URBN Q1 2027 Earnings Transcript

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DATE

Wednesday, May 20, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Richard A. Hayne
• Co-President and Chief Operating Officer — Francis J. Conforti
• Chief Financial Officer — Melanie Marein-Efron
• Global CEO, Free People Group and Urban Outfitters — Sheila Harrington
• President, Anthropologie Group — Tricia D. Smith
• Chief Technology Officer — David A. Hayne
• President, Free People Movement — Andrea Perez
• President, Urban Outfitters North America — Shea Jensen

TAKEAWAYS

• Net Sales -- $1.5 billion, representing 11% growth and marking a seventh consecutive quarter of record sales for Urban Outfitters (NASDAQ:URBN).
• Earnings Per Share (EPS) -- $1.30, up 12%, setting a record for the company.
• Total Retail Segment Comp Sales -- Increased 6% with every retail brand delivering positive comps, and digital comp growth slightly exceeding store comp growth.
• Nuuly Revenue -- Grew 35% due to a 33% rise in average active subscribers, adding over 110,000 compared to last year.
• Wholesale Segment Revenue -- Increased 25%, driven by double-digit growth in both specialty and department store channels.
• Gross Profit Rate -- 36.6%, down 16 basis points, mostly due to the absence of a prior-year $5 million onetime benefit, partially offset by improved overall markdown rates.
• SG&A -- Increased 12%, including a $7 million legal settlement benefit, and deleveraged by 5 basis points, with cost growth tied to payroll, marketing, and technology investments.
• Operating Income -- Rose 9% to a record $140 million.
• Net Income -- $116 million, with share repurchases totaling 4.6 million shares for $300 million, reducing outstanding shares by 5%.
• Anthropologie Retail Segment Comp -- Up 2%, marking over five years of consecutive positive comps, led by women's apparel, shoes, and home categories.
• Urban Outfitters Global Retail Comp -- 9%, with total brand sales surpassing 11% growth, and notable strength in both North America and Europe.
• Free People Group Revenue -- Rose 17%, with a 14% increase in the retail segment and a 26% increase in wholesale revenue.
• FP Movement Revenue -- Grew 32%, with a 15% retail segment comp, six new stores, and 48% wholesale growth.
• Nuuly Operating Profit -- $10 million, a 6% operating profit rate, reflecting scale-driven margin gains, partly offset by continued marketing investment.
• Tariff and Fuel Cost Impact -- Current elevated inbound freight and delivery costs from Middle East–related fuel surcharges are anticipated to persist, with an adverse impact of about 70 basis points per quarter.
• Tariff Refunds -- Company expects to collect about $100 million in Q2 as a one-time refund for IEEPA tariffs and plans to record this as a one-time benefit.
• Fiscal year 2027 guidance -- Anticipates high single-digit total sales growth, mid single-digit retail segment comps, mid-20% growth at Nuuly, high single-digit wholesale growth, and a 25-basis-point gross profit margin improvement for the full year if current estimates hold. (Fiscal year ending Jan. 31, 2027.)
• Capital Expenditure Plans -- $475 million budgeted, with 35% allocated for store expansion, 50% for logistics, and 15% for technology and office support, expecting 54 new store openings and 19 closures.
• AI Initiatives -- "AI is driving our personalization and recommendation algorithms, a lot of our search and discovery across our websites," according to CTO David A. Hayne, who highlighted ongoing deployment across key business operations.

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RISKS

• Co-President and COO Francis J. Conforti said, "We are assuming these costs will remain consistent for the remainder of the year. These additional costs could have a negative impact of approximately 45-basis points in IMU relating to higher inbound costs, and 25-basis points in outbound delivery and freight expense due to increased fuel surcharges."
• CFO Melanie Marein-Efron stated, "second quarter gross profit margins could be flat to down by approximately 25 basis points versus last year," primarily due to "lower IMU due to the increased tariffs" and ongoing fuel surcharges.
• Co-President and COO Francis J. Conforti described tariffs as "difficult and seemingly ever-changing," with substantial current and potential variability in future rates affecting cost planning and IMU.

SUMMARY

Guidance for the second quarter points to high single-digit sales growth company-wide, with retail segment comps by brand expected in the low to mid single digits for Anthropologie and high single digits for Urban Outfitters, Free People, and FP Movement. Management anticipates a $100 million one-time cash benefit in the second quarter from IEEPA tariff refunds, which will augment reported results but is non-recurring. Inventory growth is planned to track at or below sales, with capital outlays centered on logistics projects supporting both the subscription and retail segments. Strategic focus includes international expansion for the Free People brand, continued standalone FP Movement store rollouts, and leveraging AI across marketing, product development, and customer engagement operations. Management reported positive customer behavior trends, emphasizing brand relevance among higher-income demographics.

