Urban Outfitters, Inc. reported profits jumped 75.4 percent in the first quarter as comps at its Retail segment increased 4.8 percent.
Total company net sales for the three months ended April 30 increased 10.7 percent to a record $1.33 billion. Total Retail segment net sales increased 6.4 percent, with comparable Retail segment net sales increasing 4.8 percent. The increase in Retail segment comparable net sales was driven by mid-single-digit positive growth in retail store sales and digital channel sales. Comparable Retail segment net sales increased 6.9 percent at Anthropologie, 3.1 percent at Free People and 2.1 percent at Urban Outfitters. Subscription segment net sales increased by 59.5 percent, primarily driven by a 52.9 percent increase in average active subscribers in the current quarter versus the prior year quarter. Wholesale segment net sales increased 24.2 percent, driven by a 25.6 percent increase in Free People wholesale sales due to increased sales to specialty customers and department stores.
“We are excited to announce record first quarter revenues and profits,” said Richard A. Hayne, chief executive officer. “Our success was driven by positive sales growth and improved profitability across all brands and segments. We believe these results demonstrate the strength of our brands and the effectiveness of our strategy, giving us confidence in URBN’s continued success.”
The gross profit rate increased by 278 basis points compared to the three months ended April 30, 2024, and gross profit dollars increased 19.8 percent to $489.1 million from $408.4 million. The gross profit rate benefited from a non-recurring gain of $4.8 million, or 36 basis points, recorded in the current year quarter and store impairment and lease abandonment charges of $4.6 million, or 38 basis points, recorded in the prior year quarter, not repeated in the current year quarter. The remaining 204 basis point increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters, leverage in delivery expense due to lower carrier costs and a reduction in packages per order, and leverage in store occupancy costs due to the increase in comparable Retail segment net sales. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.
As of April 30, total inventory increased by $84.8 million, or 14.6 percent, compared to total inventory a year ago. Total Retail segment inventory increased 13.2 percent, and Retail segment comparable inventory increased 12.6 percent. Wholesale segment inventory increased 30.6 percent. The increase in inventory for both segments was due to increased sales and early receipts.
Selling, general and administrative (SG&A) expenses increased by $27.1 million, or 8.1 percent. SG&A expenses leveraged 65 basis points as a percentage of net sales compared to a year ago. The leverage in SG&A expenses as a rate to net sales was primarily related to lower litigation expenses in the current year quarter as compared to the prior year quarter. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth, increased sales in the Retail and Subscription segments, and increased store payroll expenses to support the Retail segment stores’ net sales growth.
The company’s effective tax rate for the three months ended April 30 was 21.4 percent, compared to 23.6 percent a year ago. The decrease in the effective tax rate was primarily attributable to the ratio of foreign and global taxable earnings.
Earnings reached $108.3 million, or $1.16 a share, up from $61.8 million, or 65 cents, a year ago.
On June 4, 2019, the company’s Board of Directors authorized the repurchase of 20 million common shares under a share repurchase program. During the three months ended April 30, the company repurchased and subsequently retired 3.3 million shares for approximately $152 million. During the twelve months ended January 31, 2025, the company repurchased and subsequently retired 1.2 million shares for roughly $52 million. As of April 30, 14.7 million common shares remained under the program.
During the three months ending April 30, 2025, the company opened 13 new retail stores, including 9 Free People stores (which includes 5 FP Movement stores), 2 Anthropologie stores, and 2 Urban Outfitters stores. The company closed 2 Free People stores.
Urban Outfitters operates 257 Urban Outfitters stores, 241 Anthropologie stores, 237 Free People locations (including 68 FP Movement stores), nine Menus & Venues restaurants, seven Urban Outfitters franchisee-owned stores, and two Anthropologie franchisee-owned stores as of April 30. Free People, FP Movement and Urban Outfitters wholesale sell their products through department and specialty stores.
Image courtesy Urban Outfitters
