Urban Outfitters, Inc. (NASDAQ:URBN) shares jumped 22% on Thursday morning after the apparel retailer reported better-than-expected earnings and revenue for its fiscal first quarter, driven by strong performance across all its brands and a sharp rise in profitability.
The company posted net income of $108.3 million, up 75.3% from the year-ago period, while revenue climbed 10.7% to a record $1.33 billion, beating Wall Street expectations of $1.29 billion.
Earnings per share came in at $1.16, well above analysts’ estimates of $0.84.
“Our success was driven by positive sales growth and improved profitability across all brands and segments,” CEO Richard Hayne told shareholders.
Comparable retail sales rose 4.8%, supported by continued strength at Anthropologie and Free People. Anthropologie posted a 7% rise in segment comps, marking its fourth consecutive year of quarterly growth, while Free People delivered an 11% increase in combined retail and wholesale segment sales.
Urban Outfitters, the namesake brand, recorded a 2% increase in global comparable sales, turning positive for the first time in nearly three years. However, North American comps for Urban Outfitters were down 4%, offset by a 14% increase in international markets.
Nuuly, the company’s clothing rental service, was a standout performer, with revenue jumping 60% and first-quarter operating profit exceeding 5% — both records for the brand.
The wholesale segment also grew 24%, contributing to gross margins of 36.8%, which topped Street forecasts of 35.3%. Operating margin expanded to 9.6%, up from expectations of 7.6%.
Urban Outfitters reiterated its full-year guidance, including mid-single-digit percentage sales growth and 50-100 basis points of gross margin expansion.
The company plans to open approximately 64 new stores this year, with most growth coming from FP Movement, Free People, and Anthropologie, while closing 17 underperforming locations.
The company also emphasized its diversified sourcing strategy, noting that no single country accounts for more than 25% of its production, with India, Vietnam, and Turkey as top origins. Management said its guidance factors in a 10% global tariff on all imports to the US, excluding China, where a 30% rate is assumed.