• CFO Melanie Marein-Efron indicated full-year gross profit margin guidance assumes fuel surcharges persist at levels introduced in March, with a net unfavorable 70-basis-point quarterly impact despite potential tariff relief or volatility.
• Approximately 54 new stores will open in fiscal year 2027, primarily in FP Movement, Free People, and Anthropologie, signaling ongoing physical retail expansion.
• Co-President and COO Francis J. Conforti noted that the company "remain committed to scaling Nuuly toward its significant long term potential while continuing to improve its profitability," suggesting future growth investment in that segment.
• Urban Outfitters launched DoorDash partnerships during the quarter, with "early conversion and reach of this partnership" described as encouraging by management.

INDUSTRY GLOSSARY

• IMU: Initial Markup; the difference between the cost of goods and the original retail selling price, expressed as a percentage of retail.
• IEEPA Tariffs: Trade tariffs imposed under the International Emergency Economic Powers Act, referenced here as affecting prior sourcing costs and pending refund claims.

Full Conference Call Transcript

Richard A. Hayne: Thank you, Oona. In the first quarter, our teams once again produced record quarterly sales and earnings per share. Net sales grew 11% to $1.5 billion and EPS grew 12% to $1.30. This marks the 7th consecutive quarter of record sales and profits for URBN. I salute our extraordinary teams for their talent, and remarkable consistency. All retail segment brands delivered positive comps, with standout performance from Free People and FP Movement. You will hear more on both of these brands from their CEO Sheila Harrington, in a few minutes. Our other segments wholesale and subscription, also produced outstanding results and were instrumental in driving these record results. Francis J.

Conforti, our Co-President and Chief Operating Officer, will now provide the details of our Q1 performance. After Frank, Sheila will talk about the Free People Group. Following her, Melanie Marein-Efron, our CFO, will walk you through our outlook for Q2. And the second half of the year.

Francis J. Conforti: I will then wrap things up with a few closing thoughts before we open the call to your questions. Frank, the floor is yours. Thank you, Dick, and good afternoon, everyone. Today, I am excited to share our company's first quarter record results compared to last year. Then I will dive into some detailed notes by brand, followed by a tariff and fuel cost update. Overall, our teams delivered another outstanding quarter. Exceeding our plans and setting new sales and operating profit records. Total URBN sales grew by over 11% reaching a Q1 record of $1.5 billion. All our retail segment brands delivered positive retail segment comps while 4 of our 5 brands posted record first quarter sales.

Nuuly continued its impressive double digit revenue growth, and our wholesale segment also delivered exceptional double digit revenue growth. Our total URBN sales growth was partly driven by a 6% increase in the retail segment comp with digital comps slightly exceeding store comps. Nuuly delivered strong 35% revenue growth driven primarily by an increase of over 110 thousand average active subscribers compared to Q1 last year. Additionally, the wholesale segment delivered a 25% increase in revenue driven by growth across both specialty and department store accounts. Next, I will turn your attention to gross profit. URBN saw an 11% increase in gross profit dollars while the gross profit rate decreased by 16 basis points to 36.6%.

The decrease in gross profit rate versus the prior year is due to a $5 million or 36 basis point onetime benefit received in the prior year. This deleverage was partially offset by an improvement in total company markdown rate driven by lower markdown rates at the Free People and Urban Outfitters brands. In the quarter, SG&A increased by 12%, deleveraging by 5 basis points. I want to note that SG&A in the quarter included a $7 million or 47 basis points benefit from a favorable resolution of a legal matter.

The increase in SG&A dollars was driven by increased store payroll expenses to support the growth in store net sales, marketing investments at several of our brands, and investments in technology. The marketing efforts drove increases in traffic, both in stores and online for the total URBN retail segment. While Nuuly's marketing campaigns resulted in healthy double digit growth in average active subscribers. The technology investments relate to several exciting AI related projects that we anticipate to benefit the company for years to come. Overall, total URBN operating income grew by 9% compared to last year. Reaching a Q1 record of $140 million. During the quarter, we repurchased 4.6 million shares for approximately $300 million.

These recent share repurchases reduced our outstanding shares by 5%. Net income increased to $116 million while earnings per share increased by 12% to $1.30 per diluted share. Moving on to brand performance, starting with Anthropologie. As noted on the last call, the Anthropologie team had a slow start to the quarter as the brand cleared through some slower moving winter products. As fresh spring receipts began to impact the assortment in March, the brand saw the business respond nicely with positive comps in March and April. For the full quarter, Anthropologie delivered a positive 2% retail segment comp. This marks over 5 years of positive comps produced by the Anthropologie brand.

The positive retail segment comp was driven by positive comps in women's apparel, shoes, and home. Partially offset by negative comp in accessories. Apparel growth was fueled by a continuation of the strong bottom cycle and a nicely positive dress comp, which is great to see for the brand. Turning to the home category, performance was primarily driven by recent improvements in furniture. Which we believe presents an opportunity for growth in the coming year as we continue to lean into the brand's unique home aesthetic. Through strong execution in product marketing, and creative content, the Anthropologie team successfully fostered broad based customer growth and engagement this quarter.

