Urban Outfitters (NASDAQ:URBN) reported record first-quarter fiscal 2027 sales and earnings, with management pointing to broad strength across its retail brands, continued growth at Nuuly and a strong wholesale performance.
Chief Executive Officer Dick Hayne said net sales rose 11% to $1.5 billion for the three months ended April 30, 2026, while earnings per share increased 12% to $1.30. He said the quarter marked the company’s seventh consecutive quarter of record sales and profits.
“All retail segment brands delivered positive comps with standout performance from Free People and FP Movement,” Hayne said.
Retail Brands Post Positive Comps
Co-President and Chief Operating Officer Frank Conforti said total URBN sales growth was partly driven by a 6% increase in retail segment comparable sales, with digital comps slightly ahead of store comps. Four of the company’s five brands posted record first-quarter sales, he said.
Anthropologie delivered a 2% retail segment comp, extending a streak of more than five years of positive comps, according to Conforti. He said the brand had a slow start as it cleared slower-moving winter products, but performance improved in March and April as spring merchandise arrived. Strength in women’s apparel, shoes and home offset weakness in accessories.
Tricia Smith, global CEO of The Anthropologie Group, said in the question-and-answer portion that the brand’s March and April performance returned to the “higher end” of its low-single-digit comp trend. She cited strength in pants, denim, dresses, shoes, beauty and full-price furniture sales. Smith said May month-to-date performance was more similar to the end of the first quarter than its beginning.
The Urban Outfitters brand also continued to improve. Conforti said total Urban Outfitters sales rose more than 11%, while the global retail segment comp increased 9%, with strength in both North America and Europe. In North America, digital comps outpaced stores, while in Europe, stores led digital. He cited positive comps in women’s apparel, accessories and home, along with strong regular-price sales.
Hayne later said May sales to date were “essentially in line” with the company’s second-quarter plans. On Europe, he said the market remains “reasonably soft,” particularly in Germany due in part to high energy prices, but demand for the Urban Outfitters and Free People brands in Europe was “quite brisk,” with comp store sales posting double-digit gains.
Free People and FP Movement Lead Growth
Sheila Harrington, global CEO of the Urban Outfitters and Free People groups, said total Free People Group revenue increased 17% year-over-year, driven by both wholesale and retail growth. Wholesale revenue rose 26%, while the retail segment grew 14%. The group posted a 10% retail segment comp, marking its 24th consecutive quarter of positive retail segment comps.
The Free People brand delivered total revenue growth of 12%, including a 9% retail segment comp. FP Movement revenue increased 32%, supported by a 15% retail segment comp, non-comp growth, six new store openings and 48% wholesale growth.
Harrington said the group achieved record first-quarter profitability, with both Free People and FP Movement producing record low markdown rates. She attributed the performance to strong regular-price selling, product execution and marketing. Free People saw broad-based strength in tops, bottoms, intimates and accessories, while FP Movement benefited from emphasis on bottoms and bras.
Harrington also outlined a longer-term strategy to manage Free People and FP Movement as “two independent ecosystems,” rather than a parent brand and sub-brand. She said Free People’s priorities include international expansion, domestic store and wholesale modernization, brand elevation and digital platform development. For FP Movement, she highlighted consumer expansion, domestic store growth, international expansion and product innovation.
Nuuly and Wholesale Continue Double-Digit Growth
Nuuly revenue grew 35% in the quarter, driven by a 33% increase in average active subscribers, or more than 110,000 additional average active subscribers compared with the prior-year quarter, Conforti said. He said Nuuly was “on the doorstep” of a half-million active subscribers.
Nuuly generated $10 million in operating profit, representing a 6% operating profit rate. Conforti said the improvement reflected operating leverage as the business scaled, partially offset by marketing investments to support subscriber growth.
The wholesale segment posted a 25% revenue increase, driven by growth across specialty and department store accounts, Conforti said.
Margins, Tariffs and Fuel Costs in Focus
URBN’s gross profit dollars increased 11%, while the gross profit rate declined 16 basis points to 36.6%. Conforti said the rate decline reflected a $5 million, or 36-basis-point, one-time benefit in the prior year, partially offset by improved markdown rates at Free People and Urban Outfitters.
SG&A expense increased 12% and deleveraged by 5 basis points. Conforti noted that SG&A included a $7 million, or 47-basis-point, benefit from the favorable resolution of a legal matter. He said higher store payroll, marketing investments and technology investments contributed to the increase.
Conforti said the company is navigating higher inbound freight costs and delivery expenses tied to fuel surcharges associated with the conflict in the Middle East. He said the company is assuming those costs remain consistent for the rest of the year, with an estimated negative impact of about 45 basis points to initial merchandise markup from inbound costs and 25 basis points from outbound delivery and freight expenses.
On tariffs, Conforti said the company expects approximately $100 million in refunds from IEPA tariffs imposed last spring and plans to record the refunds as a one-time benefit in the second quarter. He said URBN is planning conservatively for a 15% across-the-board tariff on imports in the second half of the year, adding that if the estimate is “reasonably accurate,” the company expects a net favorable benefit to initial merchandise markup in the second half, after factoring in additional fuel costs.
During the quarter, URBN repurchased 4.6 million shares for approximately $300 million, reducing outstanding shares by 5%, Conforti said. Net income rose to $116 million, and operating income increased 9% to a first-quarter record of $140 million.
Company Guides for High-Single-Digit Sales Growth
Chief Financial Officer Melanie Marein-Efron said URBN is planning for second-quarter total company sales growth in the high single digits. Retail segment comps are expected to grow in the mid-single digits, driven by high-single-digit positive comps at Urban Outfitters and the Free People Group and low- to mid-single-digit positive comps at Anthropologie. Nuuly revenue is expected to grow in the mid- to high-20% range, while wholesale revenue is expected to grow in the mid-teens.
For the full fiscal year, Marein-Efron said the company continues to believe it can deliver positive high-single-digit total sales growth, supported by mid-single-digit retail comps, mid-20% Nuuly revenue growth and high-single-digit wholesale growth. She said full-year gross profit margins could increase approximately 25 basis points versus last year, with second-half benefit to initial merchandise markup.
URBN plans fiscal 2027 capital expenditures of approximately $475 million, with about 35% allocated to retail store expansion and support, 50% to logistics investments and 15% to technology investments and home office expansion. Marein-Efron said the company expects to open approximately 54 new stores and close about 19 stores during the year, with net growth primarily driven by FP Movement, Free People and Anthropologie.
Hayne closed by emphasizing the company’s diversified portfolio, saying the consistency of URBN’s recent performance stems from diversification across brands, categories, geographies and channels. He said the company’s customer base has remained resilient despite macroeconomic volatility.
About Urban Outfitters (NASDAQ:URBN)
Urban Outfitters, Inc is a global lifestyle retailer headquartered in Philadelphia, Pennsylvania. Established in 1970 by Richard Hayne, Scott Belair and Judy Wicks, the company began as a single store catering to college students in the city's historic Old City neighborhood. Over the decades, Urban Outfitters has expanded its reach and diversified its portfolio to include multiple retail concepts addressing distinct customer segments.
The company operates through several well-known brands, each offering a curated selection of apparel, footwear, accessories and home goods.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
The article "Urban Outfitters Q1 Earnings Call Highlights" first appeared on MarketBeat.
