Urban Outfitters in ongoing M&A discussions; hopeful of deal this year
Urban Outfitters (NASDAQ:URBN), the Philadelphia, Pennsylvania-based specialty retail company, will continue to engage in talks regarding potential acquisitions and hopes to announce a deal this year, CEO Richard Hayne said Monday.
On the 2Q15 earnings call, Hayne was asked for an update on the company’s M&A strategy.
“We have had many, many discussions with a number of parties,” he said, regarding acquisitions.
The CEO noted that the company was not in a hurry to make deals, describing market valuations as “a bit frothy” at present. He added that he would not overpay for targets.
“We keep having those discussions,” Hayne said. “And I think at some point, hopefully still this year, we may have something to report.”
A published report in June suggested Urban Outfitters as among those potentially interested in Australia-based activewear retailer Lorna Jane, which had previously been valued at AUD 500m (USD 467m).
On Urban Outfitter’s 2Q14 earnings call held August 2013, Hayne said the company planned to expand its product range and enter into adjacent business areas via internal development as well as external relationships, with the latter including licensing, partnerships, joint ventures and acquisitions. On that call, the CEO said Urban Outfitters had not typically sought these types of external relationships to achieve its expansion goals, but intended to more aggressively pursue this method in future.
“The partnerships and acquisitions we believe present the most potential are those that have a similar customer profile to one of our existing brands, have a management team that will augment or complement our existing expertise and those that offer strong growth opportunities,” Hayne said on the 2Q14 call.
The CEO said on the earlier call that smaller targets would be preferred to larger targets.
In 2008, the company bought Pennsylvania-based J. Franklin Styler Nurseries for an undisclosed sum. The target, engaged in landscape nurseries, had annual revenues ranging from USD 10m to USD 20m.
Urban Outfitters has a longstanding relationship with hometown-based law firm Drinker Biddle & Reath. Harry Cherken, a partner at the firm, has served on the company's board since 1989.
On Monday’s call, Urban Outfitters reported cash and marketable securities of USD 409m at quarter-end. The company has a market capitalization of USD 5.1bn