Q2 2027 Urban Outfitters, Inc Earnings Call Transcript
Key Points
- Urban Outfitters Inc (URBN) delivered record quarterly sales and earnings per share, with net sales growing 10% to $1.7 billion and EPS up 9% to $1.72, marking the eighth consecutive quarter of record sales and profits.
- All retail segment brands delivered positive comps, with the FP Group achieving a 10% retail segment comp and the Urban Outfitters brand posting an 8% comp, driven by strong regular price sales and customer growth.
- Nuuly, the subscription rental business, achieved record revenue of $179 million (up 29%) and reached a milestone 10% operating income rate, with average active subscribers growing 30% to 484,000.
- The wholesale segment delivered exceptional double-digit revenue growth of 19%, driven by strength across both specialty and department store accounts, particularly in FP Movement, Intimates, and women's apparel.
- Management expressed confidence in the consumer environment, citing job stability, rising take-home incomes, and consistent spending on fashion, while also highlighting successful AI-related technology investments that are expected to benefit the company for years.
- The company is navigating higher inbound freight costs, domestic transportation costs, and delivery expenses driven by fuel surcharges associated with the ongoing war in the Middle East, which negatively impacted IMU by approximately 50 basis points and outbound delivery expenses by 20 basis points.
- Anthropologie experienced elevated markdowns during the quarter as the team worked through slower turning inventory, and the brand's home category was flat, with a slight decline in home accessories.
- The company faces higher year-over-year tariff costs and inbound freight fuel surcharges, which partially offset gross profit improvements, despite receiving refunds for previously paid IEFA tariffs.
- Nuuly's subscriber growth is subject to seasonality, with active subscribers easing back from over 500,000 in early June to 484,000 average for the quarter, and back-half operating rates are anticipated to ease to high single-digits.
- The European Urban Outfitters business is expected to moderate to a mid-single-digit positive comp range in Q3 due to very difficult multi-year comparisons, and the company assumes current oil surcharges will remain in effect for the remainder of FY27, representing approximately 70 basis points unfavorable impact on each of the third and fourth quarters.
Good day, ladies and gentlemen, and welcome to the Urban Outfitters, Inc.'s second quarter fiscal 2027 earnings call. At this time, all participants are in listen-only mode.
Later, we will conduct a question-and-answer session. To ask a question during this session, you'll need to press *11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again. We ask that you please limit yourself to one question.
As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Elena McCullen, Executive Director of Investor Relations. Ms. McCullough, you may begin.
Good afternoon and welcome to the URBN Second Quarter Fiscal 2027 Conference Call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the three and six-month period ending July 31, 2026.
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