URBAN OUTFITTERS INC

Previous wording

We operate under three reportable segments – Retail, Subscription and Wholesale. Our Retail segment primarily includes our Anthropologie, Free People, FP Movement and Urban Outfitters brands. Our Retail segment products and services are sold directly to our customers through our retail locations, websites, mobile applications, social media and third-party digital platforms, catalogs and customer contact centers and franchisee-owned stores. Our Subscription segment includes the Nuuly brand, which offers customers a more sustainable way to explore fashion primarily through a monthly women’s apparel subscription rental service. Our Wholesale segment includes our Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, digital businesses and our Retail segment. Our Wholesale segment primarily designs, develops and markets apparel, intimates, activewear and shoes.

Current wording

We operate under three reportable segments – Retail, Subscription and Wholesale. Our Retail segment primarily includes our Anthropologie, Free People, FP Movement and Urban Outfitters brands. Our Retail segment products and services are sold directly to our customers through our retail locations, websites, mobile applications, social media and third-party digital platforms, catalogs and customer contact centers and franchisee-owned stores. Our Subscription segment includes the Nuuly brand, which offers customers a more sustainable way to explore fashion primarily through a monthly women’s apparel subscription rental service. Our Wholesale segment includes our Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. Our Wholesale segment primarily designs, develops and markets apparel, intimates, activewear and shoes.

Previous wording

Shifting our countries of origin where enabled by dual sourcing most of our own branded products (we currently have no single country that represents the majority of our production);

Current wording

Shifting our countries of origin (where possible) to enable the dual sourcing of most of our own branded products (we currently have no single country that represents the majority of our production);

Previous wording

We currently believe that tariffs could have a negative impact on our financial results.

Current wording

Even with these mitigation strategies in place, we believe that tariffs could have a negative impact on our financial results.

Previous wording

On July 4, 2025, the United States enacted legislation commonly referred to as the One Big Beautiful Bill Act which includes various tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions like bonus depreciation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. This legislation, enacted during the second quarter of fiscal 2026, did not have a material impact on the Company's interim period income tax provision. The Company continues to assess the impact of the legislation on our consolidated financial statements. We do not expect a material impact to our financial statements for the fiscal year ending January 31, 2026, however, additional guidance from the Internal Revenue Service and U.S. Treasury may affect the interpretation and application of certain provisions.

Current wording

On July 4, 2025, the United States enacted legislation commonly referred to as the One Big Beautiful Bill Act which includes various tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions like bonus depreciation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. This legislation, enacted during the second quarter of fiscal 2026, did not have a material impact on the Company's interim period income tax provision for the three and nine months ended October 31, 2025. The Company continues to assess the impact of the legislation on our consolidated financial statements. We do not expect a material impact to our financial statements for the fiscal year ending January 31, 2026, however, additional guidance from the Internal Revenue Service and U.S. Treasury may affect the interpretation and application of certain provisions.

Previous wording

Net sales from the Retail segment accounted for approximately 85.4% of consolidated net sales for the six months ended July 31, 2025, compared to 88.5% for the comparable period in fiscal 2025.

Current wording

Net sales from the Retail segment accounted for approximately 85.2% of consolidated net sales for the nine months ended October 31, 2025, compared to 87.9% for the comparable period in fiscal 2025.

Previous wording

The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, furniture, home decor and beauty and wellness. The brand also has a bridal collection consisting of wedding, bridesmaid and party dresses, accessories and decor. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience. Merchandise includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. Anthropologie stores are located in specialty centers, upscale street locations and enclosed malls. Anthropologie operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, offers catalogs in North America that markets select merchandise, most of which is also available in Anthropologie brand stores and sells merchandise through franchisee-owned stores in the Middle East. Anthropologie's North American Retail segment net sales accounted for approximately 46.8% of total Retail segment net sales for the six months ended July 31, 2025, compared to approximately 46.7% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.8% of total Retail segment net sales for both the six months ended July 31, 2025, and the comparable period in fiscal 2025.

Current wording

The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, furniture, home decor and beauty and wellness. The brand also has a bridal collection consisting of wedding, bridesmaid and party dresses, accessories and decor. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience. Merchandise includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. Anthropologie stores are located in specialty centers, upscale street locations and enclosed malls. Anthropologie operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, offers catalogs in North America that markets select merchandise, most of which is also available in Anthropologie brand stores and sells merchandise through franchisee-owned stores in the Middle East. Anthropologie's North American Retail segment net sales accounted for approximately 47.0% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 47.1% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.8% of total Retail segment net sales for both the nine months ended October 31, 2025, and the comparable period in fiscal 2025.

