Urban Outfitters (URBN) Rides on FP Movement, Nuuly Expansion

Urban Outfitters Inc.’s URBN strategic initiatives, particularly through FP Movement and Nuuly, have positioned the company for sustained growth and market leadership. The impressive first-quarter fiscal 2025 results and forward-looking strategies reflect a strong consumer response and a well-rounded approach to retail expansion, digital engagement and sustainability. With continued investments in key growth areas, Urban Outfitters is poised to maintain its competitive edge and drive long-term success.

Delving Deeper

The FP Movement initiative epitomizes the innovative and strategic direction of Urban Outfitters' overall portfolio. With impressive 25% retail segment comp growth in the first quarter of fiscal 2025, the FP Movement underscores significant market demand and brand affinity. This initiative includes plans to expand Movement stores, optimize store sizes for better performance, and forge wholesale partnerships to strengthen its market presence in activewear.

Additionally, Free People's wholesale segment witnessed a 6% year-over-year sales increase in the fiscal first quarter, primarily fueled by robust full-price sales in department and specialty stores. By embracing a holistic approach across diverse sales channels and emphasizing consumer engagement, Urban Outfitters aims to perpetuate the success of FP Movement, driving sustained revenue growth and solidifying the brand's standing in the competitive activewear industry.


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Nuuly, URBN's rental business, saw significant growth, exceeding 50,000 new active subscribers compared to the fourth quarter of fiscal 2024. By the end of the fiscal first quarter, Nuuly boasted more than 244,000 active subscribers., with an average of above 224,000 active subscribers throughout the quarter.

This surge in subscribers reflects a strong market response to Nuuly's offerings and signifies a notable expansion of its customer base. The Nuuly segment saw a significant 51.4% increase in net sales mainly due to a 45% rise in the average number of active subscribers from the prior-year quarter.

Strong Retail Unit Bodes Well

Total Retail segment of Urban Outfitters has experienced growth, with significant contributions from the Free People Group and the Anthropologie Group. Net sales in the Retail segment rose 5.8% year over year, with comparable sales increasing 4.6%.

This growth in comparable Retail segment sales was fueled by strong high-single-digit growth in digital sales and modest low-single-digit growth in retail store sales. Specifically, comparable Retail net sales rose 17.1% at Free People and 10.4% at Anthropologie. This retail segment performance highlights the company's adaptability to market dynamics and its commitment to delivering value to customers.

Roadmap Ahead

Urban Outfitters is pleased with strong consumer demand at the start of the fiscal second quarter and expects this strength to continue, projecting mid-single-digit total company sales growth. The company is optimistic about the outlook for the Anthropologie and expects mid-single-digit comps growth for fiscal 2025. With a planned capital expenditure of $210 million, the company will prioritize retail store expansion, including the opening of 57 stores, alongside investments in logistics and IT infrastructure to fortify its operational capabilities.

Wrapping Up

Despite the overall positive performance, the company is still facing challenges, especially for the Urban Outfitters brand, which saw a 14% decrease in Retail segment comps in the fiscal first quarter. Efforts are underway to reinvigorate the brand through enhanced product assortments, brand relevancy and marketing strategies.

Urban Outfitters' strong business strategies, ambitious retail expansion plans, and solid foundation present a promising outlook and are poised to drive its success in the future.

In the past six months, shares of this Zacks Rank #3 (Buy) company have gained 13.3% compared with the Retail-Apparel and Shoes industry’s growth of 26.1%.

3 Hot Stocks to Consider

Some better-ranked stocks from the same space are Abercrombie & Fitch Co. ANF, Bath & Body Works BBWI and Casey's General Stores, Inc. CASY.

Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 43.6% and 10.4%, respectively, from the fiscal 2023 reported figure. ANF has a trailing four-quarter average earnings surprise of 210.3%.

Canada Goose is a global outerwear brand. The company sports a Zacks Rank #1.

The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.

Bath & Body Works is a specialty retailer. It has a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for Bath & Body Works’ current fiscal-year sales and earnings indicates a decline of 0.4% and growth of 1.8%, respectively, from the year-ago reported figures. BBWI has a trailing four-quarter average earnings surprise of 23.2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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