This integrated approach not only drove positive traffic trends, across their store and digital channels, but was also key to expanding the customer base. Overall, we are pleased with the brand's execution And based on our current plans, we believe the brand has the ability to deliver low to mid single digit positive comps in the second quarter. Now turning to the Urban Outfitters brand, which continued to build meaningful momentum in the first quarter on top of last year's positive performance. Total Urban Outfitters sales grew by over 11% and the global retail segment comp was 9% with strength across both North America and Europe.

Digital comps outpaced store comps in North America, while in Europe, the store business led the digital channel. In North America, the team delivered positive comps across women's apparel, accessories, and home. Within women's apparel, the strong bottom trend continues to fuel growth, complemented by incredible performance in their key items. The positive retail segment comp was driven by reg price sales, which outpaced total comp. The brand's marketing initiatives fueled positive traffic in both stores and digital this quarter. Resulting in double digit growth in new customer acquisition while maintaining high retention rates across their existing base. This success is rooted in the brand's strategic commitment to platform diversification. Meeting their audience wherever they engage.

The brand was excited to launch DoorDash in April, which successfully expanded through May. And they are incredibly encouraged by the early conversion and reach of this partnership. Furthermore, the brand has evolved their influencer model to lean heavily into user generated content. The brand's recent spring campaign served as a powerful proof point of this shift. As it was uniquely shaped by the brand's creators and customers. By transitioning to a more community oriented campaign structure, the brand is fostering a deeper, more authentic connection with their audience. In Europe, the business continues to be a standout performer. The European team produced a remarkable 12% retail segment comp despite being up against healthy comparisons versus the prior year.

European stores outperformed the digital channel, leading to a nice increase in profitability for the quarter. Their consistent execution in product and marketing is allowing them to continue capturing meaningful market share. We are pleased by the progress of the global Urban Outfitters brand. We believe the brand is well positioned to deliver high single digit positive retail segment comps for the second quarter while continuing to make meaningful progress in growing their profitability. Now moving to the Nuuly brand. Which delivered another strong performance this quarter. Continuing to scale both its subscriber base and its financial results. Total revenue grew by 35% driven by a 33% increase in average active subscribers.

This was an increase of 110 thousand average active subscribers And Compared to the prior year Q1. as of today, the brand is currently sitting on the doorstep of a 1 million active subscribers. This subscriber growth reflects continued strong demand for the service supported by effective marketing campaigns, and healthy subscriber retention. Nuuly generated operating profit of $10 million in the first quarter, representing a 6% operating profit rate. This improvement was driven by operating leverage as the business scales. Partially offset by continued marketing investments to sustain subscriber growth. The brand's ability to grow its subscriber base while simultaneously improving its economics is a meaningful indicator of the health and scalability of this business.

We remain committed to scaling Nuuly toward its significant long term potential while continuing to improve its profitability. The last topic I wanna address is the overall tariff and freight environment and its impact on our business. First, let's discuss fuel costs. Are currently navigating higher inbound freight costs and higher delivery expenses driven by fuel surcharges associated with ongoing conflict in the Middle East. We are assuming these costs will remain consistent for the remainder of the year. These additional costs could have a negative impact of approximately 45-basis points in IMU relating to higher inbound costs, and 25-basis points in outbound delivery and freight expense due to increased fuel surcharges.

If the price of oil declines and holds, at any point in time in the future, we would expect to see a corresponding reduction in these increased expenses. Next, let's discuss tariffs. Navigating the current tariff landscape is difficult and seemingly ever-changing. Let me try to organize it as best I can. I will start in chronological order. The IEEPA tariffs imposed last spring were declared illegal this spring. In some countries, such as India, where we source a meaningful amount of product, the tariff rates reach as high as 50% from August, through the start of fiscal year 27.

In the meantime, these IEEPA tariffs were used to negotiate bilateral tariff agreements with most of the countries from which we source our products. The agreed upon bilateral tariff rates varied from 10% to 22%. We have filed for refunds from the IEEPA tariffs imposed in the spring of last year and expect to receive approximately $100 million in refunds in the second quarter. We are planning to record these refunds as a 1-time benefit in the second quarter. After the IEPA tariffs were ruled illegal, the administration quickly imposed a new 10% Section 22 tariff on almost all imports. These tariffs took effect in mid-March and run through the July.

These have now also been ruled illegal, but we are required to continue to pay them. It is possible we will receive refunds on the section 22 tariffs sometime in the future. There is much uncertainty regarding what will happen once the section 22 tariffs expire. But since a number of bilateral agreements were reached under the IEEPA tariffs, we assume that some form of tariffs similar to those agreements will be imposed. So in order to plan conservatively, we are planning for a 15% across the board tariff for our imports in the second half of the year.

