Why did gross margin come in better than guided? Can you provide Q1 sales trends across brands, especially regarding weather impact?

Q4 gross margin beat expectations due to lower markdowns at Urban Outfitters and Free People, and better-than-expected top-line performance leading to occupancy leverage. For Q1, total Retail segment comps are planned at mid-single digits, but store sales are softer due to extreme weather, particularly on the East Coast, while digital sales are fine. Free People is ahead of plan, Urban Outfitters is on plan, and Anthropologie is slightly behind. “You are correct. It did come in better than we were signing for in the fourth quarter was largely due to lower markdown rates than what we were planning for at both Urban Outfitters and Free People.”

What product and marketing strategies are being focused on for Urban Outfitters North America to improve sales productivity and support the comp outlook?

Product focus is on bottoms (woven, denim, long), accessories, gifting, and novelties. Marketing aims to connect with customers on diverse social platforms like Reddit, TikTok, Pinterest, and through user-generated content. The brand acquired 1 million new regular-price customers last year. “Last year, we acquired 1 million new customers to the brand, and those customers are regular price customers who are spending more with us and shopping more frequently.”

Given the FY27 gross margin and SG&A outlook, what is the medium-term operating margin opportunity relative to the 10% target, and what are the brand-level puts and takes?

Q1 gross margin is expected to be down 25-50 bps (excluding a prior-year gain), primarily due to tariffs. Full-year gross margin is guided up 25 bps, but there's potential for greater improvement if Section 122 tariffs are resolved favorably. SG&A is planned to outpace sales due to technology investments, with a larger delta in H1. Urban Outfitters North America is targeted for low single-digit operating profit in FY27, building towards high single-digits long-term. “If the Section 122 tariffs were to remain in for the full year or expire in July as it currently sits today. We certainly believe we could achieve greater than 25 basis points improvement in gross profit margin for the year.”

URBN

Urban Outfitters (URBN) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jan 2026 (Q4 FY26)· Consumer Discretionary· Feb 25, 2026

Source: earnings call transcript

Executive summary

Urban Outfitters, Inc. Q4 FY26 — Record Sales and Profitability Across Brands

Urban Outfitters closed FY26 with record Q4 sales and operating profit, driven by strong performance across all retail brands and significant growth from Newly. The company is investing in technology and logistics for FY27, anticipating continued high single-digit sales growth despite near-term tariff and SG&A pressures. Management remains optimistic about market share capture and customer engagement.

Highlights

Total revenue grew by 10% in Q4, reaching a record $1.8 billion.
Adjusted EPS jumped 38% for Q4 and 35% for the full year.
Gross profit dollars increased 14% to nearly $600 million, with the rate improving by 101 basis points to 33.3%.
Total URBN operating income rose 27% to a Q4 record of $159 million, with the operating profit rate growing by 115 basis points.
Newly delivered 43% revenue growth, surpassed $500 million in annual revenue, and increased total profitability by over $21 million.

