URBAN OUTFITTERS INC Q1 FY2026 earnings call

• Dick Hayne welcomes everyone and mentions Q1 was a record-breaking quarter. - Frank Conforti details Q1 results, noting all brands had positive sales comps, four brands had record first-quarter sales. - Discusses brand performance by segment: Anthropologie had 7% retail comp increase, Free People had 11% sales growth and 26% Wholesale revenue growth, Urban Outfitters had 2% global retail comp, Nuuly had 60% revenue growth. - Talks about tariff mitigation efforts like negotiating with vendors, shifting countries of origin, etc.

Total URBN sales grew by 11% to reach a Q1 record of $1.3 billion. The Retail segment comp increased by 5%. Nuuly delivered impressive 60% revenue growth with a 53% increase in average active subscribers. The Wholesale segment saw a 24% revenue increase. Anthropologie achieved a 7% increase in its retail segment comp. Free People had an 11% increase in total retail and wholesale segment sales. Urban Outfitters recorded a positive 2% global retail segment comp. Nuuly has over 380,000 active subscribers as of May.

• Q2 total company sales expected to grow in the high single-digits. - Retail segment comps: mid-single-digit for Anthropologie and Free People, low single-digit for Urban Outfitters. - Nuuly expected mid-double-digit revenue growth, wholesale expected low double-digit growth. - Gross margin improvement of 50 to 100 basis points for Q2 and full fiscal year 2026. - SG&A expenses expected to grow roughly in line with sales. - Inventory may grow above sales growth in Q2 due to tariffs. - Capital expenditures planned at approximately $240 million, plan to open 64 new stores and close 17 this fiscal year.

• Tariff uncertainty with daily changes in tariff news. - Potential impact on gross margins with tariffs, currently assumed to have minimal negative impact in Q2 and up to 20 basis points in the back half of the year. - Supply chain risks related to tariffs and potential congestion.

Q: Talk about key drivers of success at UO Europe and learnings for US UO business A: Dick Hayne attributes progress to product, strong marketing, and collaboration between Europe and North America. Sheila Harrington adds women's wear in Europe has momentum and there's a strong partnership between regions Q: On Urban Outfitters' different format and early inventory A: Melanie Marein-Efron says early inventory was due to faster transit times and anticipating tariff outlook. Shea Jensen mentions no immediate format changes but flexibility in fleet leases with potential downsizing Q: Elaborate on performance by brand in May and consumer spending on apparel A: Dick Hayne says May to date comps similar to Q1 print, expects mid-single-digit retail segment comps in Q2. Frank Conforti praises Urban Outfitters' progress in turning around Q: Frame UO margins, rent, occupancy, SG&A recapture opportunity A: Frank Conforti says focus is on maintained margin improvement, Urban has made progress but not at historical averages yet, with opportunity to leverage occupancy in fixed expenses Q: Guidance and tariff mitigation on price A: Frank Conforti says planning is conservative due to uncertainty, price increases are last resort and selective, targeting certain categories Q: Nuuly profitability profile and customer differences A: Frank Conforti says Nuuly has seen strong subscriber growth, no immediate price changes due to tariffs. Dick Hayne mentions Nuuly is profitable and not dilutive to URBN's 10% goal Q: Markdown benefit in Q1 and long-term EBIT margins A: Frank Conforti says markdowns contributed about half of the 204 basis point gross margin improvement, targets 10% operating profit rate and will focus on achieving that first Q: Marketing changes and Nike partnership at Urban Outfitters A: Melanie Marein-Efron talks about multi-platform social media approach and authentic engagement. Shea Jensen explains Nike partnership aligns with customer focus and brand strategy Q: SG&A rate and UO turnaround linearity A: Melanie Marein-Efron says SG&A rate of sales will grow in line with sales. Shea Jensen says retail turnaround is sooner due to full-price penetration, digital will take longer to see inflection Q: Gross margin historical levels and new occasion businesses at Anthropologie A: Frank Conforti says historical levels not the right bar, Urban's turnaround is changing the outlook. Tricia Smith says new businesses like Celandine are outperforming, no current plans to spin off standalone stores Q: Wholesale EBIT margin, carrier costs, and packages per order A: Dick Hayne talks about reduction in packages per order and monitoring carrier costs. Melanie Marein-Efron says wholesale is profitable and growing with aligned partners, seeding new labels