If it turns out receipts from any country face a different charge than 15%, we will have an additional cost or benefit versus our plan. The good news is if our 15% estimated rate is reasonably accurate to what actually occurs, we will have a net favorable benefit to IMU in the second half of the current year. That benefit does take into consideration the additional fuel costs we expect to pay during that period. In summary, the record breaking 2027 reflects the underlying strength of our diversified brand portfolio. Total revenue grew over 11%, Free People delivered a standout performance across both retail and wholesale, Urban Outfitters continued its strong top line comp alongside meaningful operating results improvement.

Nuuly robustly grew its active subscriber base while continuing to improve their profits. And our wholesale segment delivered exceptional results. Anthropologie quickly responded to a slow start to the quarter and as fresh new spring and summer products arrived, their comp sales performance improved. We entered the second quarter proud of all of our team's performance, and confident in our growth plans. Now I will turn the call over to Sheila Harrington, global CEO of Free People Group and the Urban Outfitters brand.

Sheila Harrington: Thank you. Thank you, Frank. For the purposes of this discussion, FP Group refers to the entire brand footprint. Spanning both Free People and FP movement across all retail segments and wholesale channels. Both Free People and FP Movement delivered an exceptionally strong quarter. Total FP Group revenue increased 17% year over year driven by sustained momentum across both of our wholesale and retail segments. Wholesale revenue surged 26%, while the retail segment grew 14%. This includes a 10% retail segment comp marking our 24th consecutive quarter or 6 full years of positive retail segment comps for the FP Group. The Free People brand delivered total revenue growth of 12% with wholesale up 16% and the retail segment up 11%.

Driven by a 9% retail segment comp. FP Movement continued its impressive trajectory delivering total brand revenue growth of 32%. This was driven by a 15% retail segment comp strong noncomp performance, 6 new store openings in the quarter, and 48% wholesale growth. This success was directly supported by well-executed product distortion and impactful creative marketing in both brands. In addition to the strong top line performance, total FP Group delivered record first quarter profitability. Both Free People and FP Movement achieved record low markdown rates. Fueled by exceptional reg price selling that outpaced total sales growth. Total brand profitability also benefited from strong store performance, which outpaced digital alongside meaningful leverage within the wholesale channel.

For the Free People brand, there was broad based strength across the entire assortment, including tops, bottoms, intimates, and accessories. Furthermore, store performance nicely outpaced digital across North America and Europe. This was driven by positive traffic and conversion trends. As well as higher transaction values. This metric reflects the power of our regular price selling a favorable product mix, and our continued investment in elevating product quality. On the marketing front, the brand a highly successful creative digital campaign. The art of the pants. This initiative showcased the originality and elevated positioning of our pant assortment while celebrating creativity within the broader art community. The campaign exceeded our expectations, driving robust new customer acquisition.

Turning to FP Movement, notably a strategic emphasis on our bottoms and bra categories, drove outpaced performance and did double digit new customer acquisition. Similar to Free People, these results were supported by strong full price selling, despite IMU headwinds related to tariffs during the quarter, disciplined execution allowed the brand to deliver year over year merchandise margin improvements. FP movement continues to gain significant cultural relevance reinforcing its position as a distinct and unique growth vehicle within the URBN portfolio. During the first quarter, the brand successfully activated key partnerships including a collaboration with Barry's, the leading high intensity training studio chain. Which expanded into Selfridges in London. This activation successfully elevated the brand's visibility globally.

Now I wanna take a moment to discuss the longer term strategic outlook for both Free People and FP Movement. We have reached a critical inflection point where we no longer view these as parent and sub brand. Instead, we are managing them as 2 independent ecosystems each serving genuinely different market opportunities. I wanna be clear. This evolution is not a sudden shift. But a deliberate and strategic transition. We are moving thoughtfully to ensure we maximize what is best for both brands not just from a top line perspective, but through the lens of disciplined expense management, and intellectual leverage. By sharing our collective expertise, and proven brand building playbooks, we ensure that each ecosystem grows.

It does so with the operational wisdom and efficiency of the entire group. These 2 ecosystems coexist perfectly. Free People continues to anchor our portfolio with its decade long legacy of creative storytelling and creative original products. While FP Movement is strategically architected to lead the activewear market through a unique fusion of technical performance and elevated style. By decoupling their growth strategies, we can pursue each opportunity with singular focus anchored always by the unwavering commitment to creativity and the value of original ideas. By anchoring free people and FP movement in their own singular authentic voices, we are feeding digital platforms that remember brand identity.

This maximizes our discoverability today and deepens our competitive moat for years to come. We believe this dual ecosystem approach positions us uniquely for an AI driven world. Turning to the Free People brand. We continue to build formidable momentum across 4 strategic pillars. First, our international expansion remains a high conviction opportunity. We currently operate 13 European locations, and our wholesale business remains under penetrated. Leaving us a massive runway for growth. Our recent shop entry into Scotland with the Edinburgh opening is a perfect example of the international opportunity ahead of us.