Previous wording

The Free People brand focuses its product offering on private label merchandise targeted to young contemporary women aged 25 to 30 and provides a unique merchandise mix of casual women’s apparel, intimates, activewear, shoes, accessories, home products, gifts and beauty and wellness. The FP Movement brand offers performance-ready activewear, beyond-the-gym staples and wellness essentials. Free People stores are located in enclosed malls, upscale street locations and specialty centers. Free People operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement brands’ wholesale offerings. Free People also offers catalogs that market select merchandise, most of which is also available in our Free People stores. Free People's North American Retail segment net sales accounted for approximately 24.4% of total Retail segment net sales for the six months ended July 31, 2025, compared to approximately 23.9% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.4% of total Retail segment net sales for the six months ended July 31, 2025, compared to approximately 1.3% for the comparable period in fiscal 2025.

Current wording

The Free People brand focuses its product offering on private label merchandise targeted to young contemporary women aged 25 to 30 and provides a unique merchandise mix of casual women’s apparel, intimates, activewear, shoes, accessories, home products, gifts and beauty and wellness. The FP Movement brand offers performance-ready activewear, beyond-the-gym staples and wellness essentials. Free People stores are located in enclosed malls, upscale street locations and specialty centers. Free People operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement brands’ wholesale offerings. Free People also offers catalogs that market select merchandise, most of which is also available in our Free People stores. Free People's North American Retail segment net sales accounted for approximately 24.0% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 23.7% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.3% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 1.2% for the comparable period in fiscal 2025.

Previous wording

Urban Outfitters targets young adults aged 18 to 28 through a unique merchandise mix, compelling store environment, social media and third-party digital platforms, websites and mobile applications and a product offering that includes women’s and men’s fashion apparel, activewear, intimates, footwear, accessories, home goods, electronics and beauty. A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of products designed internally or designed in collaboration with third-party brands. Urban Outfitters stores are located in street locations in large metropolitan areas and select university communities, specialty centers and enclosed malls that accommodate our customers’ propensity not only to shop, but also to congregate with their peers. Urban Outfitters operates websites and mobile applications that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores and sells merchandise through franchisee-owned stores in the Middle East. Urban Outfitters’ North American Retail segment net sales accounted for approximately 15.2% of total Retail segment net sales for the six months ended July 31, 2025, compared to approximately 16.8% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 9.6% of total Retail segment net sales for the six months ended July 31, 2025, compared to approximately 8.8% for the comparable period in fiscal 2025.

Current wording

Urban Outfitters targets young adults aged 18 to 28 through a unique merchandise mix, compelling store environment, social media and third-party digital platforms, websites and mobile applications and a product offering that includes women’s and men’s fashion apparel, activewear, intimates, footwear, accessories, home goods, electronics and beauty. A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of products designed internally or designed in collaboration with third-party brands. Urban Outfitters stores are located in street locations in large metropolitan areas and select university communities, specialty centers and enclosed malls that accommodate our customers’ propensity not only to shop, but also to congregate with their peers. Urban Outfitters operates websites and mobile applications that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores and sells merchandise through franchisee-owned stores in the Middle East. Urban Outfitters’ North American Retail segment net sales accounted for approximately 15.3% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 16.5% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 9.8% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 8.9% for the comparable period in fiscal 2025.

Previous wording

Menus & Venues focuses on a dining and event experience that provides excellence in food, beverage and service. Menus & Venues net sales accounted for less than 1.0% of total Retail segment net sales for both the six months ended July 31, 2025, and the comparable period in fiscal 2025.

Current wording

Menus & Venues focuses on a dining and event experience that provides excellence in food, beverage and service. Menus & Venues net sales accounted for less than 1.0% of total Retail segment net sales for both the nine months ended October 31, 2025, and the comparable period in fiscal 2025.

Previous wording

Store data for the six months ended July 31, 2025 was as follows:

Current wording

Store data for the nine months ended October 31, 2025 was as follows:

Previous wording

Our Subscription segment includes the Nuuly brand, which is primarily a monthly women’s apparel subscription rental service. For a monthly fee, Nuuly subscribers can rent product from a wide selection of the Company’s own brands, third-party brands and one-of-a-kind vintage pieces via a custom-built digital platform. Subscribers select their products each month, wear them as often as they like and then swap into new products the following month. Subscribers are also able to purchase rental product. Our Subscription segment net sales accounted for approximately 9.3% of consolidated net sales for the six months ended July 31, 2025, compared to approximately 6.6% for the comparable period in fiscal 2025.

