By Mackenzie Tatananni

Shares of Urban Outfitters surged Thursday after the fashion retailer reported better-than-expected earnings in the fiscal first quarter and asserted it was well-positioned to navigate an uncertain economic landscape.

Sales rose 10.7% from the previous year to $1.33 billion, beating the $1.29 billion Wall Street had forecast, according to FactSet. Earnings of $1.16 a share handily topped the 84 cents analysts were anticipating.

The company also saw improvement in same-store sales, which increased 4.8% across the board. This included 6.9% growth at Anthropologie, 3.1% at Free People, and 2.1% at Urban Outfitters.

Another boon to the stock was management's commentary on the current tariff environment. "We haven't seen any signs of a demand slowdown," CEO Richard Allen Hayne said on the earnings call, adding that customers "continued to show resilience" during the first quarter.

Chief Operating Officer Francis John Conforti conceded that trade tensions could have "minimal negative impact" on gross margin in the current quarter and result in a potential hit of 20 basis points in the second half of the year.

"Although tariffs present a temporary headwind to our business, we are confident in our ability to manage through this environment," Conforti said. Management is "confident" the company can achieve 50 to 100 basis points of gross margin growth in the fiscal year, he added.

The stock surged 23% to $73.03 and was headed for the largest same-day percentage increase on record, according to Dow Jones Market Data. The benchmark S&P 500 was up 0.3%.

The company's optimistic outlook was a stark contrast to other apparel retailers including American Eagle Outfitters, which pulled its fiscal-year guidance earlier this month, citing "macro uncertainty" and a disappointing first quarter. Shares of American Eagle gained 2.7% on Thursday.

Analysts at BMO Capital raised their price target on Urban Outfitters to $76 from $58, writing that the first-quarter print "represents a strongly positive signal for URBN's path upward, and we expect shares to respond positively."

Of course, this is "barring a slip-up or potential macro pressure emerging later in the year," the analysts continued. BMO maintained a Market Perform rating on the shares.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 22, 2025 14:06 ET (18:06 GMT)

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