Concerns

Tariffs negatively impacted Q4 gross and operating profit rate by approximately 75 basis points and the full year by approximately 35 basis points.
Q1 FY27 gross profit margins are expected to be down approximately 25 to 50 basis points year-over-year, primarily due to lower IMU from increased tariffs.
Total SG&A growth is expected to outpace sales growth for both Q1 and full-year FY27 due to strategic technology and marketing investments.
Extreme weather events in February negatively impacted Q1 FY27 store sales, causing Anthropologie to run slightly behind its low single-digit comp plan.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year FY27 Total Company Sales Growth	positive high single-digit high materiality	FY27	High
Full-year FY27 Retail Segment Comp	mid-single-digit high materiality	FY27	High
Full-year FY27 Newly Revenue Growth	mid-double-digit high materiality	FY27	High
Full-year FY27 Wholesale Segment Growth	mid-single-digit medium materiality	FY27	High
Q1 FY27 Total Company Sales Growth	positive high single-digit high materiality	Q1 · FY27	High
Q1 FY27 Retail Segment Comp	mid-single-digit high materiality	Q1 · FY27	High
Q1 FY27 Urban Outfitters Retail Segment Comp	high single-digit positive medium materiality	Q1 · FY27	High
Q1 FY27 Free People Retail Segment Comp	mid-single-digit positive medium materiality	Q1 · FY27	High
Q1 FY27 Anthropologie Retail Segment Comp	low single-digit positive medium materiality	Q1 · FY27	High
Q1 FY27 Newly Revenue Growth	mid-double-digit high materiality	Q1 · FY27	High
Q1 FY27 Wholesale Segment Revenue Growth	mid-teen medium materiality	Q1 · FY27	High
Full-year FY27 Gross Profit Margins	up approximately 25 basis points high materiality	FY27	High
Q1 FY27 Gross Profit Margins	down approximately 25 to 50 basis points high materiality	Q1 · FY27	High
Full-year FY27 SG&A Growth	outpace sales growth high materiality	FY27	Medium
Q1 FY27 SG&A Growth	grow several points ahead of sales growth high materiality	Q1 · FY27	Medium
Full-year FY27 Effective Tax Rate	approximately 22% medium materiality	FY27	High
Q1 FY27 Effective Tax Rate	approximately 22% medium materiality	Q1 · FY27	High
Full-year FY27 Inventory Growth	at a rate at or below sales growth medium materiality	FY27	Medium
Full-year FY27 Capital Expenditures	approximately $385 million high materiality	FY27	High
Full-year FY27 New Store Openings	approximately 57 medium materiality	FY27	High
Full-year FY27 Store Closings	approximately 14 medium materiality	FY27	High
Full-year FY27 Share Repurchases	at least offset any dilution medium materiality	FY27	Medium
Anthropologie FY27 Operating Profit Rate	mid-teen medium materiality	FY27	High
Free People Group FY27 Retail Segment Comps	positive medium materiality	FY27	High
Free People Group FY27 Operating Profit Rate	mid-teens medium materiality	FY27	High
Free People Group FY27 Wholesale Segment Growth	healthy low materiality	FY27	Medium
Free People Group FY27 Wholesale Segment Profit Rate	consistently strong low materiality	FY27	Medium
FP Movement FY27 New Store Openings	at least 21 medium materiality	FY27	High
Urban Outfitters Global FY27 Retail Segment Comps	positive medium materiality	FY27	High
Urban Outfitters Global FY27 Profitability	meaningful progress in growing medium materiality	FY27	Medium
Newly FY27 Growth Rates	mid-double-digit high materiality	FY27	High
Newly Long-term Revenue Target	$1 billion or more high materiality	long-term	High
Newly FY27 Profit Margins	improving medium materiality	FY27	Medium
Urban Outfitters North America FY27 Operating Profit Rate	low single-digit medium materiality	FY27	High
Urban Outfitters North America Long-term Operating Profit Rate	high single-digit medium materiality	long-term	High
Anthropologie FY27 Comps	low to mid-single-digit medium materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
URBN Total Record Q4 sales and operating profit. Full-year sales growth of 11%, operating profit growth of 28%, and operating profit rate growth of 128 bps. Operating profit rate: 115 bps growth	$1.8 billion	10%	—	$159 million operating income
Retail Segment (Total) All brands delivered positive Retail segment comps. Digital comps: slightly exceeding store comps	—	greater than 5% comp	—	—
Anthropologie Growth fueled by digital channel and strength in own brands. Home accessories and furniture showing improvement. 5 years of consecutive quarterly positive compsDigital channel: strengthStore comps: flatApparel: positive compsHome accessories: strengthFurniture: recent improvementsCustomer acquisition: positiveTraffic: increases across digital and store channels	—	4% comp	—	—
Free People Group (Total) Driven by positive Retail segment comps, non-comp store growth, and strong Wholesale gains. Regular price sales: improved nicely vs prior yearInventory: well-controlled	10% increase	—	—	Record operating profit for the fourth quarter
Free People (Core Brand) Positive comps driven by successes in key categories. Gifting and self-purchasing: successes in accessories, intimates, bottoms, sweaters	3% total sales growth	1% retail segment comp	—	—
FP Movement Fueled by technical innovation and fashion in activewear. Expansion strategy on track with strong new store performance. New stores opened: 12Total retail locations: 88New sites: strong performanceBrand awareness: drivingCustomer acquisition: accelerating	29% total revenue growth	21% retail segment comp	—	—
Urban Outfitters (Global) Positive momentum continued, driven by strong comps and improved markdown rates. Markdown rates: significant improvementRegular price selling: strength	—	10% global Retail segment comp	—	Returned to profitability for the full year (modestly above breakeven)
Urban Outfitters North America Delivered positive comps across all major categories. Women's apparel: strong bottoms trend, key items, proprietary collectionsSocial platforms: diversifying (Reddit, Pinterest, TikTok)Partnership: Canva (holiday wish lists)	—	8% sales comp	—	Substantial reduction in operating loss
Urban Outfitters Europe Standout performer with strong store business and consistent execution. Store business: strengthMarket share: capturing meaningful	—	12% sales comp	—	Significant increase in profitability for quarter and full year
Newly Exceptional performance driven by subscriber growth and logistics efficiencies. Average active subscribers: 40% increase vs prior year Q4Annual revenue: surpassed $500 million	43% total revenue growth	—	—	130 bps operating margin improvement (Q4), over $21 million total profitability increase (FY26), over 260 bps operating profit margin growth (FY26)
Wholesale Segment Driven by growth in specialty store accounts, largely fueled by FP Movement. Specialty store accounts: growthFP Movement: healthy increases	—	9% revenue growth	—	—

URBN operating KPIs by quarter

URBN operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jan 2026 Q4 FY26	Apr 2026 Q1 FY27	Jul 2026 Q2 FY27	Change vs prior quarter
New stores opened FP Movement	12 The expansion strategy for FP Movement remains on track, which successfully opened 12 new stores during the quarter, bringing the total to 88 retail locations to date. Source: earnings call transcript	6 This was driven by a 15% retail segment comp, strong non-comp performance, 6 new store openings in the quarter and 48% wholesale growth. Source: earnings call transcript	4 The expansion strategy for FP Movement remains on track as they successfully opened 4 new stores during the quarter. Source: earnings call transcript	-33.3%
Stores FP Movement	88 The expansion strategy for FP Movement remains on track, which successfully opened 12 new stores during the quarter, bringing the total to 88 retail locations to date. Source: earnings call transcript	—	97 This brings the total number of stand-alone stores to 97. Source: earnings call transcript	—
Stores Free People Europe	—	13 We currently operate 13 European locations, and our wholesale business remains underpenetrated, leaving us a massive runway for growth. Source: earnings call transcript	14 We're managing 14 stores currently across the UK and Europe. Source: earnings call transcript	+7.7%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Tariff Negative Impact Q4 FY26 and FY26

approximately 75 basis points on Q4 gross and operating profit rate; approximately 35 basis points on full-year FY26.

