Urban Outfitters(US:URBN)2025-09-09 20:25Retail Segment Performance - Retail segment net sales accounted for approximately 85.4% of consolidated net sales for the six months ended July 31, 2025, down from 88.5% for the comparable period in fiscal 2025 [86]. - Anthropologie's North American Retail segment net sales represented approximately 46.8% of total Retail segment net sales for the six months ended July 31, 2025, compared to 46.7% for the same period in fiscal 2025 [87]. - Free People's North American Retail segment net sales accounted for approximately 24.4% of total Retail segment net sales for the six months ended July 31, 2025, up from 23.9% for the comparable period in fiscal 2025 [88]. - Urban Outfitters' North American Retail segment net sales represented approximately 15.2% of total Retail segment net sales for the six months ended July 31, 2025, down from 16.8% for the same period in fiscal 2025 [89]. - Net sales for the second quarter of fiscal 2026 were $1.50 billion, a $152.8 million increase from $1.35 billion in the second quarter of fiscal 2025, driven by a 7.8% increase in Retail segment net sales [104]. - Subscription segment net sales accounted for approximately 9.3% of consolidated net sales for the six months ended July 31, 2025, up from 6.6% in the comparable period of fiscal 2025 [97]. - Wholesale segment net sales represented approximately 5.3% of consolidated net sales for the six months ended July 31, 2025, compared to 4.9% for the same period in fiscal 2025 [98]. - Subscription segment net sales increased by 53.2%, while Wholesale segment net sales rose by 18.1% in the second quarter of fiscal 2026 [104]. Store Expansion and Operations - Total company-owned stores increased to 756 as of July 31, 2025, from 733 at the end of January 2025, with 27 new openings and 4 closures [92]. - Projected total company-owned stores for fiscal 2026 is expected to reach 785, with 69 new openings and 17 closures planned [96]. - The company plans to expand both domestically and internationally, including new store openings and additional franchise or joint venture agreements [95]. - The FP Movement brand's selling square footage increased by 71.4% to 108 thousand square feet as of July 31, 2025, compared to 63 thousand square feet in 2024 [94]. - Selling square footage for Urban Outfitters decreased by 3.4% to 2,172 thousand square feet as of July 31, 2025, compared to 2,249 thousand square feet in 2024 [94]. - The company plans to open approximately 69 new retail locations during fiscal 2026 and invest around $270 million in capital expenditures for store expansion and technology improvements [130]. Financial Performance - Gross profit for the second quarter of fiscal 2026 increased to $566.2 million, with a gross profit margin of 37.6%, up from 36.5% in the second quarter of fiscal 2025 [107]. - Income from operations for the second quarter of fiscal 2026 was $174.4 million, or 11.6% of net sales, compared to $145.1 million, or 10.7%, in the second quarter of fiscal 2025 [111]. - Net sales for the six months ended July 31, 2025, were $2.83 billion, a $281.6 million increase from $2.55 billion in the comparable period of fiscal 2025 [115]. - The effective tax rate for the second quarter of fiscal 2026 was 21.5%, down from 23.0% in the second quarter of fiscal 2025 [112]. - Total inventory at July 31, 2025, increased by $91.5 million, or 15.1%, to $696.2 million compared to the previous year [108]. - Selling, general and administrative expenses increased by $43.6 million, or 12.5%, in the second quarter of fiscal 2026, representing 26.0% of net sales [110]. Cash Flow and Investments - Net cash provided by operating activities increased to $251.0 million for the six months ended July 31, 2025, compared to $163.8 million for the same period in 2024 [124]. - Cash used in investing activities was $32.0 million in the first six months of fiscal 2026, down from $61.1 million in fiscal 2025, primarily due to purchases of marketable securities and property [124]. - Cash paid for property and equipment was $107.5 million in the first six months of fiscal 2026, compared to $98.9 million in fiscal 2025, aimed at expanding the store base and distribution network [127]. - Cash used in financing activities was $180.6 million in the first six months of fiscal 2026, primarily for share repurchases [128]. - The increase in working capital as of July 31, 2025, was primarily due to an increase in inventory and cash, cash equivalents, and current marketable securities [124]. - The increase in cash provided by operating activities in the first six months of fiscal 2026 was primarily due to higher net income compared to the same period in fiscal 2025 [126]. - The company believes existing cash, cash equivalents, and future cash flows will be sufficient to fund its initiatives, including potential acquisitions [131]. - The company anticipates that new store investments will generally generate positive cash flow within a year [131]. Risk Management - The company is currently evaluating global trade policies to mitigate risks associated with tariffs, which are expected to negatively impact financial results [80].