Urban Outfitters Hits Record Q2 Profit as Nuuly Subscriptions Surge
The apparel rental service grew 53%, helping the retailer beat earnings estimates and post an 11.3% rise in quarterly revenue.
Urban Outfitters, Inc. (NASDAQ: URBN) reported a record-breaking second quarter, as soaring demand for its Nuuly apparel subscription service helped the company surpass analyst expectations and deliver its highest-ever quarterly profit.
The retailer announced net income of $144 million, or $1.58 per share, for the quarter ending July 31, comfortably beating the consensus estimate of $1.48. Total net sales climbed 11.3% year-over-year to reach $1.5 billion, driven by robust performance across its brand portfolio.
The standout performer was the company's Nuuly subscription segment, which saw revenue surge by 53% to $138.9 million. This explosive growth was fueled by a 48% increase in average active subscribers, which now stand at approximately 350,000. The segment's success highlights a strategic pivot that is increasingly paying off, capturing a growing market for clothing rentals.
Growth was consistent across all divisions. The core retail segment posted an 8% sales increase to $1.29 billion, while the wholesale business grew 18% to $76.6 million. All of the company's major brands contributed to the positive results, with Free People leading the way with a 14% sales jump to $415.0 million. Anthropologie sales rose 7% to $607.0 million, and the namesake Urban Outfitters brand saw a 5% increase to $333.2 million.
Urban Outfitters ended the quarter in a strong financial position, holding $989 million in cash and marketable securities with no debt. The company noted it increased its inventory by 15% to support the rapid expansion of the Nuuly business and planned early receipts of merchandise, signaling management's confidence in sustained momentum heading into the second half of the year.