Urban Outfitters, Inc. FY'26 Q3 RESULTS Introduction Urban Outfitters, Inc. "URBN" is providing fiscal 2026 third quarter commentary ahead of our earnings call scheduled for November 25th at 5:00pm. We remind you that any forward-looking statements made in this commentary are subject to our safe harbor statement found in our SEC filings. Our third quarter earnings release and related financial information are available on our website, www.urbn.com. As used in this document, unless otherwise defined,"Anthrop ...

Core Insights - The apparel and home goods retailer reported increased earnings and revenue for the third quarter [1] Financial Performance - The company achieved higher earnings in the third quarter compared to previous periods [1] - Revenue also saw an upward trend during the same quarter [1]

The clothing retailer's third-quarter results topped estimates, and management said it picked up a bigger share of the apparel market. ...

Core Insights - Urban Outfitters, Inc. reported record net income of $116.4 million and earnings per diluted share of $1.28 for the three months ended October 31, 2025, with a total net income of $368.7 million and earnings per diluted share of $4.01 for the nine months ended October 31, 2025 [1][11]. Financial Performance - Total Company net sales for the three months ended October 31, 2025, increased by 12.3% to a record $1.53 billion, while net sales for the nine months increased by 11.5% to $4.36 billion [2][3]. - Retail segment net sales increased by 9.6% for the three months and 8.0% for the nine months, with comparable Retail segment net sales rising by 8.0% [2][3]. - Subscription segment net sales surged by 48.7% for the three months and 53.4% for the nine months, driven by a significant increase in average active subscribers [2][3]. Segment Performance - Comparable Retail segment net sales growth was driven by Urban Outfitters (12.5%), Anthropologie (7.6%), and Free People (4.1%) for the three months ended October 31, 2025 [2]. - For the nine months, comparable Retail segment net sales increased by 6.8% at Anthropologie, 6.4% at Urban Outfitters, and 4.7% at Free People [3]. Profitability Metrics - Gross profit for the three months ended October 31, 2025, increased by 13.3% to $563.3 million, with a gross profit rate improvement of 31 basis points [6][7]. - For the nine months, gross profit dollars rose by 15.7% to $1.62 billion, with a gross profit rate increase of 135 basis points [6][7]. Expenses and Taxation - Selling, general and administrative expenses increased by 13.7% for the three months and 11.5% for the nine months, primarily due to increased marketing expenses [9]. - The effective tax rate decreased to 23.6% for the three months and 22.2% for the nine months ended October 31, 2025, compared to the previous year [10]. Share Repurchase and Expansion - The company repurchased 3.3 million shares for approximately $152 million during the nine months ended October 31, 2025, with 14.7 million shares remaining under the repurchase program [12]. - Urban Outfitters opened 41 new retail locations and closed 6 during the nine months ended October 31, 2025 [13].

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Core Insights - Retail earnings are in focus this week as several companies within the Direxion Daily Retail Bull 3X Shares (RETL) prepare to report results just before the Thanksgiving and Black Friday shopping weekend [1] - Six retailers, including Burlington Stores, Best Buy, Kohl's, Dick's Sporting Goods, Urban Outfitters, and Abercrombie & Fitch, will release quarterly results [1][2] Group 1: Earnings Reports - Urban Outfitters will report earnings on Monday after market close, while the other five companies will report on Tuesday morning [2] - These six retailers represent approximately 6.7% of RETL's portfolio [2][6] Group 2: ETF Performance and Structure - RETL tracks the S&P Retail Select Industry Index and offers three times the index's daily performance, utilizing a modified equal-weighted methodology [3] - The equal-weight structure allows smaller retailers like Dick's Sporting Goods to impact the fund's performance similarly to larger companies like Amazon [4] Group 3: Market Trends and Forecasts - Consulting firm Bain & Company forecasts an 11% increase in Black Friday and Cyber Monday sales this year, surpassing broader holiday shopping growth estimates [5] - RETL has seen $6.01 million in net inflows over the past month and $349,400 in net inflows over the past five days [2][5]

Market Overview - Major U.S. index futures indicate a higher open on Monday, suggesting a continuation of the rebound seen last Friday [1] - The Nasdaq and S&P 500 reached their lowest closing levels in over two months last Thursday due to concerns about valuations and interest rates [2] - Positive sentiment is emerging from progress in peace talks between Russia and Ukraine [2][3] Economic Indicators - Traders are awaiting the release of delayed U.S. economic data, including retail sales, producer prices, and durable goods orders for September [3][4] - The upcoming reports could influence the outlook for interest rates ahead of the Federal Reserve's December meeting [4] Stock Performance - On Friday, the Dow rose by 493.15 points (1.1%) to 46,245.41, the Nasdaq increased by 195.03 points (0.9%) to 22,273.08, and the S&P 500 climbed by 64.23 points (1.0%) to 6,602.99 [5] - Despite the Friday rebound, all major averages posted significant weekly losses: Nasdaq down 2.7%, S&P 500 down 2.0%, and Dow down 1.9% [5] Interest Rate Outlook - Optimism regarding a potential interest rate cut by the Federal Reserve in December has increased, with the probability rising to 71.5% from 39.1% [6] - New York Federal Reserve President John Williams indicated that monetary policy is "modestly restrictive" and suggested room for further rate adjustments [7] Sector Performance - Housing stocks performed well, with the Philadelphia Housing Sector Index increasing by 4.0% [9] - Airline stocks also showed strength, with the NYSE Arca Airline Index rising by 3.0% [10] - Other sectors, including biotechnology, oil service, healthcare, and computer hardware, experienced upward movements [10] Commodity and Currency Markets - Crude oil futures increased slightly to $58.08 per barrel after a previous drop [11] - Gold futures rose to $4,082.60 per ounce following a prior increase [11] - The U.S. dollar strengthened against the yen and euro, trading at 156.92 yen and $1.1538 respectively [11] Asian Market Activity - Asian stocks ended mixed, with Japanese markets closed for a holiday, but sentiment was supported by hopes for a Federal Reserve rate cut and easing Ukraine-Russia tensions [12] - Hong Kong's Hang Seng Index surged by 2.0%, driven by positive performance in chip-related stocks and Alibaba's growth [15] European Market Activity - European stocks mostly rose, buoyed by hopes for a Federal Reserve rate cut and progress in Ukraine peace talks [18] - The German DAX Index increased by 0.8%, while Bayer's shares rose sharply following positive study results [19][20]

