Nuuly's Strong Revenue Growth Powers Urban Outfitters Momentum

Core Insights - Urban Outfitters, Inc.'s Nuuly platform is experiencing strong growth, with total revenue increasing by 12% and net income rising by 13% in the third quarter of fiscal 2026 [1] Group 1: Nuuly Performance - Nuuly's revenue surged by 49% year over year, primarily due to a 42% increase in average active subscribers, reaching nearly 400,000 [2][8] - The growth from Nuuly contributed approximately 3.5 percentage points to Urban Outfitters' total revenue growth [2][8] - The company is focused on scaling the Nuuly platform and enhancing brand visibility through investments in logistics and strategic marketing [2] Group 2: Customer Engagement and Market Position - Customer engagement remains strong, with significant increases in both store traffic and online sessions, driven by Nuuly's appealing merchandise selection [3] - The performance of Nuuly highlights the scalability and resilience of Urban Outfitters' diversified business model [3] Group 3: Future Outlook - Management believes that current investments will sustain momentum and support further market share growth in the U.S. apparel rental market [4] - Nuuly is expected to achieve healthy double-digit revenue growth in the fourth quarter, reflecting confidence in demand trends [4] Group 4: Competitive Landscape - American Eagle Outfitters reported a 6% increase in total net revenue to $1.36 billion, with a 4% rise in comparable sales [5] - Boot Barn Holdings posted an 18.7% year-over-year net sales growth to $505.4 million, with same-store sales growing by 8.4% [6] Group 5: Valuation and Earnings Estimates - Urban Outfitters' shares have increased by 8.6% over the past six months, compared to a 12% rise in the industry [7] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 29.8% for the current year and 9.6% for the next year [9] - Urban Outfitters trades at a forward price-to-earnings ratio of 13.35, which is lower than the industry average of 16.51 [10]