Urban Outfitters, Inc. FY'26 Q4 RESULTS Introduction Urban Outfitters, Inc. "URBN" is providing fiscal 2026 fourth quarter commentary ahead of our earnings call scheduled for February 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 fourth quarter earnings release and related financial information are available on our website, www.urbn.com. As used in this document, unless otherwise defined, "Anth ...

Financial Data and Key Metrics Changes - Total revenues grew by 12%, reaching a record $1.5 billion for Q3 [6][4] - Net income increased by 13% to a new Q3 record of $116 million or $1.28 per diluted share [8][4] - Gross profit rose by 13% to $563 million, with a gross profit rate improvement of 31 basis points to 36.8% [7][4] - Operating income increased by over 12% to $144 million, maintaining the operating profit rate consistent with the prior year [8][4] Business Line Data and Key Metrics Changes - Retail segment sales grew by 12%, with an 8% increase in Retail segment comparable sales [6][4] - Nuuly brand revenue grew by 49%, driven by an increase of 118,000 average active subscribers [6][4] - Free People brand revenue increased by 9%, with a 4% Retail segment comp and significant non-comp sales growth [9][4] - Urban Outfitters brand achieved a 13% global Retail segment comp, with North America at 10% and Europe at 17% [11][4] Market Data and Key Metrics Changes - All brands produced positive comparable sales across all geographies [4][6] - Urban Outfitters brand saw strong performance in both store and digital channels, with positive traffic and conversion [12][14] - Free People brand experienced double-digit growth in Europe, contributing to overall brand performance [10][9] Company Strategy and Development Direction - The company aims to continue scaling the Nuuly business and building brand awareness through investments in logistics and marketing [16][4] - Focus on maintaining opening price points while implementing strategic price increases where appropriate [41][40] - Plans to open approximately 69 new stores while closing 17, with significant growth expected from FP Movement, Free People, and Anthropologie [31][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record sales and operating profit for the year despite tariff headwinds [18][4] - Anticipated mid-single digit comparable sales growth for Q4, with a competitive and promotional holiday season expected [35][34] - Management noted a shift in consumer behavior, with customers waiting for promotions, indicating a return to pre-pandemic purchasing patterns [89][88] Other Important Information - Tariffs negatively impacted gross margin by approximately 60 basis points in Q3, with an expected impact of 75 basis points in Q4 [17][4] - The company is actively working on tariff mitigation efforts, including negotiating vendor terms and adjusting transportation modes [18][4] Q&A Session Summary Question: Follow-up on pricing strategy and customer reaction - Management confirmed strategic and thoughtful price increases with little to no price resistance observed [41][40] Question: Insights on own brand penetration and global footprint - Own brand penetration increased by over 100 basis points, with plans for continued growth and expansion in the U.K. [49][48] Question: Update on Urban Outfitters brand recovery and profitability - Urban Outfitters achieved profitability in Europe and reduced losses in North America, with potential for global profitability next year [55][54] Question: Drivers of business acceleration and holiday selling trends - Increased traffic in stores and online was identified as a key driver of sales growth, with expectations for a strong holiday season [60][59] Question: Discussion on gross margins and promotional expectations - Management maintained guidance for gross profit margin improvement despite anticipated higher promotions during the holiday season [75][74]

Financial Data and Key Metrics Changes - Total revenues grew by 12%, reaching a record $1.5 billion for Q3 [4][7] - Net income increased by 13% to a new Q3 record of $116 million or $1.28 per diluted share [4][9] - Gross profit dollars rose by 13% to $563 million, with a gross profit rate improvement of 31 basis points to 36.8% [8][9] - Operating income increased by over 12% to $144 million, with the operating profit rate consistent with the prior year [9] Business Line Data and Key Metrics Changes - Nuuly brand revenue grew by 49%, driven by a 40% increase in average active subscribers [17] - Free People brand revenue increased by 9%, with a 4% retail segment comp and significant non-comp sales growth [10][12] - Urban Outfitters brand achieved a 13% global retail segment comp, with North America at 10% and Europe at 17% [12][13] Market Data and Key Metrics Changes - The wholesale segment saw an 8% revenue increase, primarily from specialty store accounts [8] - The Anthropologie Group reported an 8% retail segment comparable sales increase, marking the 19th