Urban Outfitters(URBN) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - URBN sales grew by 11%, reaching a record of $1.3 billion in Q1 [8] - Gross profit increased by 20% to$ 489 million, with a gross profit rate improvement of 278 basis points to 36.8% [10] - Operating income rose by 72% to $128 million, with a net income increase of 75% to$ 108 million or $1.16 per diluted share [11] Business Line Data and Key Metrics Changes - Anthropologie achieved a 7% increase in retail segment comp, marking four consecutive quarters of positive comps [11] - Free People delivered an 11% increase in total retail and wholesale segment sales, with a 3% retail segment comp [14] - Urban Outfitters recorded a positive 2% global retail segment comp, with North America at -4% and Europe at +14% [16][19] Market Data and Key Metrics Changes - Nuuly saw a 60% revenue growth with a 53% increase in average active subscribers [9][20] - The wholesale segment experienced a 24% revenue increase, driven by full-price sales at Free People [9] Company Strategy and Development Direction - The company is focused on customer engagement, evolving product assortments, and delivering profitable growth [18] - Plans to open approximately 64 new stores while closing 17 this fiscal year, with a focus on Free People and Anthropologie [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth and margin expansion despite global uncertainties [40] - The company anticipates total sales growth in the high single digits for Q2, with specific brand performance expectations [29] Other Important Information - The company is actively managing tariff impacts, with expectations of minimal negative effects on gross margins [27] - Capital expenditures for FY 2026 are planned at approximately$ 240 million, with significant investments in retail expansion and technology [33] Q&A Session Summary Question: Key drivers of success in Europe - Management attributed success to strong product offerings and effective marketing strategies [43][44] Question: Urban Outfitters' smaller format stores - No adjustments have been made yet, but there is flexibility to downsize stores as leases become available [53][56] Question: Performance by brand and consumer spending outlook - May comp sales are expected to be similar to Q1, with total retail segment comps projected in the mid single digits for Q2 [61] Question: SG&A rate expectations - SG&A is expected to grow in line with sales, with potential unevenness due to marketing campaigns [107] Question: Nuuly's profitability profile - Nuuly is expected to achieve a 10% operating profit margin in the future, with no immediate price increases planned [86] Question: Wholesale EBIT margin outlook - The wholesale business is expected to continue growing, with a focus on aligning with brands that share similar values [122]