2018 ASSETS Current assets: Cash and cash equivalents $ 291,199 $ 358,260 $ 313,713 Marketable securities 229,163 279,232 166,367 Accounts receivable, net of allowance for doubtful accounts of $892, $1,499 and $1,895, respectively 88,390 80,461 88,936 Inventory 408,362 370,507 404,617 Prepaid expenses and other current assets 122,183 114,296 123,505 Total current assets 1,139,297 1,202,756 1,097,138 Property and equipment, net 829,072 796,029 819,725 Operating lease right-of-use assets 1,088,290 — — Marketable securities 93,894 57,292 35,079 Deferred income taxes and other assets 101,267 104,438 99,273 Total Assets $ 3,251,820 $ 2,160,515 $ 2,051,215 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 174,258 $ 144,414 $ 158,870 Current portion of operating lease liabilities 214,443 — — Accrued expenses, accrued compensation and other current liabilities 259,478 242,230 256,221 Total current liabilities 648,179 386,644 415,091 Non-current portion of operating lease liabilities 1,092,180 — — Deferred rent and other liabilities 63,490 284,773 289,709 Total Liabilities 1,803,849 671,417 704,800 Commitments and contingencies (see Note 12) Shareholders’ equity: Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued — — — Common shares; $.0001 par value, 200,000,000 shares authorized, 103,599,364, 105,642,283 and 108,670,688 shares issued and outstanding, respectively 10 11 11 Additional paid-in-capital — — 6,434 Retained earnings 1,478,678 1,516,190 1,358,683 Accumulated other comprehensive loss (30,717) (27,103) (18,713) Total Shareholders’ Equity 1,447,971 1,489,098 1,346,415 Total Liabilities and Shareholders’ Equity $ 3,251,820 $ 2,160,515 $ 2,051,215 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 URBAN OUTFITTERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except share and per share data) (unaudited) Three Months Ended April 30, 2019 2018 Net sales $ 864,413 $ 855,688 Cost of sales 595,357 575,028 Gross profit 269,056 280,660 Selling, general and administrative expenses 229,036 226,764 Income from operations 40,020 53,896 Other income, net 2,680 80 Income before income taxes 42,700 53,976 Income tax expense 10,115 12,716 Net income $ 32,585 $ 41,260 Net income per common share: Basic $ 0.31 $ 0.38 Diluted $ 0.31 $ 0.38 Weighted-average common shares outstanding: Basic 104,437,460 108,490,926 Diluted 105,340,148 109,743,677 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 URBAN OUTFITTERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (amounts in thousands) (unaudited) Three Months Ended April 30, 2019 2018 Net income $ 32,585 $ 41,260 Other comprehensive loss: Foreign currency translation (3,800) (7,969) Change in unrealized gains (losses) on marketable securities, net of tax 186 (93) Total other comprehensive loss (3,614) (8,062) Comprehensive income $ 28,971 $ 33,198 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 URBAN OUTFITTERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (amounts in thousands, except share data) (unaudited) Accumulated Common Shares Additional Other Number of Par Paid-in Retained Comprehensive Shares Value Capital Earnings Loss Total Balances as of January 31, 2019 105,642,283 $ 11 $ — $ 1,516,190 $ (27,103) $ 1,489,098 Comprehensive income — — — 32,585 (3,614) 28,971 Share-based compensation — — 5,553 — — 5,553 Share-based awards 563,989 — 974 — — 974 Share repurchases (2,606,908) (1) (6,527) (70,097) — (76,625) Balances as of April 30, 2019 103,599,364 $ 10 $ — $ 1,478,678 $ (30,717) $ 1,447,971 Accumulated Common Shares Additional Other Number of Par Paid-in Retained Comprehensive Shares Value Capital Earnings Loss Total Balances as of January 31, 2018 108,248,568 $ 11 $ 684 $ 1,310,859 $ (10,651) $ 1,300,903 Comprehensive income — — — 41,260 (8,062) 33,198 Share-based compensation — — 5,524 — — 5,524 Share-based awards 560,430 — 5,273 — — 5,273 Cumulative effect of change in accounting pronouncements — — — 6,564 — 6,564 Share repurchases (138,310) — (5,047) — — (5,047) Balances as of April 30, 2018 108,670,688 $ 11 $ 6,434 $ 1,358,683 $ (18,713) $ 1,346,415 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 URBAN OUTFITTERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) April 30, 2019 2018 Cash flows from operating activities: Net income $ 32,585 $ 41,260 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,809 30,464 ROU asset amortization 46,626 — Provision (benefit) for deferred income taxes 4,163 (7,166) Share-based compensation expense 5,553 5,524 Loss on disposition of property and equipment, net 552 1,985 Changes in assets and liabilities: Receivables (8,003) (12,194) Inventory (38,551) (54,379) Prepaid expenses and other assets (12,396) 1,599 Payables, accrued expenses, operating lease liabilities and other liabilities (32,445) 47,022 Net cash provided by operating activities 25,893 54,115 Cash flows from investing activities: Cash paid for property and equipment (37,716) (24,634) Cash paid for marketable securities (129,896) (52,237) Sales and maturities of marketable securities 151,761 57,400 Net cash used in investing activities (15,851) (19,471) Cash flows from financing activities: Proceeds from the exercise of stock options 974 5,273 Share repurchases related to share repurchase program (71,242) — Share repurchases related to taxes for share-based awards (5,383) (5,047) Net cash (used in) provided by financing activities (75,651) 226 Effect of exchange rate changes on cash and cash equivalents (1,452) (3,377) (Decrease) increase in cash and cash equivalents (67,061) 31,493 Cash and cash equivalents at beginning of period 358,260 282,220 Cash and cash equivalents at end of period $ 291,199 $ 313,713 Supplemental cash flow information: Cash paid during the year for: Income taxes $ 3,030 $ 2,414 Non-cash investing activities—Accrued capital expenditures $ 31,761 $ 26,177 The accompanying notes are an integral part of these condensed consolidated financial statements.