Urban Outfitters, Inc.

Second-quarter net sales grew 10% to $1.7 billion, operating income increased 11% to a record $193 million, net income was $149 million, and EPS rose 9% to $1.72. Gross profit rate increased 4 basis points to 37.7%, with gross profit dollars up 11%. On a segment basis, Nuuly revenue grew 29% to $179 million and posted $18 million of operating income, while wholesale revenue rose 19% and several brands posted strong comp gains, including Urban Outfitters at 8% and Free People at 9% retail comp; Anthropologie comped 3% and the FP Group retail comp was 10%. For Q3, management guided total company sales to high-single-digit growth, retail comp to mid-single digits, Nuuly revenue to high-20s growth, wholesale to low-teens growth, and gross margin improvement of 25 to 50 bps. For the full year, they reiterated high-single-digit sales growth, about 25 bps gross margin expansion, SG&A growth at or below sales, and Nuuly revenue over $700 million with a high-single-digit operating profit rate.

Dick Hayne emphasized that the quarter reflected the strength of URBN’s diversified portfolio and said the company has now produced eight straight quarters of record sales and profits. His tone was confident and upbeat, pointing to strong execution across brands, resilient consumers, and a long-term strategy built on diversification by brand, demographic, product, channel, and geography. He also reiterated his view that URBN’s portfolio could eventually include multiple $5 billion-plus brands.

Melanie Marein-Efron focused on the Q3 and full-year outlook, saying the company expects high-single-digit sales growth for FY27, about 25 bps of full-year gross margin improvement, and SG&A growth at or below sales. She said Q3 gross margin could improve 25 to 50 bps, helped by lower tariffs and occupancy leverage, but partially offset by fuel surcharges that she quantified at about 70 bps unfavorable in each of Q3 and Q4. She also guided FY27 capex to approximately $475 million, with about 35% for store expansion/support, 50% for logistics, and 15% for technology and home office expansion, and she said the adjusted tax rate should be approximately 24.75% for Q3 and the full year.

Analysts pressed on Anthropologie’s assortment issues, markdown pressure, and whether the brand can get back to a mid-teen operating rate; management said the brand is rebalancing assortment, clearing slower inventory, and sees confidence in fall reads, but is still focused on returning to low- to mid-single-digit comps and eventually mid-single-digit comps longer term. Questions also centered on Nuuly retention, brand mix, and profitability; management said retention remains stable, URBN brands stay at the core, and the business is scaling toward better fixed-cost leverage, with leadership saying Nuuly can run at a 10% operating profit rate or better on an annual basis. Analysts also asked about pricing and promotional trends; management said promotional activity has not broadly worsened, August trends are in line with plans, and AUR is being driven more by fashion mix than aggressive pricing.