consecutive quarter of positive comparable sales [21] Company Strategy and Development Direction - The company is focused on scaling the Nuuly business and building brand awareness through investments in logistics and marketing [17] - Anthropologie is modernizing its product assortment and enhancing customer experiences to drive growth [22][81] - The company plans to open approximately 69 new stores while closing 17, with a focus on expanding the FP Movement, Free People, and Anthropologie brands [32] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro landscape remains consistent, with tariffs negatively impacting gross margins but expecting overall improvement for the fiscal year [18][19] - The company anticipates a competitive holiday season but remains optimistic about achieving record sales and operating profit [35][36] Other Important Information - The company is investing in technology and logistics, with capital expenditures planned at approximately $300 million for FY 2026 [31] - The company is committed to maintaining opening price points and managing pricing architecture to protect customer value [41][42] Q&A Session Summary Question: Follow-up on pricing strategy and customer reaction - Management stated that small price increases have seen little to no resistance, and they remain committed to protecting opening price points [41][42] Question: Insights on own brand penetration and global footprint - Management highlighted strong growth in own brand penetration and plans for continued expansion in both North America and the U.K. [49][50] Question: Update on Urban Outfitters brand recovery and men's business - Management confirmed that Urban Outfitters is profitable in Europe and has reduced losses in North America, with potential for further improvement [55][56] Question: Drivers of business acceleration and holiday selling trends - Management noted that increased traffic in stores and online has driven sales growth, with expectations for a strong holiday season despite a more promotional environment [61][62] Question: Discussion on gross margins and promotional expectations - Management indicated that while they expect higher promotions during the holiday, they are maintaining their guidance for gross profit margin improvement [75][76]

Financial Data and Key Metrics Changes - Total revenues grew by 12%, reaching a record of $1.5 billion for Q3 [5][3] - Net income increased by 13% to a new Q3 record of $116 million, or $1.28 per diluted share [8][3] - Gross profit dollars rose by 13% to $563 million, with a gross profit rate improvement of 31 basis points to 36.8% [6][3] - Operating income increased by over 12% to $144 million, with the operating profit rate consistent with the prior year [8][3] Business Line Data and Key Metrics Changes - All retail segment brands delivered positive comparable sales, with four out of five brands posting record third-quarter sales [5][3] - Nuuly brand revenue grew by 49%, driven by an increase of 118,000 average active subscribers compared to the prior year [5][3] - Free People brand saw a 9% increase in total revenue, with a 9% increase in retail segment sales and an 8% increase in wholesale segment revenues [9][3] - Urban Outfitters brand achieved a 13% global retail segment comp, with North America at 10% and Europe at 17% [11][3] Market Data and Key Metrics Changes - The wholesale segment delivered an 8% increase in revenue, primarily from specialty store accounts [6][3] - Nuuly's growth contributed 3.5 percentage points to total URBN sales [16][3] - The Anthropologie Group achieved an 8% retail segment comparable sales increase, marking the 19th consecutive quarter of positive comparable sales [20][3] Company Strategy and Development Direction - The company is focused on scaling the Nuuly business and building brand awareness through investments in logistics and strategic marketing [16][3] - The Anthropologie Group is investing in its own brands, with a historical high in own brand penetration, and plans to open new stores to enhance customer experience [21][3][25] - The company aims to maintain its pricing architecture while managing costs effectively, with little expectation for further price increases [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving approximately 100 basis points of gross margin improvement for the full fiscal year 2026 despite tariff headwinds [17][3] - The company anticipates a competitive holiday season but expects to maintain strong sales performance [34][3] - Management noted a shift in consumer behavior, with customers waiting for promotions, which is expected to impact sales strategies [61][3] Other Important Information - The company plans to open approximately 69 new stores and close about 17 this year, with significant growth expected from FP Movement, Free People, and Anthropologie [31][3] - Tariffs are estimated to have negatively impacted gross margin rates by approximately 60 basis points in Q3, with expectations of 