Urban Outfitters Inc. reported record quarterly sales for the second fiscal quarter of 2027, driven by growth across its core brands and its Nuuly rental platform. Net sales increased 10% year-over-year to $1.66 billion, exceeding the $1.65 billion consensus estimate by $10 million. The company’s eighth consecutive quarter of record sales and profits was tempered by a $0.01 miss on adjusted earnings per share, which came in at $1.72 versus the $1.73 forecast.
Operating income rose 11% to a record $193 million, while net income increased to $149 million. Gross profit dollars climbed 11%, with the gross margin rate improving by 4 basis points to 37.7%. The company’s market capitalization stood at $7.1 billion, with a return on equity of 19%. Shares, which had gained 9.5% during regular trading to close at $82.95, slipped 3.6% in after-hours activity to $80.
Nuuly, Urban Outfitters’ rental business, posted a 29% revenue increase to $179 million, marking a record quarter. The unit’s operating margin reached 10%, generating $18 million in operating income. Average active subscribers grew 30% year-over-year to 484,000, having surpassed 500,000 in early June before seasonal softening. Choice count rose 35% to nearly 33,000. Logistics expansion continued, with the Kansas City footprint expanded to 1 million square feet and a new East Coast facility near Philadelphia slated to open by late 2028.
Anthropologie reported a 5% revenue increase, driven by a 3% comparable sales gain and new store growth. The brand extended its streak of 22 consecutive quarters of positive comps and delivered its 15th straight quarter of double-digit operating margins. Urban Outfitters’ total sales rose 8%, with an 8% global retail comp, including a 9% increase in Europe. The brand launched its first connected TV commercial for back-to-school, featuring over 75 real customers from 10 U.S. universities.
FP Group, comprising Free People and FP Movement, posted a 15% revenue increase, with retail comps up 10% and wholesale revenue rising 19%. Free People’s total sales grew 11% (retail comp 9%), while FP Movement’s revenue surged 26% (retail comp 13%), bringing its standalone store count to 97 after opening four new locations.
Management guided for high single-digit total company sales growth in the third quarter and full fiscal year, with retail comps expected to rise in the mid-single digits. Gross profit margins are projected to improve by 25 to 50 basis points in Q3 and by about 25 basis points for the full year. Capital expenditures for fiscal 2027 are planned at $475 million, with 50% allocated to logistics investments. The company expects to open 54 new stores and close 18 during the year, primarily driven by FP Movement expansion.
Cost pressures persisted, with fuel surcharges tied to Middle East tensions weighing on margins. Inbound freight, domestic transportation, and outbound delivery expenses added roughly 70 basis points of pressure in Q3 and Q4. Management noted that substantially all refunds for IEEPA tariffs were received during Q2.
