Urban Outfitters (URBN) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 net sales of $1.50 billion, up 11–11.3% year-over-year, with all brands and segments posting positive comparable sales and strong growth.

• Net income reached a record $144 million, or $1.58 per diluted share, up 22–22.5% year-over-year.

• Subscription segment (Nuuly) sales surged 53–53.2%, driven by a 48% increase in average active subscribers and record operating profit.

• Wholesale segment revenue grew 18–18.1%, with Free People wholesale up 19–22.4%.

• All retail brands except one posted record Q2 sales, with Urban Outfitters returning to growth in North America and strong double-digit comps in Europe.

Financial highlights

• Q2 gross profit increased 14.8–15% to $566 million, with gross margin up 113 basis points to 37.6%.

• Operating income rose 20% to $174 million, with an operating margin of 11.6%, up from 10.7% last year.

• SG&A expenses increased 12.5–13% to $391.8–$392 million, mainly due to higher marketing and payroll costs, representing 26.0% of net sales.

• Effective tax rate for Q2 was 21.5–22%, down from 23% last year.

• Inventory increased 15–15.1% year-over-year to $696–$696.2 million, reflecting higher sales and early receipts.

Outlook and guidance

• Expecting high single-digit total sales growth in Q3, with mid-single-digit retail segment comps at key brands.

• Nuuly projected to deliver mid double-digit revenue growth in Q3.

• Full-year gross profit margin expected to increase by about 100 basis points, with Q3 margins flat and Q4 up 75–100 basis points year-over-year.

• SG&A to grow in line with sales in the second half, with marketing deleverage in Q3 and leverage in Q4.

• Fiscal 2026 capital expenditures projected at $270 million, funded by operating cash flow and existing liquidity.