This success combined with double digit retail segment comp growth and strong 4 wall profitability in the European market, reinforces our commitment to keep global expansion at the forefront of our long term strategy. Second, we are aggressively modernizing our domestic foot across both retail and wholesale. In our retail segment, we are strategically evolving our store base. Investing in larger format locations, and high impact remodels that are already yielding meaningful sales list and deepening our consumer engagement. Simultaneously, we are scaling our wholesale business through thoughtful category expansion.

By aligning with correctly positioned partners across our portfolio of labels, including We The Free, Freest, and Intimately FP, we are capturing new demographics and broadening our market reach without compromising our brand integrity. Third, brand elevation remains our north star. We believe that when we lead with distinctive and uniquely designed product, uncompromising quality, and clear value we solidify our emotional connection with our customer. This is powered by our agile sourcing strategy, which gives us the speed to react to emerging trends and maximize market opportunities in real time. Finally, we are focused on the evolution of our digital platform. The enduring consistency of the Free People brand provides the perfect foundation to leverage AI driven tools.

We have begun to use these technologies to optimize customer acquisition and build a scalable digital environment that spinks speaks with a singular authentic voice. Now turning to FP movement. As we accelerate this brand's growth, I would like to call out our new president, Andrea Perez, now leading the brand. With this dedicated leadership in place, we are positioned to be a major disruptor in the active risk space. Are not simply participating in the category. We are redefining it. Our strategy is focused on 4 key areas of growth. First, we are aggressively expanding our consumer ecosystem. We know that FP Movement's appeal extends far beyond the core free people base. And the results bear this out.

In Q1, we saw FP Movement only consumers continue to grow significantly. And continue to build momentum year over year. We are building a distinct identity through elevated storytelling while ensuring our content is AI ready to drive compounded returns on discoverability as digital platforms evolve. Second, we continue to scale through domestic optimization. Store expansion remains a proven high return lever for us. After ending last year with 25 new store openings to reach 88 stand alone locations, we have more than 20 new store openings planned for this current fiscal year.

Our shop in shop model remains a highly successful incubator for these stand alone stores, In fact, in several markets, we are seeing productivity and profitability that exceed our legacy benchmarks. Additionally, to support the growth in the wholesale channel, we are being incredibly intentional targeting premium specialty partners, including boutique studios, and outdoor retailers that reinforce our brand authority. Third, we are turning our focus to international expansion. The global opportunity for FP movement is compelling and untapped. We will lead our international growth through a strategic mix of wholesale partnerships, and direct to consumer channels, allowing us to scale brand awareness rapidly while remaining a deep authentic connection with our global community.

Finally, as our fourth pillar, we remain obsessed with product innovation and technical performance. Understand that today's active consumer refuses to choose between function and fashion and FP movement is engineered exactly at this intersection. We will continue to lean into this white space where elevated style meets authentic athletic functionality. This is our competitive advantage, and we intend to widen it. In closing, we have 2 distinct brands with real momentum. Long term strategic opportunities, focused teams, and strong new leadership executing against them. We are confident and excited about our long term success.

Finally, I want to thank Meg and the creative teams in both brands Andrea, along with the entire Free People and FP Movement teams for your shared passion, creativity, and unwavering focus on our consumer. I now turn the call over to Melanie.

Melanie Marein-Efron: Thank you, Sheila, and good afternoon, everyone. On today's call, I will discuss our thoughts on the second quarter and full year fiscal 27. We are off to a solid start this quarter, and based on what we are seeing so far, we are planning for Q2 total company sales to grow in the high single digits. In our retail segment, comp sales could grow mid single digits. Driven by high single digit positive retail segment comps at Urban Outfitters and FP Group. While Anthropologie brand could be low to mid single digit positive comps. At Nuuly, the brand could deliver mid to high twenties revenue growth, driven by continued subscriber momentum.

Finally, our wholesale segment could produce mid teens growth. We continue to believe we could deliver positive high single digit total company sales growth for the full year fiscal 27. This growth could be driven by mid single digit retail segment comps mid-20s revenue growth at Nuuly, and high single digit growth for the wholesale segment. Based on our current plans, we believe our full fiscal year 2027 gross profit margins could be up approximately 25 basis points versus last year with the second half showing a benefit to IMU. This guidance reflects the current Section 22 tariffs at 10% until the July and an estimated 15% blended tariff for the second half of the year.

In addition, we are assuming that current oil surcharges related to the Middle East conflict remain in effect for the remainder of fiscal year 27. These surcharges, which began in March, impact inbound freight, and delivery and outbound freight expenses. Based on current surcharges, they represent approximately 70-basis points unfavorable impact per quarter. Based on the current sales performance and plans, we believe our second quarter gross profit margins could be flat to down by approximately 25 basis points versus last year. The reduction in Q2 gross profit rate could be primarily due to lower IMU due to the increased tariffs versus last year along with the fuel surcharges.