Current wording

Our Subscription segment includes the Nuuly brand, which is primarily a monthly women’s apparel subscription rental service. For a monthly fee, Nuuly subscribers can rent product from a wide selection of the Company’s own brands, third-party brands and one-of-a-kind vintage pieces via a custom-built digital platform. Subscribers select their products each month, wear them as often as they like and then swap into new products the following month. Subscribers are also able to purchase rental product. Our Subscription segment net sales accounted for approximately 9.3% of consolidated net sales for the nine months ended October 31, 2025, compared to approximately 6.8% for the comparable period in fiscal 2025.

Previous wording

Our Wholesale segment includes the Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People and FP Movement brands and the BDG and “iets frans” apparel collections under the Urban Outfitters brand. Our Wholesale segment net sales accounted for approximately 5.3% of consolidated net sales for the six months ended July 31, 2025, compared to 4.9% for the comparable period in fiscal 2025.

Current wording

Our Wholesale segment includes the Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People and FP Movement brands and the BDG and “iets frans” apparel collections under the Urban Outfitters brand. Our Wholesale segment net sales accounted for approximately 5.5% of consolidated net sales for the nine months ended October 31, 2025, compared to 5.3% for the comparable period in fiscal 2025.

Previous wording

Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements for the fiscal year ended January 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on April 1, 2025. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. We are not currently aware of any reasonably likely events or circumstances that would cause our actual results to be materially different from our estimates. There have been no significant changes to our critical accounting policies during the six months ended July 31, 2025.

Current wording

Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements for the fiscal year ended January 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on April 1, 2025. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. We are not currently aware of any reasonably likely events or circumstances that would cause our actual results to be materially different from our estimates. There have been no significant changes to our critical accounting policies during the nine months ended October 31, 2025.

Previous wording

Net sales for the second quarter of fiscal 2026 were $1.50 billion, compared to $1.35 billion in the second quarter of fiscal 2025. The $152.8 million increase was attributable to a $92.8 million, or 7.8%, increase in Retail segment net sales, a $48.2 million, or 53.2%, increase in Subscription segment net sales and an $11.8 million, or 18.1%, increase in Wholesale segment net sales.

Current wording

Net sales for the third quarter of fiscal 2026 were $1.53 billion, compared to $1.36 billion in the third quarter of fiscal 2025. The $167.5 million increase was attributable to a $113.9 million, or 9.6%, increase in Retail segment net sales, a $47.4 million, or 48.7%, increase in Subscription segment net sales and a $6.2 million, or 7.6%, increase in Wholesale segment net sales.

Previous wording

The increase in our Retail segment net sales during the second quarter of fiscal 2026 was due to an increase of $65.0 million, or 5.6%, in Retail segment comparable net sales and an increase of $27.8 million in non-comparable net sales. Retail segment comparable net sales increased 6.7% at Free People, 5.7% at Anthropologie and 4.2% at Urban Outfitters. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in both retail store net sales and digital channel net sales. Comparable store net sales increased as a result of higher store traffic, transactions, average unit retail and conversion rate, while units per transaction decreased. The digital channel comparable net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. The increase in non-comparable net sales during the second quarter of fiscal 2026 was primarily due to the impact of the 46 net new Company-owned stores opened since the prior comparable period.

Current wording

The increase in our Retail segment net sales during the third quarter of fiscal 2026 was due to an increase of $91.2 million, or 8.0%, in Retail segment comparable net sales and an increase of $22.7 million in non-comparable net sales. Retail segment comparable net sales increased 12.5% at Urban Outfitters, 7.6% at Anthropologie and 4.1% at Free People. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by high single-digit positive growth in both digital channel net sales and retail store net sales. The digital channel comparable net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. Comparable store net sales increased as a result of higher store traffic, transactions and average unit retail, while conversion rate was flat and units per transaction decreased. The increase in non-comparable net sales during the third quarter of fiscal 2026 was primarily due to the impact of the 52 net new Company-owned stores opened since the prior comparable period.

