Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Urban Outfitters Inc (NASDAQ:URBN) reported record fourth-quarter sales of $1.6 billion, marking a 9% increase from the previous year.
• The company achieved a 17% increase in gross profit dollars, reaching a record $528 million, with a gross profit rate improvement of over 200 basis points.
• Anthropologie and Free People brands delivered high single-digit positive retail segment comps, contributing significantly to the company's overall growth.
• The newly business segment experienced robust growth, with a 56% increase in brand revenue and achieving its first full year of profitability.
• URBN's wholesale segment saw a 26% revenue increase, driven by strong full-price sales at Free People.

Negative Points

• Urban Outfitters brand recorded a 3% decline in the retail segment comp for the quarter, with a high single-digit negative comp in North America.
• The company faced challenges in achieving its goal of improving IMU by 500 basis points, falling short of the target.
• URBN ended FY25 with slightly elevated inventory levels due to early product arrivals to avoid potential port strikes.
• The Urban Outfitters brand in North America is still working towards stabilizing and improving profitability, with expectations of a low single-digit negative to flat comp for the first quarter of fiscal '26.
• Despite overall growth, the company anticipates continued challenges in achieving break-even for the Urban Outfitters brand in the near term.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with URBN.

Q: Did Urban Outfitters achieve their goal of improving IMU by 500 basis points by the end of last year? A: Frank, Co-President and COO, stated that while they fell just short of the goal, significant progress was made, and they plan to continue driving improvements in the coming years.

Q: What is the strategy for the mix of branded products versus own brand or private brands within Urban Outfitters and Anthropology? A: Shay, Urban Outfitters' representative, mentioned that growing national brands is part of their strategy, with no specific target for penetration. Trisha, from Anthropology, noted that their own brand penetration in women's apparel is at 70%, with continued growth opportunities.

Q: Can you discuss any notable trends across categories and how Urban Outfitters is positioned to capitalize on them? A: Dick, CEO, highlighted that they are in a bottom cycle, with brisk sales in bottoms and slimmer tops. Sneakers continue to dominate shoe sales, and activewear concepts like FP Movement and Anthropology's Daily Practice are performing well.

Q: What are the real estate plans for Anthropology and Urban Outfitters in North America? A: Trisha explained that Anthropology plans to expand to 270 stores globally, with 15 new stores in fiscal year '26. Shay noted that Urban Outfitters is focusing on right-sizing stores and relocating to areas with higher customer density.

Q: How is Urban Outfitters addressing the recent slowdown in sales, and what are the expectations for the Newly brand? A: Dick attributed the slowdown to weather-related delayed demand, with confidence in spring assortments. Dave, from Newly, expressed excitement about reaching a goal of $500 million in sales this year, driven by continued subscriber growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.