Based on current sales performance and financial plan, we believe Q2 total growth in SG&A could grow at or slightly ahead of sales growth due to marketing investments at all brands to support new customer acquisition along with increased technology investments. These technology investments relate to several AI related projects. We believe that these technological investments will provide significant benefits for years to come. Now for the full year, we believe SG&A growth could grow at a rate in line with sales growth. As always, if sales performance fluctuates, we maintain a certain level of variable SG&A spending that we can fluctuate up and down depending on how our business is performing.

We are planning for an effective tax rate of approximately 22.5 percent for Q2 and the full year. Now moving on to inventory. We continue to be focused on increasing our product turns We believe that inventory levels could grow at a rate at or below sales growth. For fiscal year 27 capital expenditures, are planned at approximately $475 million The fiscal year 27 capital project spend is broken down as follows. Approximately 35% for retail store expansion and support, approximately 50% for logistics investments, and the remaining 15% for technology investments and home office expansion support our growing business. The logistics investments are to expand our capacity and automation in both the subscription and retail segment businesses.

We will be opening approximately 54 new stores and closing approximately 19 stores during fiscal year 27. Our net new store growth is primarily being driven by growth in FP movement Free People, and Anthropologie stores. During fiscal year 27, we plan on opening 21 FP Movement stores 12 Free People stores, 13 Anthropologie stores, and 8 Urban Outfitters stores. As a reminder, the foregoing does not constitute a forecast but is simply a reflection of our current views. The company disclaims any obligation to update forward looking statements. Now it is my pleasure to turn the call back to Dick Hayne, Chief Executive Officer of URBN.

Richard A. Hayne: Thank you, Melanie. Sheila, once again, congratulations to you and both the Free People and FP Movement teams. On the exceptional quarter you produced. The results speak for themselves. It is a credit to the talent and creativity you have built within both teams. So thank you. In addition to the FP group, I am proud of what all teams delivered in the first quarter. Every 1 of our retail segment brands posted positive comps. This is no coincidence. It is the result of years of disciplined investment in our brands, our people, and the experiences we create for our customers. Beyond retail, the wholesale and subscription segments also posted strong double digit revenue growth and solid profitability.

What gives me confidence as we look ahead to the rest of the year? Is not just the numbers, but the underlying health of the business. Free People and FP Movement are performing with genuine distinction. Urban Outfitters is on a clear and meaningful path forward in North America and is already excelling in Europe. Anthropology showed real resilience turning a slow Q1 into a positive comp as well received products hit the shelves in March and April. Nuuly continues to scale with impressive speed, well on its way to the magic $1 billion goal. And our wholesale business is delivering outstanding top and bottom line results.

Taken together, this portfolio gives us confidence that our brand have the opportunity to deliver positive comps for the full year with margin expansion and record profitability. The strength of our business is built on the talent, creativity, and dedication of our teams. However, even the most talented team can and will have an occasional off season. The consistency of URBN which has allowed for 7 consecutive quarters of record sales and profits, stem from our diversification. From our first store, on, the University of Pennsylvania campus, which multiple product categories in a lifestyle setting.

To geographic diversification beyond Philadelphia and later outside The US, to the introduction of additional retail brands, and distribution channels, and most recently, the launch of a subscription rental brand. The history of our company is 1 of progressive diversification. It is a genuine competitive advantage that our talented teams bring to life every day. No matter how talented our teams are, we remain dependent on the health of our customers. Much has been written about the consumer in a K-shaped economy. My observations today focus on our specific customer set most of whom reside in the top half of that K.

Despite the daily noise and turmoil in the macro environment, our customer shopping behavior has remained remarkably consistent over the past few years. Including the current year to date. They remain positive and continue to engage enthusiastically with our brands. Responding to fashion newness and seeking the quality and creativity that define what we do. In short, our customers are in excellent shape. They are financially secure, and are more interested in fashion than price. With a strong customer base, a diversified portfolio of distinguished brands, and outstanding teams we believe our future shines very bright. In closing, I offer our sincere thanks to the entire URBN family.

Especially to our co presidents, Meg and Frank, and all of our brand leaders. I also wanna thank our global partners, and our shareholders for their continued support. That concludes our prepared remarks. We now invite your questions.

Operator: Thank you. Ladies and gentlemen, as a reminder to ask a question, please press 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press 11 again. Please limit yourself to 1 question only. Please stand by while we compile the Q&A roster. First question comes from the line of Lorraine Hutchinson with Bank of America. Your line is open.

Analyst (Lorraine Hutchinson): Thank you. Good afternoon. Dig into Anthro a little deeper. What did you fix What was the impact on margins? And how comfortable are you with the brand's ability to continue to profitably comp positively?

