Urban Outfitters Inc. URBN shares are trading 23.6% below its 52-week high of $61.16 reached on March 3, 2025, making investors contemplate their next moves. Over the past six months, the URBN stock has gained 25.4%, significantly outperforming the Zacks Retail-Apparel and Shoes industry’s 20.7% decline.

Urban Outfitters’ strategic initiative and operational efficiencies have helped it outperform the Retail-Wholesale sector and the S&P 500 index’s respective declines of 2.2% and 7.3% in the same period.

URBN Stock Past Six-Month Performance

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This lifestyle specialty retailer is trading at a notable low price-to-sales (P/S) multiple, below the averages of the industry and the sector. With a forward 12-month P/S of 0.72, URBN is priced lower than the industry and the sector’s average of 1.30 and 1.44, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. The company’s Value Score of A emphasizes its investment appeal.

URBN Looks Attractive From a Valuation Standpoint

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Urban Outfitters Posts Strong Retail and Wholesale Results

URBN demonstrated an impressive performance across its Retail segment, posting solid sales growth in the fourth quarter of fiscal 2025. Comparable sales grew across various brands, with Anthropologie leading the charge with an 8.3% increase. This growth was fueled by a strong surge in digital sales and a mid-single-digit rise in in-store sales. Additionally, the Home category achieved its first positive comparable sales growth of the year.

Free People Group also sustained positive momentum, with notable growth both online and in stores. The FP Movement sub-brand, in particular, saw rapid expansion due to increased brand awareness and a growing store presence. We expect Free People Group’s net sales to rise 12.1% year over year in fiscal 2026.

The Wholesale segment also delivered an outstanding performance, driven by strong demand from specialty retailers and department stores. Free People Wholesale played a pivotal role in this success by focusing on full-price sales rather than markdowns. FP Movement Wholesale saw exceptional growth, with sales soaring more than 90% year over year. This strategic focus on full-price sales significantly boosted profitability, and we forecast Wholesale net sales to grow 17.5% in fiscal 2026.

Nuuly: Key Growth Driver for URBN

Urban Outfitters' subscription-based rental platform, Nuuly, continues to emerge as a key growth driver. In the fiscal fourth quarter, net sales in the segment surged 78.4% year over year, whereas the Subscription business posted a 55.6% increase. This growth was largely driven by a 53.5% rise in average active subscribers, which reached 300,000.

Nuuly reached a milestone by posting its first full year of profitability, generating $13 million in operating profit with a mid-single-digit margin. The addition of more than 20,000 subscribers in the fiscal fourth quarter demonstrates strong momentum. Management aims to scale Nuuly to $500 million in revenues by fiscal 2026. We estimate Nuuly’s net sales to increase 10.4% year over year.

Urban Outfitters Expands Store Footprint Strategically

URBN is continuing its commitment to physical retail expansion with an aggressive store-opening strategy. In the fiscal fourth quarter, the company launched seven Free People stores and 25 FP Movement locations. Anthropologie also expanded its presence with additional stores. At the same time, Urban Outfitters is refining its store portfolio by closing underperforming locations and prioritizing smaller, higher-productivity stores.

For fiscal 2026, the company plans to open about 58 stores, including 20 FP Movement locations, 16 Free People stores and 15 Anthropologie sites. In the long term, Urban Outfitters aims to expand FP Movement to 300 locations across North America, reinforcing its position in the activewear segment. With strong brand momentum, solid financial performance and a well-executed strategy, the company is well-positioned for continued growth.

URBN’s Optimistic Outlook for FY26

Urban Outfitters' impressive performance in the fiscal fourth quarter sets a positive tone for fiscal 2026. In its last reported quarter’s earnings call, the company forecast mid-single-digit sales growth for both the fiscal first quarter and the year, driven by low-single-digit comparable sales growth in the Retail segment. Free People is expected to see low to mid-single-digit comps growth, whereas Anthropologie is projected to grow in the mid-single-digit range.

Nuuly is on track for double-digit revenue growth, fueled by an increasing subscriber base. The Wholesale segment is anticipated to grow in the mid-single digits annually, with double-digit growth expected in the fiscal first quarter.

The gross margin is expected to improve 50-100 basis points, driven by fewer markdowns, especially at Urban Outfitters, along with better occupancy and delivery efficiencies. Capital expenditure is forecast at $240 million, with about half directed toward retail store expansion, 25% toward technology and logistics, and the remainder for home office upgrades.

Urban Outfitters Achieves Impressive ROIC

URBN has showcased strong capital efficiency over the past year, delivering a return on invested capital (“ROIC”) of 11.8% for the trailing 12 months, well above the industry average of 9.2%. This solid performance highlights the company’s disciplined capital allocation and underscores the success of its investments, particularly store expansion, which has played a key role in driving returns.

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Here's How Estimates Stack Up for URBN

The positive sentiment surrounding Urban Outfitters is reflected in the upward revisions in the Zacks Consensus Estimate for earnings. In the past 30 days, the consensus estimate has moved up 11 cents to $4.65 per share for the current fiscal year and by nine cents to $5.04 for the next fiscal year, indicating 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

URBN presents a compelling case for investors due to its strong brand performance, strategic expansion and diversified growth drivers. Its core labels like Anthropologie and Free People continue to gain traction, while the activewear-focused FP Movement and the Nuuly rental service are scaling rapidly with solid profitability. The company’s focus on full-price sales, efficient cost management and selective store openings supports healthier margins and long-term stability. Its ability to adapt to shifting consumer trends while maintaining operational efficiency enhances its outlook for sustained growth.

The company currently has a Zacks Rank #2 (Buy).

Other Key Picks

Some other top-ranked stocks are The Gap, Inc. GAP, Stitch Fix SFIX and Gildan Activewear Inc. GIL.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) 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 fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Stitch Fix delivers customized shipments of apparel, shoes and accessories for women, men and kids. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Stitch Fix’s fiscal 2025 earnings implies growth of 64.7% from the year-ago actuals. SFIX delivered a trailing four-quarter average earnings surprise of 48.9%.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s earnings and revenues implies growth of 16% and 4.4%, respectively, from the year-ago actuals. GIL delivered a trailing four-quarter average earnings surprise of 5.3%.

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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report

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