PHILADELPHIA, PA — Urban Outfitters Inc. posted record second-quarter sales of $1.66 billion, up 10.4% from a year earlier, as growth across its retail brands and a nearly 29% increase in its Nuuly subscription business lifted the Philadelphia-based retailer’s results for the three months ended July 31.
The company, which trades on the Nasdaq under the ticker URBN, reported net income of $240.7 million, or $2.78 a diluted share, compared with $143.9 million, or $1.58 a share, a year earlier.
Those GAAP results included several one-time benefits, most notably $95.7 million in refunds for tariffs previously paid under the International Emergency Economic Powers Act. Excluding the tariff refunds, related interest income and a tax benefit tied to foreign deferred tax assets, adjusted net income was $149.3 million, or $1.72 a diluted share, compared with $143.9 million, or $1.58 a share, a year earlier.
Retail segment sales increased 8% during the quarter, while comparable retail sales rose 6.2%. Digital comparable sales grew at a high-single-digit rate and store sales increased at a mid-single-digit pace.
FP Group led the company’s comparable retail growth with a 10% increase, followed by an 8.4% gain at Urban Outfitters and 3% at Anthropologie. Nuuly helped drive subscription segment sales up 28.6%, supported by a 30.4% increase in average active subscribers.
Wholesale sales increased 18.6%, driven by a 19.2% increase at FP Group as sales to specialty customers and department stores expanded.
By brand, Anthropologie generated $634.5 million in quarterly sales, up from $607 million a year earlier. FP Group sales climbed to $478.1 million from $415 million, Urban Outfitters increased to $360 million from $333.2 million, and Nuuly rose to $178.6 million from $138.9 million.
Chief Executive Officer Richard Hayne called the period the company’s “highest adjusted profit quarter” and its eighth consecutive quarter of record sales and profits, citing positive comparable retail sales at each brand and double-digit wholesale and subscription growth.
Adjusted gross profit increased 10.6% to $625.9 million, while the adjusted gross margin edged up four basis points from a year earlier. Occupancy and delivery-expense leverage helped margins, but those benefits were partly offset by higher Anthropologie markdowns, tariffs and inbound freight fuel surcharges.
Selling, general and administrative expenses rose 10.5% to $432.8 million and remained at 26% of sales. Urban Outfitters attributed the increase primarily to higher marketing and store payroll costs, while also citing increased investment in artificial-intelligence technology.
Inventory increased 11.8% from a year earlier to $778.5 million, with retail inventory up 12% and wholesale inventory rising 10%. The company attributed the increases to higher sales and, in retail, the timing of inventory receipts.
For the first six months of the fiscal year, sales rose 10.9% to a record $3.14 billion. Adjusted net income was $265 million, or $3.02 a diluted share, compared with $252.2 million, or $2.73 a share, in the prior-year period.
Urban Outfitters also returned capital through its existing share-repurchase program, buying back and retiring 4.6 million shares for about $300 million during the six months ended July 31. The company had authorization remaining to repurchase 10 million shares at the end of the period.
The retailer ended July with 801 company-owned stores, up from 784 at the end of January after 23 openings and six closings. FP Group accounted for 17 of the openings, including 10 FP Movement locations.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.