Tricia D. Smith: Yeah. Hi, Lorraine. This is Tricia. I will speak I will speak to that. We were really pleased with the progress that our team's made throughout, our Q1 performance. As we shared on the February earnings call, we had a soft start as Dick and Frank mentioned, to the quarter in February. But as the quarter progressed and new spring receipts were received in mid-March, we saw a return to our prior trend on the higher end of our low single digit comps in March and April. The results were really driven by the strength in core women's categories like pants, denim, dresses, and shoes, as well as Mother's Day gifting categories like beauty.

In addition, we continued In addition, the continued momentum we are seeing in full price furniture sales really drove our home comps nicely positive. We ended the quarter with a 2% comp, driven by a full price comp increase as well as increases in traffic and AUR in both channels. We also see May month to date performance more similarly to how we exited Q1 than how we began, and we are planning low to mid single digit comps on the quarter.

So I think to Dick's point around the resilience, our teams have built the ability to be able to react to newness be able to fuel that newness, and the continued strength that the teams have delivered over the last 21 consecutive quarters of comps and the strength of our own brands, we really feel like we will see progress and feel like we can deliver on that plan.

Operator: Thank you. Our next question comes from the line of Paul Lejuez with Citi. Your line is open.

Analyst (Paul Lejuez): Hey. Thanks, guys. I would love to hear how the other brands are running. Relative to the comp guidance that you gave on the prepared remarks. And then also, just would love to hear a little bit more about European market generally. Just anything any differences by country that you could talk about? And what sort of traffic patterns you might have seen if anything, changed over the last several weeks.

Richard A. Hayne: Okay, Paul. This is Dick. I will take both questions. First, the May sales to date, I think you knew and you heard our prerecorded. That we are planning on high single digit total revenue growth in the second quarter. And with retail segment comp growth by brand, planned between low and mid single digits for anthropology. And high single digits for the Free People, FP Movement, and Urban Brands. Sales month to date in May are essentially in line with those plans. Now as for Europe, the European market, as you know, is reasonably soft. The economies are struggling among other reasons. Largely around high energy prices. And, of course, this is especially true in Germany.

However, when we look at the Urban-- the European demand, for our urban and free people brands, it is actually quite brisk. With comp store sales posting double digit gains. This is not normal on the high street. The only explanation I can come up with is we have very good product, and we are taking market share.

Operator: Thank you. Our next question comes from the line of Matthew Boss with JPMorgan.

Analyst (Matthew Boss): Great. Thanks. So, Dick, I think you made a great point on consistency. Your portfolio's kicking off its seventh that is-- I was going to say that-- great. So your portfolio is kicking off at a seventh year of at least mid single digit minimum comps. So as we think about how your portfolio is positioned, regardless of the macro, what do you think the difference is? Like, how would you think about differentiation across the brands to be able to produce that level of consistency on a year in and year out basis?

Richard A. Hayne: Thanks, Matthew. Well, I do not I do not wanna say that the brands are always consistent. As I mentioned, there is ups and downs. in each of the brands. What allows for the consistency across URBN is the fact that when some brands are way up, some other brands might be less up. And so we get that consistency. it is very much like the way you folks manage your portfolios. And so we are very pleased with that concept. We think it is working, and we feel that it is a real plus and that is it. Next question.

Operator: Thank you. Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Your line is open.

Analyst (Simeon Siegel): Thanks. Hey. Good evening, everyone. Nice job. Thank you. How much did improve how much did improving UO profitability at the total URBN EBITDA How should we think about that opportunity there? And then just what is the right way to think about how you are thinking about repurchases now just given that meaningful 1Q buyback? Thanks, guys.

Richard A. Hayne: Okay. I am going to-- yeah. I hate to take that.

Francis J. Conforti: I can touch on Urban. So, you know, obviously, the brand hit profitability last year. And in the first quarter, they continue to build upon that and drove improved profitability. We are still on track. Targeting low single digit operating profit rate for the global brand for the for the full year this year and still believe that we should be able to get to a high single digit operating profit rate as we continue to build top line sales comp.

Operator: Thank you. Our next question comes from the line of Jay Sole with UBS. Your line is open.

Analyst (Jay Sole): A lot of discussion about AI in the prepared remarks. Dick, can you just talk about the potential you see for AI and maybe give us some specific examples anecdotes, if you will, of how you are applying AI into the business and how it is driving improvement and what gets you excited for more opportunities going forward?

Richard A. Hayne: Jay, I would love to do that, but I am going to hand it over to my son, David. Who does this day in and day out. Is quite familiar with all the things that we are doing.

David A. Hayne: Yeah. Hey, Jay. How are you? Obviously, a lot going on in the world right now. Of people talking about AI. We are doing the same. I feel like I am meeting about it all day every day at this point. Look. there is an incredible amount of opportunity for AI to impact the company. All across URBN. We are hard at work deploying AI and machine learning across the company. Much of our online experience right now has been and is even more so now driven by AI. AI is driving our personalization and recommendation algorithms, a lot of our search and discovery across our websites.

