Urban Outfitters Reports Record-Breaking Third Quarter Sales and Profits
Urban Outfitters, Inc., the renowned American retail chain, has recently announced its third quarter fiscal 2025 earnings call results, showcasing a remarkable performance across various segments. In a conference call held on November 26, 2024, the company's executives provided insights into their financial and operating achievements for the three- and nine-month period ending October 31, 2024.
According to Francis Conforti, Co-President and COO of URBN, the company achieved record-breaking third-quarter sales and profits, surpassing expectations discussed in August. Total URBN sales grew by an impressive 6% to a Q3 record of $1.4 billion, with four out of five brands posting record third-quarter sales.
The Retail segment comp of 2% was also noteworthy, driven by mid-single-digit positive Retail segment comps at Anthropologie and Free People, which more than offset the high single-digit retail segment comp decline at Urban Outfitters. Additionally, Nuuly delivered robust double-digit revenue growth due to a 51% increase in average active subscribers versus the prior year.
URBN's gross profit dollars increased by 9% to $497 million, while the gross profit rate improved by 105 basis points to 36.5%. This improvement was primarily driven by higher initial merchandise margins followed by reduced merchandise markdowns across all segments. Both Anthropologie and Free People saw increases in initial margins, with Urban Outfitters driving the improvement in merchandise markdowns.
The company's SG&A expenses increased by 7%, slightly outpacing their rate of sales growth. This rise was primarily due to increased marketing spend used to drive solid sales growth at the Anthropologie, Free People, FP Movement, and Nuuly brands. The marketing efforts of Anthropologie and Free People significantly boosted traffic to both store and digital channels, while Nuuly's campaign led to over 50% growth in average active subscribers.
Total URBN operating income rose by an impressive 18% compared to last year, reaching $129 million with the operating profit rate improving by over 90 basis points to 9.4%. Net income saw a 24% increase to $103 million or $1.10 per diluted share.
These exceptional results reflect the company's ability to adapt and innovate in an ever-changing retail landscape, showcasing their commitment to delivering outstanding performance across various segments.
The Urban Outfitters' leadership has demonstrated its dedication to driving growth through strategic marketing efforts, improving operational efficiency, and investing in emerging trends. As they continue to navigate the evolving retail environment, investors remain optimistic about the company's future prospects.
As the fourth quarter unfolds, Melanie Marein-Efron, URBN's CFO, will provide updates on current expectations for the period ahead, offering valuable insights into the company's ongoing efforts to maintain momentum and drive continued success.
The Urban Outfitters' conference call highlighted the company's remarkable progress in a highly competitive retail market. With these impressive third-quarter results, investors can look forward to a promising future for this iconic American retailer.
