Urban Outfitters (NASDAQ:URBN) shares jumped over 18% in premarket trading on Thursday after the company posted a robust earnings beat for the first quarter, showcasing strength across all its key brands and signaling momentum that defied the broader retail industry’s slowdown.
For the quarter ending April 30, the fashion retailer reported net income of $108.3 million, or $1.16 per share, a sharp increase from $61.8 million, or 65 cents per share, a year earlier. Analysts had forecast earnings of 82 cents per share, according to FactSet, making the results a significant upside surprise.
Revenue for the period reached $1.33 billion, surpassing the consensus estimate of $1.29 billion. Same-store sales were up 5% year-over-year, driven by strong brand performance: Anthropologie rose 7%, Free People grew 3%, and the Urban Outfitters label advanced 2%.
JPMorgan responded positively to the earnings release, upgrading the stock to Overweight from Neutral, citing not only the Q1 outperformance but also a promising multi-year trajectory for earnings expansion. The firm lifted its price target on the stock to $78 from $63, reflecting confidence in improved margins and same-store sales across brands.
Gross margin for the quarter expanded by 240 basis points to 36.8%, while operating margin increased by 305 basis points, reaching 9.6%—both figures beating Wall Street expectations.
JPMorgan analysts pointed to a “5-pronged top/bottom-line growth flywheel,” crediting sustained strength at Anthropologie and Free People, growth acceleration in Nuuly and FP Movement, and ongoing revitalization efforts at the Urban Outfitters brand, now under fresh leadership. “The ‘E’—earnings—has multi-year upside,” they said.
Urban Outfitters’ management noted that current second-quarter trends are holding steady, with comps at Anthropologie and Urban Outfitters in line with Q1 and Free People showing an uptick, aided by more favorable year-over-year comparisons.
The investment bank raised its FY25 earnings estimate to $5.04 per share from $4.80, ahead of the consensus forecast of $4.51, and projected FY26 EPS at $5.93. It also highlighted the potential for continued upside in comps and margins as discounting pressures subside and Nuuly scales further.
“We see potential upside to FY25 comps across all 3 brands,” analysts noted, estimating same-store sales growth of 6.7%, far exceeding the Street’s 2.8% consensus.
Gross margin gains are expected to be sustainable, supported by efficiencies in the Urban Outfitters division and operating leverage at Nuuly. JPMorgan’s valuation now implies a multiple of approximately 13 times FY26 earnings, a level consistent with the retailer’s pre-pandemic three-year average.