Urban Outfitters (NasdaqGS:URBN) FY 2026 Conference January 12, 2026 08:00 AM ET Company ParticipantsTricia Smith - CEOMelanie Marein-Efron - CFOConference Call ParticipantsAdrienne Yih - Director and Senior Equity AnalystAdrienne YihThere we go. Okay, great. Good morning, everybody. Happy New Year. My name is Adrienne Yih. I'm the retail analyst from Barclays, and I couldn't be happier to kick off another year. I love having you at the 8:00 A.M. slot because you always have good news, certainly for the pas ...

Financial Data and Key Metrics Changes - Urban Outfitters reported a record holiday sales growth of 9% for the period ending December 31, driven by a 5% retail segment comp, with all brands showing positive comps [3][4] - The company anticipates gross profit margin improvement of approximately 25 basis points for the quarter, slightly below the initial expectation of 50-100 basis points for the year [5] - FP Movement achieved an impressive 18% comp growth during the holiday period, while Nuuly reported a remarkable 43% sales growth [6][43] Business Line Data and Key Metrics Changes - Urban Outfitters led the retail segment with a 9% comp growth, followed by Free People at 5% and Anthropologie at 3%, which was lower than anticipated due to increased promotional activity [4][5] - Nuuly's growth trajectory remains strong, with a 41% increase in average active subscribers contributing to its 43% sales growth [6][43] - Wholesale also performed well, achieving a 13% growth during the holiday period, driven by Free People and FP Movement [6] Market Data and Key Metrics Changes - The consumer market appears resilient, with low unemployment, growing wages, and a positive stock market contributing to consumer confidence [11][12] - The company serves a middle-income and above customer base, which is currently feeling optimistic about their purchasing power [11] Company Strategy and Development Direction - The company is focused on attracting new customers while maintaining its core customer base, with positive data indicating success in this strategy [18][19] - There is an emphasis on increasing engagement and improving product relevancy by expanding categories such as denim, shoes, and beauty [20] - Urban Outfitters is working on margin recapture and has made significant improvements in its pricing architecture to protect margins [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the consumer's resilience heading into 2026, with expectations of continued strong performance [48] - The company is optimistic about leveraging AI to enhance creative processes and operational efficiency in the future [49] Other Important Information - The company is managing tariff impacts by negotiating with vendors and adjusting pricing strategies to minimize cost pass-through to consumers [25][26] - Inventory management remains disciplined, aligning growth with sales to ensure product freshness [27] Q&A Session Summary Question: How is the consumer sentiment affecting sales? - Management noted that the consumer feels good, with low unemployment and rising wages contributing to a positive outlook [11][12] Question: What are the expectations for Urban Outfitters' margin recovery? - Urban Outfitters is expected to approach break-even for fiscal year 2026, with significant opportunities for margin recapture in North America [38][40] Question: How is the company addressing tariff challenges? - The company is focused on managing costs and negotiating with vendors to mitigate tariff impacts while maintaining product quality [25][26]