Urban Outfitters Inc. URBN stands out as a compelling value play within the Retail-Apparel and Shoes industry, trading at a forward 12-month price-to-earnings ratio of 10.44, below the industry average of 15.76 and the Retail-Wholesale sector average of 22.49. This undervaluation highlights its potential for investors seeking attractive entry points in the retail space. Furthermore, URBN's Value Score of A further emphasizes its investment appeal.

URBN Looks Attractive From a Valuation Standpoint

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Shares of the company are currently trading 19.7% below its 52-week high of $61.16, reached on March 3, 2025, making investors contemplate their next move. In the past year, URBN stock has gained 16.7%, outperforming the industry’s 7% decline. The company’s strategic initiative and operational efficiencies have helped it to outperform the broader sector and the S&P 500 index’s respective growth of 12.1% and 9.1% in the same period.  

URBN Stock Past-Year Performance

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URBN closed Friday’s trading session at $49.13. The stock is trading above its 200-day SMA (simple moving average) of $45.42, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in URBN’s financial health and growth prospects.

URBN Trades Above 200-Day Moving Averages

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Urban Outfitters' Strong Retail and Wholesale Segments

Urban Outfitters' Retail segment experienced healthy sales growth, with comparable sales (Comp) increasing across multiple brands. Anthropologie led the way with 8.3% comps increase, driven by double-digit digital sales growth and a mid-single-digit rise in store sales. The Home category recorded its first positive sales comp of the year. 

Free People continued its momentum, achieving strong sales growth both online and in stores. The FP Movement sub-brand expanded rapidly, benefiting from increased brand awareness and store expansion. Looking ahead, Free People Group is expected to maintain solid sales growth. We anticipate Free People Group’s net sales to increase 12.1% in fiscal 2026.

The Wholesale segment delivered impressive results, with strong demand from specialty retailers and department stores. Free People Wholesale was a key contributor, focusing on full-price sales rather than markdown-driven revenues. FP Movement Wholesale saw remarkable growth, with sales surging more than 90% year over year. The emphasis on full-price sales rather than markdown-driven revenues helped bolster profitability. We project Wholesale net sales to rise 17.5% in fiscal 2026.

URBN’s Rapid Growth in the Nuuly Segment

Urban Outfitters’ subscription-based rental service Nuuly continues to be a major growth driver. The segment's net sales increased 78.4% year over year, with the Subscription segment’s net sales rising 55.6%. This was fueled by a 53.5% rise in average active subscribers, reaching 300,000. 

Nuuly achieved its first full year of profitability, delivering $13 million in operating profit and a mid-single-digit profit margin. The brand added more than 20,000 new subscribers in the fourth quarter alone, reinforcing its potential for continued growth. Management aims for Nuuly to generate $500 million in revenues in fiscal 2026. We estimate Nuuly’s net sales to increase 10.4% year over year.

Strategic Store Expansion of Urban Outfitters

Urban Outfitters' aggressive store expansion underscores its confidence in long-term growth. In the fiscal fourth quarter, the company opened seven new Free People stores and 25 FP Movement stores. Anthropologie also expanded its footprint. The company is optimizing its store portfolio by closing underperforming locations while opening smaller-format stores to enhance productivity.

For fiscal 2026, Urban Outfitters plans to open approximately 58 new stores, including 20 FP Movement locations, 16 Free People stores and 15 Anthropologie stores. Management envisions FP Movement growing to 300 stores in North America, strengthening the company’s foothold in the activewear market. Urban Outfitters’ robust financial performance, strong brand momentum and strategic initiatives position it for continued success in fiscal 2026 and beyond.

URBN’s Positive Outlook Heading Into Fiscal 2026

Urban Outfitters' impressive fourth-quarter results pave the way for strong growth in fiscal 2026. The company forecasts mid-single-digit total sales growth for both the first quarter and the full year, supported by low single-digit retail segment comps. Free People is projected to see low to mid-single-digit positive comps, while Anthropologie expects mid-single-digit growth. 

Nuuly is set for double-digit revenue growth, driven by a growing subscriber base. The Wholesale segment is anticipated to expand mid-single digits annually, with low double-digit growth in the first quarter.

The gross margin is expected to rise 50-100 basis points, benefiting from reduced markdowns—particularly at Urban Outfitters—as well as efficiencies in occupancy and delivery expenses. Capital expenditures are estimated at approximately $240 million, with half dedicated to retail store expansion, 25% to technology and logistics, and the remaining 25% to home office growth.

Here's How Estimates Stack Up for URBN

The positive sentiment surrounding Urban Outfitters is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past seven days, analysts have increased their estimates for the current fiscal year, resulting in an upward revision of 11 cents to $4.65 per share. The consensus estimate for earnings for the next fiscal year has also advanced nine cents to $5.04 per share. This indicates year-over-year growth of 14.5% and 8.4%, respectively.

The Zacks Consensus Estimate for the current and next fiscal year’s sales is pegged at $5.92 billion and $6.25 billion, respectively, implying year-over-year growth of 6.6% and 5.6%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

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Final Thought on Urban Outfitters

Urban Outfitters appeals to investors with its strong brand presence, strategic expansion and innovative business model. The company is successfully growing its retail and wholesale segments while capitalizing on the rising demand for its subscription-based Nuuly service. Operational efficiencies and a focus on profitability further strengthen its position in the market. With a solid track record of adapting to consumer trends and expanding its footprint, URBN demonstrates resilience and long-term growth potential, making it a compelling choice in the retail sector. The company currently sports a Zacks Rank #1 (Strong Buy).

Other Key Picks

Some other top-ranked stocks are The Gap, Inc. GAP, Deckers Outdoor Corporation DECK and G-III Apparel Group, Ltd.  GIII.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from the fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It carries a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.

G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies a decline of 4.5% and 1.2%, respectively, from the year-ago actuals. GIII delivered a trailing four-quarter average earnings surprise of 117.8%.

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Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

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G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report

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