Urban Outfitters Reports Record Q1 Revenue and Growth

Urban Outfitters ((URBN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Urban Outfitters, Inc. recently held its earnings call, revealing a strong quarter marked by record-breaking revenue and growth across multiple brands. The general sentiment was positive, with significant achievements and strategic management highlighted. However, there were some concerns about potential tariff impacts and challenges faced by Urban Outfitters in North America. Overall, the company’s positive results overshadowed the lowlights.

Record-Breaking Revenue and Growth

Urban Outfitters, Inc. reported an impressive 11% growth in total sales, reaching a Q1 record of $1.3 billion. All brands within the company delivered positive sales comps, with four out of five brands achieving record first-quarter sales. This growth underscores the company’s robust market presence and effective strategies.

Nuuly’s Exceptional Performance

Nuuly, one of Urban Outfitters’ brands, showcased remarkable performance with a 60% increase in revenue. This was driven by a 53% rise in average active subscribers, contributing nearly 400 basis points to the total URBN top line. Nuuly’s success highlights its growing popularity and strategic importance to the company.

Gross Profit and Operating Income Surge

The company experienced a 20% increase in gross profit dollars, reaching a record $489 million. The gross profit rate improved by 278 basis points, while operating income surged by 72% compared to the previous year, reaching $128 million. These figures reflect the company’s efficient cost management and operational excellence.

Anthropologie and Free People Success

Anthropologie and Free People brands also contributed to the company’s success. Anthropologie achieved a 7% increase in retail segment comp, while Free People saw an 11% increase in total retail and wholesale segment sales. Notably, Free People Wholesale revenues increased by 26%, showcasing strong brand performance.

Urban Outfitters’ Turnaround

Urban Outfitters posted its first positive sales comp in some time, with a 2% global retail segment comp. The European market was particularly strong, with a 14% positive retail segment comp, indicating a successful turnaround strategy.

Strategic Inventory and Supply Chain Management

Urban Outfitters has diversified its countries of origin for production, ensuring that no single country accounts for more than 25% of production. This strategic move mitigates potential tariff impacts and strengthens the company’s supply chain resilience.

Tariff and Supply Chain Concerns

Despite the positive results, there are concerns about tariffs and potential supply chain disruptions, which could negatively impact gross margins by 20 basis points in the latter half of the year. The company remains vigilant in addressing these challenges.

North America’s Urban Outfitters Struggles

In North America, Urban Outfitters recorded a negative 4% retail segment comp, with ongoing challenges in the digital business due to heavy promotional activity from the prior year. This remains an area of concern for the company.

SG&A Increases

SG&A expenses rose by 8.1%, driven by higher marketing spend and increased store labor costs. While these increases support growth initiatives, they also impact overall profitability.

Forward-Looking Guidance

Looking ahead, Urban Outfitters, Inc. shared optimistic guidance for the future. The company expects high single-digit sales growth in Q2, with mid-single-digit retail segment comps for Anthropologie and Free People brands. Urban Outfitters anticipates low single-digit positive comps, while Nuuly is expected to achieve mid-double-digit revenue growth. Gross profit margins are projected to improve by 50 to 100 basis points, despite tariff challenges. The company plans to open approximately 64 new stores and anticipates capital expenditures of around $240 million for FY’26.

In conclusion, Urban Outfitters, Inc.’s earnings call highlighted a strong quarter with record-breaking revenue and growth across multiple brands. Despite some concerns about tariffs and challenges in North America, the company’s strategic management and positive achievements were the focal points. Looking forward, the company remains optimistic about its growth prospects, with plans to expand its store footprint and improve profitability.