Aug 26, 2026 earnings call — Record quarter performance and Nuuly milestone
Company reported record quarterly sales with net sales up 10% to $1.7 billion.
Revenue $1.7B (est $1.7B) · EPS $1.72 (est $1.72)
Key quotes
"In the second quarter, our teams once again produced record quarterly sales and earnings per share."
"This strong growth translated directly into robust financial results on both our top and bottom lines, with Q2 revenue rising 29% to $179 million and, for the first time in brand history, quarterly operating income landing at 10%, equating to $18 million."
"These additional costs had a negative impact of approximately 50 basis points in IMU and 20 basis points in outbound delivery and freight expense."
Analyst Q&A 10
Anthropologie fall sales and margins
Q (Lorraine Maikis · BofA): They asked if early fall reads mean Anthropologie has fixed assortment issues, whether inventory is turning slower, and if Anthropologie will face margin pressure in Q3.
A: Management said they saw progress in Q2 with full-price comp increases and are rebalancing assortment to clear older styles and add newness. They expect newness to build through the quarter and believe the group can deliver low- to mid-single digits in Q3. They also plan to deliver 25 to 50 basis points of gross profit margin improvement in Q3 while giving Anthropologie room to clear remaining product.
"Relative to Q3 margins, as you heard from Melanie, right now, our plan is to deliver 25 to 50 basis points of gross profit margin improvement in the third quarter." — Francis Conforti (COO)
Anthropologie share gains and comps
Q (Brooke Roach · Goldman Sachs): They asked how the competitive environment affects Anthropologie's ability to gain share after execution issues, and whether the brand is still on track to deliver a mid-teen operating rate this year.
A: Management said the brand has been gaining share, citing 22 consecutive positive comps that outpaced the market, and they are confident they will continue to gain share. They said rebalancing the assortment will require slightly higher markdowns while using speed-to-market initiatives to keep pace. Management did not directly confirm the mid-teen operating rate in this answer.
"I think when you look at the 22 consecutive positive comps that outpaced the market, we have gained share, and I'm confident that we'll continue to do so." — Oona McCullough
Fashion trends: denim and footwear
Q (Adrienne Yih-Tennant · Barclays): They asked what URBN sees for denim, lifestyle footwear, and Nuuly, and why URBN should be more resilient than some vertically-oriented brands.
A: Management said all three brands are seeing very strong increases in athletic shoe sales and that denim is doing quite well. They said the fuller-bottom trend remains strong and they expect it to continue into FY '28, though trends do change over time. They also noted they use AI to spot trends and personalize for each brand, which gives them opportunity to grow.
"But I just want you to know that all 3 of our brands are seeing very strong increases in athletic shoe sales." — Richard Hayne (CEO)
Urban and Anthropologie comp outlook
Q (Matthew Boss · JPMorgan): He asked why Urban has had consistent comp strength and what sustainable multi-year comp profile looks like for Anthropologie, and for August trends at both concepts.
A: Management gave comp plans: Anthropologie targeting low- to mid-singles in Q3, Free People and Free People Movement high-singles, and Urban high-singles in North America and mid-singles in Europe. They said August-to-date is in line with plans. Management said Urban's strength comes from growth categories, marketing, digital improvements, and service discipline, and they believe Anthropologie can be a mid-single-digit comp long term though they did not give a timing for that.
"So I think we believe long term, we can be a mid-single-digit comp." — Tricia Smith
Nuuly retention and brand mix
Q (Paul Lejuez · Citi): He asked about Nuuly retention rates, any changes, and how the platform mix is evolving between URBN brands and third-party brands.
A: Management said Nuuly's retention rates have remained relatively stable and early subscribers are the most engaged and loyal. As they add more subscribers, the new cohort has a slightly different retention profile but overall stability remains. They said URBN brands are at the core of Nuuly and adding third-party brands adds value; the URBN brands will continue to be central though the percentage mix may change as the business grows.
"I think we do see those subscribers that have started with us very early tend to be those subscribers that are the most engaged and most excited about the program and most loyal." — Unknown Executive
SG&A cuts and Nuuly margins
Q (Alexandra Straton · Morgan Stanley): She asked where the incremental SG&A savings came from, and how Nuuly reached the 10% operating margin so fast and the path beyond high-single-digits.
A: Management said they believe Nuuly can run at a 10% operating profit rate, if not better, on an annual basis, and that the business is showing quarter-after-quarter improvement as it scales. They pointed to logistics and fixed-cost improvements as areas of margin progress and said they have not set a timeline to hit 10%. On SG&A, they said savings came from leveraging direct store controllable expenses, reallocating some marketing to drive sales and investing in technology like AI.
"As we've stated previously, and honestly, I think our belief remains stronger than ever, that we believe the brand can run at a 10% operating profit rate, if not better, on an annual basis." — Francis Conforti (COO)
Nuuly brands, beauty, and AUR pricing
Q (Dana Telsey · Telsey Advisory Group): She asked what types of brands Nuuly will add, thoughts on the beauty category opportunity, and how they think about AUR pricing for newness versus core.
A: Management said they pick Nuuly brands based on price profile, brand notoriety, and subscriber interest, and they like adding both known and new brands to add value. On beauty, they said Anthropologie's beauty business has grown consistently and delivered high-single-digit comps in Q2; beauty is in 23 expanded stores now and they will double that store count this fall. For AUR and pricing, management deferred a detailed discussion to other executives later in the call.
"It's not really been a category we've talked a lot about, but it's grown very consistently, delivered high-single-digit comps in Q2." — Tricia Smith
Free People international growth
Q (Marni Shapiro · The Retailer Tracker): She asked about growth opportunity for Free People and FP Movement in the U.S. and internationally.
A: Management said Free People has strong momentum internationally with strong double-digit comp growth in Q2, outpacing North America, and they currently operate 14 stores across the U.K. and Europe. They said FP Movement has early strong international reads and the team is planning European growth starting with wholesale and DTC, with stores to follow. Partnerships like Barry's and Selfridges are delivering strong growth and reinforce their conviction to expand.
"What we're seeing is strong double-digit comp growth in Q2, outpacing our North America growth in Free People." — Sheila Harrington
Pricing and promotional outlook
Q (Mark Altschwager · Baird): He asked if pricing tailwinds are moderating, whether competitors are resetting price because of tariff inventory, and if URBN's back-half plan assumes flexibility for more promotions.
A: Management said they do not see promotional activity picking up broadly, aside from typical back-to-school and a brief Prime Day effect, and Urban's promotions this back-to-school are similar to last year. They said much of Urban's August gains are driven by full-price sales and they don't expect promotions to get more severe until Black Friday. They also said AUR is being driven by mix (strong bottoms, higher-quality items) and that AURs are planned up a bit for the remainder of the year due to mix.
"We don't really see the promotional activity picking up, as you put it." — Richard Hayne (CEO)
AI use across product life cycle
Q (Guggenheim): He asked where they stand on AI implementation for product life cycles, whether one brand is further along, and when it will show meaningful results.
A: Management said in Q2 they continued to deploy AI across the company, putting tools in associates' hands to optimize workflows and enable more creativity. They said the tech team is accelerating software delivery and they are building impactful AI use cases across supply chain, creative, design, marketing, and inventory teams. They also said measurable efficiencies will take time to fully materialize but they are confident in the trajectory and excited about speed-to-market and production/design gains.
"So in the second quarter, we've really continued to deploy AI across the company." — David Hayne (PRESIDENT)