Urban Outfitters, Inc. (URBN) reported record third‑quarter revenue of $1.53 billion, up 12.3% year‑over‑year, and earnings per share of $1.28—$0.09 above the consensus estimate of $1.19. The results marked the company’s highest quarterly revenue to date and a 12% increase over the same period in 2024, when revenue was $1.49 billion and EPS was $1.10.
The growth was driven by a broad‑based lift across all core brands. Retail sales for the namesake Urban Outfitters brand rose 12.5%, Anthropologie grew 7.6%, and Free People added 4.1%. The wholesale channel also expanded 7.6% year‑over‑year, while the subscription segment, Nuuly, delivered a 48.7% jump in net sales, powered by a 42% rise in active subscribers. These gains combined to lift total revenue to a record high.
Gross margin improved 30 basis points to 36.8%, a gain largely attributable to lower markdowns at Urban Outfitters and Free People and stronger occupancy leverage. The company offset a 60‑basis‑point hit from tariff‑related cost increases by tightening inventory discipline and shifting to higher‑margin product mixes. Operating margin held steady at 9.4%, reflecting the balance between revenue growth and the cost impact of tariffs.
Management guided for high single‑digit sales growth in Q4 2025 and projected a 100‑basis‑point improvement in both gross and operating margins for the full fiscal year, targeting a 10% operating margin. CEO Richard Hayne said, “We are pleased to report record revenues, profits, and earnings per share for the quarter,” adding that “trends observed last quarter have remained consistent with broad‑based comparable sales growth and robust results in the Retail, Subscription, and Wholesale segments.”
The earnings beat triggered a strong market reaction: analysts upgraded the company’s price target—Telsey Advisory Group raised it to $85, UBS to $80, and Morgan Stanley to $91—citing the margin expansion, revenue beat, and Nuuly’s continued momentum. The stock surged in aftermarket trading, reflecting investor confidence in the company’s execution and growth prospects.
Strategically, Urban Outfitters plans to open 69 new stores and close 17 this year, reinforcing its focus on expanding retail presence while leveraging the subscription model. The combination of a diversified brand portfolio, a high‑growth rental service, and disciplined cost management positions the company to sustain its competitive advantage in the apparel and lifestyle market.
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