Key Takeaways:
- Urban Outfitters, Inc. Chief Executive Officer Richard Hayne reported strong consumer resilience and sustained demand for fashion newness.
- Total company net sales increased 10% to a record $1.66 billion, with adjusted net income reaching $149 million.
- Nuuly and the Free People Group led overall growth, while FP Movement expanded its standalone retail footprint to 97 stores.
Urban Outfitters CEO Richard Hayne addressed media questions regarding consumer health and resilience, telling analysts that shoppers remain financially solid and eager to spend on creative fashion.
“Much has been written in the media questioning the health and resilience of the consumer,” Hayne said. “However, based on what we see across our businesses every day, the economy and our customers remain in very solid shape. Job stability is real, take-home incomes are rising, and our customers continue to spend on fashion. Despite the ever-present noise, their shopping behavior has remained remarkably consistent. They are financially secure, highly engaged, and respond enthusiastically to new fashion. They continue to prioritize creativity and style over price, and our brands are delivering what the customers are looking for.”
Fashion Cycle, Bottom Trends and Footwear Demand
Hayne also addressed the longevity of the current fashion cycle, noting that the shift toward looser, wider silhouettes remains in high demand.
“As to the denim being long in the tooth, we don’t see that,” Hayne said. “Denim is doing quite well. I do believe we have been talking about the bottom trend for almost seven years now. My experience would tell me that most silhouettes, and the trends therein, rarely exceed a decade in length. We’re due for a change in the next, let’s say, three years or so. Right now, as I want to emphasize, the whole fuller bottom trend remains extremely strong, and we expect that to continue into FY 2028.”
When asked by an analyst about broader discussions surrounding an ebbing moment for footwear, Co-President and Chief Operating Officer Frank Conforti said the company is bucking any market softness.
“First of all, on the athletic shoe front, I understand where your comment is coming from, but I just want you to know that all three of our brands are seeing very strong increases in athletic shoe sales,” Conforti said. “We are not participating in any of the downturns that have been discussed recently.”
Second-Quarter Results
For the second quarter ended July 31, 2026, total net sales rose 10% to a record $1.66 billion, compared to $1.5 billion in the prior-year period. Total retail segment comparable net sales increased 6%, with digital channel growth slightly outpacing store channel growth. Non-comparable retail segment net sales rose 50% to $79.1 million, driven by new store openings.
Adjusted gross margin improved by four basis points to 37.7%, up from 37.6% a year earlier, as adjusted gross profit increased 11% to $626 million. Store occupancy leverage and lower delivery expenses per package offset inbound freight fuel surcharges associated with the war in the Middle East and higher markdowns at Anthropologie.
Adjusted net income for the period rose to $149 million, or $1.72 per diluted share, compared to $144 million, or $1.58 per diluted share, in the second quarter of fiscal 2026.
Urban Outfitters
Net sales at the Urban Outfitters brand increased 8% to $360 million. Retail segment net sales rose 8% to $355.7 million, with comparable retail sales rising 8%.
In North America, comparable retail sales grew 8%, while European comparable retail sales increased 9%. Wholesale segment sales grew 7% to $4.3 million.
Product strength was led by bottoms, lounge, novelties, shoes, and private-label apparel lines BDG and Out from Under. Marketing initiatives included expanding reach on platforms such as TikTok Search, Reddit, and ChatGPT, as well as launching the “All Together Now” connected television campaign featuring more than 75 real college students.
Urban Outfitters ended the quarter with 252 company-owned store locations globally, comprising 176 stores in North America and 76 stores in Europe.
Anthropologie
Total net sales for the Anthropologie brand increased 5% to $634.5 million, with retail segment comparable net sales increasing 3%. North American comparable retail sales grew 3%, while European comparable sales were flat.
Apparel and accessories delivered positive comp performance, led by dresses, bottoms, and shoes, while the home category remained flat as furniture gains balanced soft home accessories.
Anthropologie Group Global Chief Executive Officer Tricia D. Smith noted that early fall transition merchandise and influencer campaigns in July helped accelerate full-price selling following elevated promotional clearance earlier in the quarter.
Anthropologie operated 257 company-owned stores at quarter-end, with 236 locations in North America and 21 in Europe.
Free People and FP Movement
Total FP Group net sales rose 15% to $478.1 million. Retail segment net sales climbed 14% to $391.6 million, supported by a 10% comparable retail sales gain. The group’s wholesale segment surged 19% to $86.5 million, driven by demand from specialty accounts and department stores.
By individual label, Free People brand sales grew 11% to $346.4 million, with retail segment comparable sales up 9%. Activewear brand FP Movement generated a 26% increase in net sales to $131.7 million, backed by a 13% retail segment comp gain.
Urban Outfitters and Free People Groups Global Chief Executive Officer Sheila Harrington noted strong international momentum for Free People, supported by 14 Free People stores in the United Kingdom and Europe and wholesale partnerships with Selfridges and Barneys.
The FP Group ended the quarter with 284 stores, including 173 Free People North American stores, 14 Free People European stores, and 97 standalone FP Movement locations.
Nuuly
The Nuuly subscription rental business grew net sales 29% to $178.6 million, up from $138.9 million in the prior-year period. Average active subscribers rose 30% to 484,000, briefly surpassing 500,000 active subscribers in June.
Nuuly President and URBN Chief Technology Officer Dave Hayne announced that total assortment choices expanded 35% to nearly 33,000 styles, including additions from Revolve private labels, Collina Strada, Faithfull, and Edikted. Dave Hayne confirmed that Nike will launch on Nuuly this month, followed by J.Crew in October.
To support future capacity of roughly 1.2 million subscribers, the company expanded its Kansas City fulfillment center to 1 million square feet and announced plans for a 1-million-square-foot facility near Philadelphia scheduled to open in late 2028.
Second-Half Outlook
For the third quarter of fiscal 2027, CFO Melanie Marein-Efron stated the company forecasts total net sales growth in the high single digits.
Retail segment comparable sales are forecast to grow mid-single digits, reflecting high single-digit comps at the FP Group, mid-single-digit comps at Urban Outfitters, and low- to mid-single-digit comps at Anthropologie. Nuuly revenue is forecast to grow in the high 20% range, while wholesale sales are forecast to rise in the low teens. Gross margin for the third quarter is forecast to improve by 25 to 50 basis points over the prior year.
Full-year capital expenditures are planned at approximately $475 million to support 54 new store openings, including 21 standalone FP Movement locations.
