By Katherine Hamilton

Urban Outfitters logged higher sales and profit in the second quarter, but is forecasting a harder hit from tariffs than previously expected.

The apparel and home goods retailer now expects tariffs may have an impact of 75 basis points on its gross margins in the second half of the year, Chief Operating Officer Frank Conforti said during a call Wednesday. In May, Urban Outfitters said it expected tariffs to lower margins by 20 basis points during that period.

Shares fell 5% to $73.80 in after-hours trading. At the close, the stock was up 42% this year.

Urban Outfitters' current tariff projections are based on rates as of Wednesday, which include a 50% tax on goods imported from India, management said. The company plans to negotiate terms with vendors, shift its countries of origin where possible, adjust its mode of shipping goods to sea from air, and raise prices.

"We're looking to protect opening price points and only targeting areas where we believe we can gently raise some prices without significantly affecting the overall customer experience," Conforti said.

The Philadelphia company posted a profit of $143.9 million, or $1.58 a share, in the quarter ended July 31, compared with $117.5 million, or $1.24 a share, a year earlier. Analysts expected $1.46 a share in earnings, according to FactSet.

Revenue rose 11% to $1.50 billion. Analysts surveyed by FactSet forecast revenue of $1.48 billion.

Retail same-store sales increased 5.6%, compared with the 4.9% growth Wall Street was projecting, driven by growth in retail store sales and digital channels. Same-store sales rose about 7% at Free People, 6% at Anthropologie and 4% at Urban Outfitters' namesake store.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

August 27, 2025 18:18 ET (22:18 GMT)

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