Executives at Philadelphia-based URBN, the parent company of Urban Outfitters, Free People, Anthropologie and Nuuly, say they haven’t observed any shift in their customers’ behavior after reporting record results for fiscal 2026.
“We believe the macro economy is strong, and we see no shift in our customers’ behavior, except for that due to extreme weather,” said CEO Richard Hayne on the company’s February 25 earnings call. He described customers as “highly engaged” and said they are “responding enthusiastically to fashion newness.”
Urban Outfitters posted record fourth-quarter results for fiscal year 2026, with total revenue climbing 10.1% to $1.8 billion and adjusted earnings per diluted share rising 38% to $1.43.
The performance capped a full year in which the company grew total sales 11.1% to $6.17 billion — another record — despite persistent tariff headwinds that weighed on product margins throughout the year.
Consumer Confidence Edges Up in February
URBN’s results arrived against a backdrop of fragile consumer sentiment.
The Conference Board’s Consumer Confidence Index edged up 2.2 points in February to 91.2, a modest recovery after a January decline. But the reading remained well below the four-year peak of 112.8 reached in November 2024.
The Expectations Index, which tracks consumers’ short-term outlook for income, business, and labor conditions, rose to 72.0 — still in territory that historically signals recession risk. Write-in responses skewed pessimistic, with prices, inflation, and trade policy dominating consumer concerns.
Conference Board data shows confidence is still under pressure — particularly among consumers aged 35 and older, and across most income brackets on a six-month moving average basis.
Free People Comps Up 5.2% in Q4
URBN attributed fourth-quarter soft spots to extreme weather.
Store sales underperformed digital in several regions due to severe winter storms on the East Coast, and Anthropologie ran slightly behind its Q1 plan as a result. Digital, by contrast, held up.
“Digital sales were fine,” Hayne said, attributing weaker-than-planned store traffic primarily to the February storms rather than any underlying demand shift.
Across brands, Q4 performance was uneven but broadly positive:
- Free People reported a 5.2% comparable retail segment net sales increase, while wholesale sales increased 10.2% due to more sales to specialty customers. Free People’s activewear line FP Movement was the standout, with total revenue growth of 29% and a retail segment comp of 21% in the fourth quarter. FP Movement now operates 88 stores and plans to open at least 21 more in fiscal 2027.
- Nuuly, the company’s apparel rental subscription service, grew revenue 43% in Q4 and surpassed $500 million in annual revenue for the first time.
- The Urban Outfitters brand posted a global retail segment comp of 9.6% and returned to full-year profitability.
- Anthropologie delivered its fifth consecutive year of positive quarterly comps, reporting a 3.7% increase in the fourth quarter.
URBN executives estimate that tariff-related impacts reduced Q4 gross and operating profit rates by approximately 75 basis points, net of mitigation efforts. For the full year, the drag was approximately 35 basis points. CFO Melanie Marein-Efron noted that Q1 gross profit margins could decline 25 to 50 basis points year-over-year, partly due to higher tariff costs flowing through inventory. The company’s fiscal 2027 guidance was built before a recent Supreme Court ruling overturned certain IEEPA tariffs, which management said could provide an incremental benefit — though they stopped short of revising their outlook pending further clarity.
Looking ahead, URBN projected high single-digit total company sales growth for both Q1 and the full year of fiscal 2027, driven by mid-single-digit retail segment comps, mid-double-digit Nuuly revenue growth, and mid-single-digit wholesale gains. The company also plans to open approximately 57 new stores while closing 14, with net new store growth concentrated in FP Movement, Free People and Anthropologie.