AI is enhancing our product listings on our websites. it is translating our websites. it is helping with order fraud screening and optimizing our logistics operations. We have recently launched an AI customer service agent that is helping to respond to service inquiries faster and more efficiently. that is been a nice win. The tech the tech teams that I oversee are using AI constantly throughout the day. Helping to improve their code, helping to improve every function that they do, basically. Helping them do it faster and more efficiently. All of our teams across the entire company now have Gemini and they are deployed across the entire company.

We are rolling out Claude and other AI tools to help our teams be more efficient. that is a big initiative now. We are also focused heavily on AI being deployed across our creative and merchant teams. We think there is a big opportunity to help accelerate our product development life cycle. Which is a big focus of the company. So there are dozens of other ways. Those are just some, but there are dozens of other ways that AI is going to affect the company. We are very excited about it. it is going to be touching everything, and we are moving aggressively to deploy and make ourselves more efficient.

Richard A. Hayne: Thanks, David. Jay, I would just add that we are very, very committed to increasing the usage of AI in just about everything that we do. And we are in the first inning of actualizing that and we are going to be going as fast as we possibly can.

Operator: Thank you. As a reminder, ladies and gentlemen, that it is star 11 to ask a question. Next question comes from the line of Janet Kloppenburg with JJK Research Associates. Your line is open.

Analyst (Janet Kloppenburg): Hi, everybody. Congratulations. Really impressive quarter. Very impressive. I wanted to talk to Tricia about the turnaround to, I think, mid single digit comps in March and April. And that suggests to me that the lead times of the brand are much more efficient than they have been in the past, and I wondered if you could talk about that. And where you were in that cycle. Thank you.

Tricia D. Smith: Yeah. Thanks, Janet. I think the team, towards the end of third quarter, started to read subobric opportunities for some growth, and they really deployed some of our shorter lead opportunities to develop product through Q4 that we really started to see in March, as I had mentioned, that improved our business. I think we have built a varied model that allows us to read and react and allows us to chase into it. So I would not say that the entire model has changed, Janet, but it is given us opportunities to react to some of those opportunities as they present themselves. I am incredibly proud of the team. For their ability to be able to turn that.

And as March and April performed so significantly better than February, as we see the opportunity in May. I really see kind of that continued long term strategic opportunity to grow our own brand and to have that deliver the type of profitability and exclusivity that they do continue. So, thanks for the question. I think there is lots of opportunity to continue to read and react to the business.

Francis J. Conforti: And, Janet, this is Frank. I just want to add, as David mentioned, I think 1 of the most impactful initiatives that we are working on is our ability to utilize technology to speed up our product life cycle. As you know, the closer in to consumer demand, we can choose product, the more accurate we are going to be, the better off our sales are going to be, the lower our markdown rates are going to be, and we think the technology is going to be a big unlock there, and it is something that we are really excited about. And we are you know, in the early innings of working through what that can look like Thank you.

Operator: And our last question comes from the line of Marni Shapiro of The Retail Tracker. Your line is open.

Analyst (Marni Shapiro): Hi, guys. For Shea and Marni and I wanted to know with the Momentum Building at Urban, and so many partnerships, collabs, will you continue to invest in marketing and specifically in store events that create a third space for your shoppers. And then also for Trish, the accessories assortment has looked good. it is riding the wave of many key trends. Is there an opportunity to push the limit especially in handbags for your own branded product, with your own branded product to bring authority of the brand. Thanks.

Shea Jensen: Hi, Marni. it is Shea. I will start. First, our team and our marketing strategy is really focused on meeting our customer in the places and moments that matter. And increasingly, that means across a variety of social platforms, whether that is ChatGPT or Reddit, or Pinterest. But you are right. The store is also a really important platform for us. it is not just a place that we sell stuff. it is a place where we build community. And so it is in that spirit that we absolutely have a number of events lined up. The World Cup is coming up. As an example. We have got a lot of great events planned around that.

We have locally right here in Philadelphia, the MLB All Star Game that we are activating around. And then something that we are really excited about in the brand every year is the back-to-campus season where we get out and get out to college. Celebrate kids getting back on campus, and welcoming up welcoming them back into our store. So absolutely, we are excited to activate in our stores and hope our customers are too.

Tricia D. Smith: And hi, Marni. I will take-- thank you for the recognizing the work that the team's done, Marni, on the accessories category. I think recently, we are starting to see some green shoots. In the categories where summer product has been received and is performing really well. We will continue to curate our market assortments, but we think the real unlock is through further development of our elevated materials in our own brand assortment. So particularly in leather and suede as we position the handbag category for the back half of the year. At the same time, we are learning about further opportunities with elevated market brands.

With higher price points performing very well in our May standalone stores, both in jewelry and handbags. I would say what we know is our customer responds very well to newness in fashion. And generally does not see price as a barrier. So it is a great question. I think we will continue to explore additional opportunities in the accessories area.

Operator: Okay. Thank you very much. That concludes the call. Thank you for joining us. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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