Mitigation:mitigation efforts

Lower IMU due to Increased Tariffs Q1 FY27

approximately 25 to 50 basis points reduction in Q1 FY27 gross profit margins.

Mitigation:teams continue to work diligently on all our tariff mitigation efforts

SG&A Growth Outpacing Sales Growth FY27, Q1 FY27

SG&A could outpace sales growth for full-year FY27; grow several points ahead of sales growth in Q1 FY27.

Mitigation:Strategic technology investments expected to provide long-term benefits; variable SG&A spending can fluctuate with sales performance.

Extreme Weather Events Impacting Store Sales Q1 FY27 (February)

Caused softer store sales and Anthropologie to fall behind our plan in the weeks of February.

Mitigation:Teams reacting to positive sales trends from January; expecting positive impact with normalized spring weather and new product flow in mid-March.

What to watch in Q1 FY27

Anthropologie Store Sales Recovery

mid-March

Current behind plan in February

Target positive impact on sales

Why it matters

Anthropologie's store sales were negatively impacted by extreme weather, and its recovery is key to meeting Q1 and full-year comp targets.

Our teams have been hard at work at chasing into product categories that have outperformed and have a firm grasp on what the customer is telling us she wants. We believe that those receipts those receipts will flow into stores in mid-March, along with normalized spring weather trends and will positively impact our sales in the quarter.

Find out whether URBN delivers this. Inve re-checks your case every morning.

Q&A highlights

How did Anthropologie perform in Q4 and early Q1, especially with inventory?

Anthropologie's sales accelerated in January, achieving a 4% comp, higher than the 3% forecast. However, February store sales were soft due to extreme weather, though DTC demand was in line with plans. Apparel inventory is in good shape, and home/furniture inventories were front-loaded and performing well. A slight increase in markdowns is planned due to the slower start.

“Our sales accelerated coming out of the holiday period with receipt of new spring transitional product that was received in December. This contributed to a high single-digit comp in January, which resulted in a 4% comp increase for the quarter and was higher than our 3% forecasted comp.”

asked by Lorraine Maikis · answered by Tricia Smith

2 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Highlights

Urban Outfitters, Inc. achieved record fourth-quarter results, with total revenue growing 10% to $1.8 billion and adjusted EPS increasing 38%. All retail segment brands delivered positive comparable sales, with FP Movement and Urban Outfitters showing standout performances. Newly continued its strong double-digit revenue growth, and the Wholesale segment grew 9%.

Gross Margin Expansion and Drivers

The company saw a 14% increase in gross profit dollars, reaching nearly $600 million, and a 101 basis point improvement in the gross profit rate to 33.3%. This was primarily driven by lower markdowns at Urban Outfitters and Free People, occupancy leverage from strong sales, and reduced delivery expenses, which offset negative impacts from increased tariffs.

Strategic Investments in Technology and Logistics

For FY27, URBN plans capital expenditures of $385 million, with 40% allocated to logistics investments and 20% to technology. These investments aim to expand capacity and automation for Newly and the retail segment, and to speed up internal product processes through AI tools, expecting long-term benefits in sales and reduced markdowns.

Brand-Specific Momentum and Profitability

Anthropologie achieved its fifth consecutive year of positive quarterly comps, driven by digital strength and key product categories. Free People delivered impressive performance with 10% total revenue growth and record operating profit. Urban Outfitters returned to full-year profitability, significantly reducing its North American operating loss and increasing European profitability.

Newly's Continued Growth and Market Opportunity

Newly delivered exceptional Q4 revenue growth of 43%, driven by a 40% increase in average active subscribers. The brand surpassed $500 million in annual revenue for FY26 and improved its full-year operating profit margin by over 260 basis points, reinforcing confidence in its path towards $1 billion in revenue.

Tariff Impact and Future Outlook

Tariffs negatively impacted Q4 gross and operating profit rates by approximately 75 basis points and FY26 by 35 basis points. While FY27 gross profit margin guidance assumes tariffs remain, management notes potential upside if recent Section 122 tariff changes lead to incremental IMU benefits, particularly in the second half of the year.

Customer Engagement and Marketing

Marketing efforts drove increases in traffic for the total URBN Retail segment and healthy double-digit growth in Newly subscribers. Urban Outfitters successfully diversified social platforms, leveraging Reddit, Pinterest, and TikTok, and partnered with Canva to generate significant engagement and customer acquisition.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.