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Do URBN's Brand Strength & Expansion Plans Support a Positive Outlook?
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Key Takeaways
URBN sees high-single-digit Q3 sales growth, supported by strong demand across its retail brands.
Nuuly revenues are projected to climb at a mid-double-digit rate, with more subscribers and marketing push.
Gross margin improvement of 100 bps in fiscal 2026 reflects efficiency gains despite tariff pressure.
Urban Outfitters Inc. (URBN - Free Report) has entered the third quarter of fiscal 2026 with strong momentum, supported by record second-quarter results and continued brand strength across its portfolio. This robust performance has reinforced management’s confidence in achieving high-single-digit total sales growth for the fiscal third quarter and maintaining solid progress throughout the remainder of the fiscal year.
Within the Retail segment, comparable sales are expected to rise in the mid-single-digit range, driven by similar growth at Anthropologie, Free People and Urban Outfitters. The company’s Nuuly subscription business is forecast to deliver mid-double-digit revenue growth, fueled by continued subscriber additions. Meanwhile, the Wholesale segment is projected to post mid-single-digit revenue gains.
On the profitability front, URBN anticipates that the gross profit margin for the fiscal third quarter to be flat with the prior year. Lower initial product margins due to higher tariffs are expected to offset the positive impacts of reduced markdowns and improved occupancy leverage.
Selling, general and administrative (SG&A) expenses are projected to rise slightly faster than sales, resulting in some deleverage for the quarter. This increase is primarily driven by heightened marketing investments, including major brand campaigns for Nuuly and Anthropologie, as well as a pre-holiday promotional push aimed at boosting customer acquisition ahead of the holiday season.
For fiscal 2026, URBN expects the gross margin to improve 100 basis points from the prior year, with roughly 50 basis points of that improvement coming in the second half. Despite an estimated 75 basis points of tariff-related pressure, the fiscal fourth-quarter gross margin is projected to expand 75-100 basis points year over year.
SG&A expenses for the year are anticipated to grow roughly in line with sales, driven by marketing and labor costs associated with brand expansion and store openings. Capital expenditure is planned at $270 million, with half allocated to retail store expansion, 25% to technology and logistics, and the remaining 25% toward office expansion.
URBN’s combination of strong brand performance, strategic investments and disciplined expansion positions the company well to drive sustained growth and profitability throughout fiscal 2026.
URBN’s Price Performance, Valuation & Estimates
Shares of Urban Outfitters have gained 32.7% year to date against the industry’s decline of 9.6%.
Image Source: Zacks Investment Research
From a valuation standpoint, URBN trades at a forward price-to-earnings ratio of 13.14X, slightly down from the industry’s average of 18.12X. It has a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2026 earnings implies year-over-year growth of 29.1%, whereas the same for fiscal 2027 indicates an uptick of 8.7%. Estimates for fiscal 2026 and 2027 have been revised upward by 6 cents and 11 cents, respectively, in the past 30 days.
Levi Strauss designs and markets jeans, casual wear and related accessories. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 71.3% and 3.7%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7.5% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.
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Do URBN's Brand Strength & Expansion Plans Support a Positive Outlook?
Key Takeaways
Urban Outfitters Inc. (URBN - Free Report) has entered the third quarter of fiscal 2026 with strong momentum, supported by record second-quarter results and continued brand strength across its portfolio. This robust performance has reinforced management’s confidence in achieving high-single-digit total sales growth for the fiscal third quarter and maintaining solid progress throughout the remainder of the fiscal year.
Within the Retail segment, comparable sales are expected to rise in the mid-single-digit range, driven by similar growth at Anthropologie, Free People and Urban Outfitters. The company’s Nuuly subscription business is forecast to deliver mid-double-digit revenue growth, fueled by continued subscriber additions. Meanwhile, the Wholesale segment is projected to post mid-single-digit revenue gains.
On the profitability front, URBN anticipates that the gross profit margin for the fiscal third quarter to be flat with the prior year. Lower initial product margins due to higher tariffs are expected to offset the positive impacts of reduced markdowns and improved occupancy leverage.
Selling, general and administrative (SG&A) expenses are projected to rise slightly faster than sales, resulting in some deleverage for the quarter. This increase is primarily driven by heightened marketing investments, including major brand campaigns for Nuuly and Anthropologie, as well as a pre-holiday promotional push aimed at boosting customer acquisition ahead of the holiday season.
For fiscal 2026, URBN expects the gross margin to improve 100 basis points from the prior year, with roughly 50 basis points of that improvement coming in the second half. Despite an estimated 75 basis points of tariff-related pressure, the fiscal fourth-quarter gross margin is projected to expand 75-100 basis points year over year.
SG&A expenses for the year are anticipated to grow roughly in line with sales, driven by marketing and labor costs associated with brand expansion and store openings. Capital expenditure is planned at $270 million, with half allocated to retail store expansion, 25% to technology and logistics, and the remaining 25% toward office expansion.
URBN’s combination of strong brand performance, strategic investments and disciplined expansion positions the company well to drive sustained growth and profitability throughout fiscal 2026.
URBN’s Price Performance, Valuation & Estimates
Shares of Urban Outfitters have gained 32.7% year to date against the industry’s decline of 9.6%.
Image Source: Zacks Investment Research
From a valuation standpoint, URBN trades at a forward price-to-earnings ratio of 13.14X, slightly down from the industry’s average of 18.12X. It has a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2026 earnings implies year-over-year growth of 29.1%, whereas the same for fiscal 2027 indicates an uptick of 8.7%. Estimates for fiscal 2026 and 2027 have been revised upward by 6 cents and 11 cents, respectively, in the past 30 days.
Image Source: Zacks Investment Research
URBN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Key Picks
Some other top-ranked stocks are Genesco Inc. (GCO - Free Report) , Levi Strauss & Co. (LEVI - Free Report) and The TJX Companies, Inc. (TJX - Free Report) .
Levi Strauss designs and markets jeans, casual wear and related accessories. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 71.3% and 3.7%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7.5% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.