Company Overview - Urban Outfitters (URBN) is expected to report a year-over-year increase in earnings, with a consensus estimate of $1.19 per share, reflecting an increase of +8.2% [3] - Revenues are anticipated to reach $1.49 billion, marking a growth of +9.2% compared to the same quarter last year [3] Earnings Expectations - The earnings report is crucial for stock price movement; better-than-expected results may drive the stock higher, while a miss could lead to a decline [2] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4] Earnings Surprise Potential - Urban Outfitters has a positive Earnings ESP of +6.24%, suggesting analysts are optimistic about the company's earnings prospects [12] - The company holds a Zacks Rank of 3, indicating a hold position, which combined with the positive Earnings ESP suggests a likelihood of beating the consensus EPS estimate [12] Historical Performance - In the last reported quarter, Urban Outfitters exceeded the expected earnings of $1.44 per share by delivering $1.58, resulting in a surprise of +9.72% [13] - The company has successfully beaten consensus EPS estimates in each of the last four quarters [14] Industry Context - In the broader retail apparel and shoes industry, Gap (GAP) is expected to report earnings of $0.58 per share, reflecting a year-over-year decline of -19.4% [18] - Gap's revenue is projected to be $3.91 billion, with a modest increase of +2.2% from the previous year [18] - Gap has a positive Earnings ESP of +2.31% and a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate as well [19]

Core Insights - The Retail-Wholesale sector is expected to show growth in sales and earnings, influenced by consumer sentiment and spending trends [1][2] - The sector anticipates a year-over-year top-line growth of 6.2% and a bottom-line increase of 15.3% for the third quarter [2] - Companies with earnings beat potential have been identified, including Dollar General, Burlington Stores, Urban Outfitters, and TJX Companies [3] Sector Performance - Retail earnings are expected to reflect changing consumer spending patterns, with a shift towards essentials and value-oriented products due to inflation [4] - Persistent inflation continues to impact consumer budgets, leading to lower demand in discretionary categories [5] - The back-to-school season and early holiday promotions may help sustain sales in apparel, electronics, and personal care categories [5] Operational Challenges - Services and labor costs, particularly in logistics and staffing, are affecting operating margins [6] - Retailers focusing on strategic pricing and supply-chain management are better positioned to maintain market share [6] E-commerce Growth - The growth of e-commerce, supported by improved delivery times and AI-driven recommendations, is crucial for retail success [7] - Companies investing in online shopping experiences and loyalty programs gain a competitive advantage [7] Inventory Management - Efficient inventory management is key to retail profitability, with advanced analytics helping optimize stock levels [8] - Supply-chain complexities pose risks that may limit the benefits of improved demand planning [8] Company-Specific Insights - **Dollar General**: Zacks Rank 2, Earnings ESP of +12.31%, with a consensus estimate of $0.95 EPS, indicating a 6.7% increase year-over-year [10][12] - **Burlington Stores**: Zacks Rank 3, Earnings ESP of +3.24%, with a consensus estimate of $1.59 EPS, suggesting a 2.6% increase year-over-year [13][14] - **Urban Outfitters**: Zacks Rank 3, Earnings ESP of +6.24%, with a consensus estimate of $1.19 EPS, indicating an 8.2% increase year-over-year [15][16] - **TJX Companies**: Zacks Rank 3, Earnings ESP of +2.87%, with a consensus estimate of $1.22 EPS, suggesting a 7% increase year-over-year [17][18]

Core Viewpoint - Urban Outfitters (URBN) has experienced significant selling pressure, resulting in a 15.1% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted, indicating potential for recovery [1]. Group 1: Technical Analysis - The Relative Strength Index (RSI) is utilized to determine if URBN is oversold, with a current RSI reading of 25.66, suggesting that the stock may be nearing a reversal point [2][5]. - Stocks oscillate between overbought and oversold conditions, and the RSI helps identify potential entry opportunities for investors looking to benefit from price rebounds [3]. Group 2: Fundamental Analysis - Analysts have shown strong consensus in raising earnings estimates for URBN, with a 0% increase in the consensus EPS estimate over the last 30 days, indicating potential price appreciation [7]. - URBN holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which further supports the likelihood of a near-term turnaround [8].