Urban Outfitters delivered a robust third quarter, with management citing broad-based sales growth across all its brands and geographies as key drivers. Strong store and digital traffic, particularly at the Urban Outfitters and Free People brands, fueled higher transaction volumes and improved profitability. Co-President Frank Conforti attributed the performance to lower markdowns, effective marketing investments, and notable momentum in the Nuuly rental business, which saw subscriber growth of over 40%. CEO Dick Hayne emphasized that "all brands produced positive comps across all geographies this quarter," underscoring the strength of the company’s diversified business model.
Is now the time to buy URBN? Find out in our full research report (it’s free for active Edge members).
Urban Outfitters (URBN) Q3 CY2025 Highlights:
- Revenue: $1.53 billion vs analyst estimates of $1.49 billion (12.3% year-on-year growth, 2.6% beat)
- Adjusted EPS: $1.29 vs analyst estimates of $1.19 (8.3% beat)
- Adjusted EBITDA: $177.3 million vs analyst estimates of $168.8 million (11.6% margin, 5% beat)
- Operating Margin: 9.4%, in line with the same quarter last year
- Locations: 768 at quarter end, up from 731 in the same quarter last year
- Same-Store Sales rose 8% year on year (1.5% in the same quarter last year)
- Market Capitalization: $7.03 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Urban Outfitters’s Q3 Earnings Call
- Lorraine Hutchinson (Bank of America) asked about the impact of recent price increases and whether Urban Outfitters would continue to protect opening price points. CEO Dick Hayne and Anthropologie CEO Tricia Smith confirmed minimal customer resistance and emphasized a commitment to maintaining accessible entry prices.
- Adrienne Yih (Barclays) explored the trajectory of Anthropologie’s own brands and Urban Outfitters' path to sustainable profitability. Smith highlighted ongoing own-brand expansion, while COO Frank Conforti said global profitability is in reach but stopped short of providing specific annual guidance.
- Matthew Boss (JPMorgan) inquired about the drivers behind traffic acceleration and margin outlook. CEO Dick Hayne cited increased store and digital traffic, while Conforti discussed margin improvement via gross profit gains and occupancy leverage, with caution around tariff uncertainties.
- Paul Lejuez (Citi) questioned out-the-door merchandise margins and any shifts in Nuuly’s subscriber demographics. Conforti noted margin improvement from reduced markdowns, and Nuuly President Dave Hayne observed a slight trend toward younger, southern U.S. subscribers, but no significant demographic shift.
- Mark Altschwager (Baird) asked about sources of Q3 gross margin upside and promotional expectations for Q4. Conforti pointed to sales-driven occupancy leverage and confirmed that while holiday promotions may rise, the company aims to hold its annual gross margin improvement target.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team is watching (1) the execution and sales productivity of new store openings, particularly for FP Movement and Anthropologie, (2) the pace of Nuuly subscriber growth and its contribution to overall revenue, and (3) the company’s ability to manage gross margin in a more promotional and tariff-impacted environment. Progress in digital engagement and successful mitigation of cost headwinds will also be key indicators.
Urban Outfitters currently trades at $78.27, up from $68.31 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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