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PHILADELPHIA - Urban Outfitters, Inc. (NASDAQ:URBN) reported record second quarter earnings that exceeded analyst expectations, but shares tumbled 6.8% as investors appeared concerned about inventory levels despite the strong performance.
The lifestyle products retailer posted earnings per share of $1.58 for the quarter ended July 31, 2025, surpassing the analyst estimate of $1.48. Revenue reached a record $1.5 billion, beating the consensus estimate of $1.48 billion and representing an 11.3% increase YoY. Comparable retail segment sales rose 5.6%, with growth across all brands.
Despite the strong results, investors focused on the company’s inventory levels, which increased 15.1% YoY to $91.5 million. Comparable retail segment inventory rose 11.3%, outpacing the 5.6% comparable sales growth.
"We are proud to announce record revenues, profits, and earnings per share for the quarter," said Richard A. Hayne, Chief Executive Officer. "Our success was broad-based, with all five brands achieving positive comparable sales across all geographies."
The company’s subscription segment, Nuuly, showed particularly strong growth with sales increasing 53.2%, driven by a 48.1% increase in average active subscribers compared to the prior year quarter. Free People’s wholesale segment also performed well, with sales up 19.5% primarily due to increased sales to specialty customers.
Gross profit margin improved by 113 basis points compared to the same period last year, reaching $566.2 million, a 14.8% increase. The improvement was attributed to lower markdowns, particularly at the Urban Outfitters brand, and leverage in occupancy costs.
During the first half of fiscal 2026, Urban Outfitters repurchased and retired 3.3 million shares for approximately $152 million under its share repurchase program, with 14.7 million common shares remaining available for repurchase.
The company opened 27 new retail locations during the first half of the year, including 19 Free People stores, 4 Anthropologie stores, and 4 Urban Outfitters stores, while closing 4 locations.
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