75 basis points in Q4 [17][3] Q&A Session Summary Question: Follow-up on pricing strategy and customer reaction - Management stated that small price increases have seen little to no resistance, emphasizing the commitment to maintaining opening price points [41][42] Question: Own brand penetration and global footprint for Anthropologie - Management highlighted strong growth in own brands and successful store openings in the U.K., with plans for continued expansion [49][50] Question: Urban Outfitters brand profitability and future outlook - Management confirmed that Urban Outfitters is profitable in Europe and has reduced losses in North America, with potential for global profitability next year [55][56] Question: Drivers of business acceleration and holiday selling trends - Management noted that increased traffic in stores and online has driven sales growth, with expectations for a strong holiday season despite a more promotional environment [61][62] Question: Gross margins and promotional expectations - Management indicated that while they expect higher promotions, they are maintaining guidance for gross profit margin improvement for the full year [75][76]

Financial Data and Key Metrics Changes - Total URBN sales grew by 9%, reaching a Q4 record of $1.6 billion, with record fourth-quarter sales from four of the five brands [11][12] - Gross profit increased by 17% to $528 million, with the gross profit rate improving by over 200 basis points to 32.3% [13][14] - Operating income rose by 54% to $125 million, while net income increased by 49% to $98 million or $1.04 per diluted share [15][42] Business Line Data and Key Metrics Changes - Anthropologie achieved an 8% Retail segment comp, with double-digit increases in the digital channel and mid-single-digit increases in the store channel [16][19] - Free People saw total retail and wholesale segment sales increase by 13%, driven by an 8% Retail segment comp and a 27% increase in wholesale revenues [19][21] - Urban Outfitters recorded a 3% decline in Retail segment comp, with improvements in merchandise margin rate due to lower markdowns [23][24] Market Data and Key Metrics Changes - The Wholesale segment experienced a 26% revenue increase, primarily due to full-price sales at Free People [12] - Nuuly added over 20,000 average active subscribers, ending the quarter with 300,000 average active subscribers, leading to a 56% increase in brand revenue [29][30] Company Strategy and Development Direction - The company plans to open approximately 58 new stores and close about 19 stores during fiscal year 2026, focusing on retail store expansion and technology investments [38][39] - Management emphasized a renewed focus on growth for Urban Outfitters, with strategies to improve customer acquisition and drive profitable full-priced sales [25][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal 2026, expecting mid-single-digit sales growth driven by low single-digit retail segment comps [32][33] - The company noted that customer demand remains consistent, with strong performance in key categories and a positive outlook for spring assortments [44][103] Other Important Information - The company ended FY25 with slightly elevated inventory levels, planning to increase product turns in the coming year [36] - Capital expenditures for FY26 are planned at approximately $240 million, with a focus on retail store expansion and technology investments [37] Q&A Session Summary Question: Did you hit the goal to improve IMU by 500 basis points? - Management acknowledged progress but fell short of the goal, indicating continued efforts for improvement [54] Question: Can you discuss the mix of branded versus private brands? - Urban Outfitters is focusing on growing national brands, while Anthropologie has achieved 70% owned brand penetration in women's apparel [60][61] Question: What notable trends across categories do you see emerging this year? - Management noted strong sales in bottoms, outerwear, and activewear, with expectations for low to mid-single-digit comps across brands [66][67] Question: What is the status of Urban Outfitters' transformation strategy? - Management reported good progress on the five pillars of transformation, focusing on customer engagement and improved product assortment [73][78] Question: What are the real estate plans for Anthropologie and Urban Outfitters? - Anthropologie plans to ramp up store growth due to brand momentum, while Urban Outfitters is rationalizing its footprint to improve profitability [90][94] Question: What is the outlook for Urban Outfitters' profitability? - Management indicated that Urban Outfitters needs to return to positive comps to leverage occupancy costs and improve profitability [142] Question: What is the long-term revenue potential for Urban Outfitters? - Management is optimistic about Urban Outfitters' revenue growth potential, emphasizing the need for continued improvement in product assortment and customer engagement [146]