Urban Outfitters Inc., the parent of Anthropologie, Free People, FP Movement, Urban Outfitters and Nuuly brands, reported sales climbed 10.4 percent in the second quarter to $1.66 billion. Adjusted net income grew 3.8 percent to a record $149.3 million, or $1.72 a share.

Adjusted net income and adjusted earnings per diluted share for the three and six months ended July 31, 2026, excludes one-time benefits related to refunds for tariffs previously paid under the International Emergency Economic Powers Act (IEEPA), associated interest income and a tax benefit related to the release of a valuation allowance against certain foreign net deferred tax assets.

Net income of $240.7 million, or $2.78 a share, compared to year-ago earnings of $143.9 million, or $1.58.

“We are pleased to report our highest adjusted profit quarter in company history, marking our eighth consecutive quarter of record sales and profits. These results were driven by positive Retail segment ‘comps’ at every brand and continued double-digit growth in our Wholesale and Subscription segments,” said Richard A. Hayne, chief executive officer. “Our customers continue to respond favorably to our fashion assortments. This gives us confidence in URBN’s ongoing success.”

Total Retail segment net sales in the quarter increased 8.0 percent, with comparable Retail segment net sales increasing 6.2 percent. The increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel sales and mid single-digit positive growth in retail store sales. Comparable Retail segment net sales increased 10.0 percent at FP {Free People) Group, 8.4 percent at Urban Outfitters and 3.0 percent at Anthropologie. Subscription segment net sales increased 28.6 percent primarily driven by a 30.4 percent increase in average active subscribers in the current quarter versus the prior year quarter. Wholesale segment net sales increased 18.6 percent, driven by a 19.2 percent increase in FP Group wholesale sales due to an increase in sales to specialty customers and department stores.

Net sales by brand and segment for the three and six-month periods were as follows:

The gross profit rate in the second quarter increased by 580 basis points compared to the three months ended July 31, 2025, and gross profit dollars increased 27.4 percent to $721.6 million from $566.2 million. For the three months ended July 31, 2026, the adjusted gross profit rate increased by 4 basis points compared to the three months ended July 31, 2025, and adjusted gross profit dollars increased 10.6 percent to $625.9 million from $566.2 million. The increase in the adjusted gross profit rate was primarily due to leverage in store occupancy costs due to the increase in comparable Retail segment store net sales and leverage in delivery expense as a result of several company initiatives to offset fuel surcharges, partially offset by an increase in Retail segment markdowns driven by Anthropologie and the negative impacts of tariffs and inbound freight fuel surcharges on initial merchandise costs. The increase in adjusted gross profit dollars was primarily due to higher net sales.

Selling, general and administrative expenses increased by $41.0 million, or 10.5 percent, compared to the three months ended July 31, 2025. Selling, general and administrative expenses were flat as a percentage of net sales compared to the three months ended July 31, 2025. The leverage in store payroll expenses due to the growth in Retail segment store net sales was offset by the deleverage in marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, along with increased artificial intelligence technology investments benefiting the company’s current and future operations. The dollar growth in selling, general and administrative expenses was primarily due to increased marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the growth in Retail segment store net sales.

The company’s effective tax rate for the three months ended July 31, 2026, was 19.4 percent, compared to 21.5 percent in the three months ended July 31, 2025. The company’s adjusted effective tax rate for the three months ended July 31, 2026, was 24.8 percent. The company’s effective tax rate for the six months ended July 31, 2026, was 19.8 percent, compared to 21.5 percent in the six months ended July 31, 2025. The company’s adjusted effective tax rate for the six months ended July 31, 2026, was 23.0 percent. The change in the adjusted effective tax rate for the three and six months ended July 31, 2026, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings.

Six-Months Review
For the six months ended July 31, 2026, total company net sales increased 10.9 percent to a record $3.14 billion. Total Retail segment net sales increased 8.0 percent, with comparable Retail segment net sales increasing 6.0 percent. The increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel sales and mid single-digit positive growth in retail store sales. Comparable Retail segment net sales increased 9.9 percent at FP Group, 8.8 percent at Urban Outfitters and 2.5 percent at Anthropologie. Subscription segment net sales increased 31.4 percent primarily driven by a 31.8 percent increase in average active subscribers in the current period versus the prior year period. Wholesale segment net sales increased 21.7 percent driven by a 22.6 percent increase in FP Group wholesale sales primarily due to an increase in sales to specialty customers.

The gross profit rate increased by 299 basis points compared to the six months ended July 31, 2025, and gross profit dollars increased 19.8 percent to $1.26 billion from $1.06 billion. For the six months ended July 31, 2026, the adjusted gross profit rate decreased by 6 basis points compared to the six months ended July 31, 2025, and adjusted gross profit dollars increased 10.7 percent to $1.17 billion from $1.06 billion. The decrease in the adjusted gross profit rate was primarily due to an increase in Retail segment markdowns driven by Anthropologie and the impact of a prior year gain of $4.8 million, or 17 basis points, not repeated in the current year period, partially offset by leverage in store occupancy costs due to the increase in comparable Retail segment store net sales. The increase in adjusted gross profit dollars was primarily due to higher net sales.

Selling, general and administrative expenses increased by $83.1 million, or 11.0 percent, compared to the six months ended July 31, 2025. Selling, general and administrative expenses deleveraged 4 basis points as a percentage of net sales compared to the six months ended July 31, 2025. The deleverage in selling, general and administrative expenses was primarily related to deleverage in marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, along with increased artificial intelligence technology investments benefiting the company’s current and future operations. This was partially offset by a discrete benefit of $6.9 million, or 22 basis points, in the current year period resulting from the reversal of a litigation accrual, as well as leverage in store payroll expenses due to the growth in Retail segment store net sales. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, increased store payroll expenses to support the growth in Retail segment store net sales and increased artificial intelligence technology investments benefiting the company’s current and future operations.

Net income for the six months ended July 31, 2026, was $356.4 million and earnings per diluted share were $4.06. Adjusted net income for the six months ended July 31, 2026, was $265.0 million and adjusted earnings per diluted share were $3.02. In the year-ago period, net and adjusted earnings were $252.2 million, or $2.73 a share.

Inventory Position
As of July 31, 2026, total inventory increased by $82.3 million, or 11.8 percent, compared to total inventory as of July 31, 2025. Total Retail segment inventory increased 12.0 percent and Retail segment comparable inventory increased 8.4 percent. Wholesale segment inventory increased 10.0 percent. The increase in Retail segment inventory was due to the increase in net sales and timing of inventory receipts. The increase in Wholesale segment inventory was due to the increase in net sales.

Share Repurchases
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 six months ended July 31, 2026, the company repurchased and subsequently retired 4.6 million shares for approximately $300 million. During the year ended January 31, 2026, the company repurchased and subsequently retired 3.3 million shares for approximately $154 million. As of July 31, 2026, 10.0 million common shares were remaining under the program.

Store Count

Image courtesy Urban Outfitter