- Revenue & Profit Growth: Q3 revenues rose 12% to $1.5B, net income up 13% to $116M ($1.28/share), driven by all brands reporting positive comps.
- Nuuly Subscription Surge: Subscription segment revenue grew 49%, highlighting strong customer engagement and expansion in southern U.S. regions.
- Gross Profit Expansion: Gross profit hit $563M (+13%), with a 31-basis-point margin improvement despite 60-basis-point tariff impact in Q3.
- Store Expansion Strategy: Opened 8 Anthropologie stores YTD; plans to add 43 new stores in 2026, including 18 Free People and 25 FP Movement locations.
- Brand Performance: Urban Outfitters delivered 13% global retail comp; Anthropologie saw 50% customer count growth, driven by full-price sales and modernized product lines.
Segment Performance
All brands produced positive comps across all geographies, with Urban Outfitters delivering a 13% global retail segment comp, Free People a 9% increase in total revenue, and Anthropologie Group an 8% retail segment comparable sales increase. Nuuly, the subscription segment, drove double-digit revenue growth of 49%. The Urban brand delivered a positive low single-digit segment margin in Q3, and the company expects improved operating margins in Q4 versus the prior year.
Operational Highlights
The company plans to open 43 new stores for the year, including 18 Free People and 25 FP Movement stores, and has opened eight new Anthropologie stores in North America year to date. The company reported strong performance across all brands, with record sales and double-digit operating profitability. The Urban Outfitters brand posted significant profit improvement, driven by better product, improved marketing, and more full-price customers.
Guidance and Outlook
For the fourth quarter, the company expects total company sales to grow in the high single digits, with Retail segment comp sales growing mid-single-digit positive. The company still believes it can achieve approximately 100 basis points of gross margin improvement for the full fiscal year 2026 despite tariff headwinds. The effective tax rate is expected to be about 23.5% in Q4, with an SG&A growth rate similar to Q3.
Valuation and Growth Prospects
With a ROE of 19.33% and an ROIC of 11.72%, the company is demonstrating a strong ability to generate returns on equity and invested capital. Analysts estimate next year's revenue growth at 9.9%, indicating a continued growth trajectory. The current valuation metrics, including a P/S Ratio of 1.05 and an EV/EBITDA of 10.62, suggest that the market has reasonably priced in the company's growth prospects.