Previous wording

The increase in Subscription segment net sales was primarily driven by a 48.1% increase in the average number of active subscribers in the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025. The increase in Wholesale segment net sales in the second quarter of fiscal 2026 was driven by an $11.8 million, or 19.5%, increase in Free People wholesale net sales as compared to the second quarter of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Current wording

The increase in Subscription segment net sales was primarily driven by a 42.2% increase in the average number of active subscribers in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025. The increase in Wholesale segment net sales in the third quarter of fiscal 2026 was driven by a $6.5 million, or 8.4%, increase in Free People wholesale net sales as compared to the third quarter of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Previous wording

Gross profit percentage for the second quarter of fiscal 2026 increased by 113 basis points to 37.6% of net sales compared to 36.5% of net sales in the second quarter of fiscal 2025. Gross profit increased to $566.2 million in the second quarter of fiscal 2026 from $493.3 million in the second quarter of fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns, largely driven by lower markdowns at the Urban Outfitters brand, and leverage in occupancy costs due to the increase in comparable Retail segment and Subscription segment net sales. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Current wording

Gross profit percentage for the third quarter of fiscal 2026 increased by 31 basis points to 36.8% of net sales compared to 36.5% of net sales in the third quarter of fiscal 2025. Gross profit increased to $563.3 million in the third quarter of fiscal 2026 from $497.3 million in the third quarter of fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters and Free People and leverage in store occupancy costs due to the increase in comparable Retail segment net sales, partially offset by deleverage in initial merchandise costs. Additionally, the Company recorded store impairment charges of $2.0 million during the third quarter of fiscal 2026. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Previous wording

Total inventory at July 31, 2025, as compared to July 31, 2024, increased by $91.5 million, or 15.1%, to $696.2 million. Total Retail segment inventory increased by 15.0% and Retail segment comparable inventory increased by

Current wording

Total inventory at October 31, 2025, as compared to October 31, 2024, increased by $46.5 million, or 5.9%, to $839.8 million. Total Retail segment inventory increased by 6.3% and Retail segment comparable inventory increased by 7.4%. Wholesale segment inventory was flat. The increase in Retail segment inventory was due to increased net sales.

Previous wording

Selling, general and administrative expenses increased by $43.6 million, or 12.5%, in the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales increased in the second quarter of fiscal 2026 to 26.0% of net sales, compared to 25.8% of net sales in the second quarter of fiscal 2025. The deleverage in selling, general and administrative expenses as a percentage of net sales was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Current wording

Selling, general and administrative expenses increased by $50.4 million, or 13.7%, in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales increased in the third quarter of fiscal 2026 to 27.4% of net sales, compared to 27.1% of net sales in the third quarter of fiscal 2025. The deleverage in selling, general and administrative expenses as a percentage of net sales was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, partially offset by leverage in store payroll expenses due to the Retail segment stores net sales growth. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Previous wording

Income from operations was 11.6% of net sales, or $174.4 million, for the second quarter of fiscal 2026 compared to 10.7% of net sales, or $145.1 million, for the second quarter of fiscal 2025. The increase in operating income dollars was driven by the increase in gross profit dollars. The increase in operating income rate was driven by the improved gross profit rate.

Current wording

Income from operations was 9.4% of net sales, or $144.3 million, for the third quarter of fiscal 2026 compared to 9.4% of net sales, or $128.7 million, for the third quarter of fiscal 2025. The increase in operating income dollars was driven by the increase in gross profit dollars.

Previous wording

Our effective tax rate for the second quarter of fiscal 2026 was 21.5%, compared to 23.0% in the second quarter of fiscal 2025. The decrease in the effective tax rate for the three months ended July 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain state and local valuation allowances.

Current wording

Our effective tax rate for the third quarter of fiscal 2026 was 23.6%, compared to 24.2% in the third quarter of fiscal 2025. The decrease in the effective tax rate for the three months ended October 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain valuation allowances.

Previous wording

Net sales for the six months ended July 31, 2025 were $2.83 billion, compared to $2.55 billion in the comparable period of fiscal 2025. The $281.6 million increase was attributable to a $160.7 million, or 7.1%, increase in Retail segment net sales, a $94.6 million, or 56.1%, increase in Subscription segment net sales and a $26.3 million, or 21.0%, increase in Wholesale segment net sales.

Current wording

Net sales for the nine months ended October 31, 2025 were $4.36 billion, compared to $3.91 billion in the comparable period of fiscal 2025. The $449.1 million increase was attributable to a $274.6 million, or 8.0%, increase in Retail segment net sales, a $142.0 million, or 53.4%, increase in Subscription segment net sales and a $32.5 million, or 15.7%, increase in Wholesale segment net sales.

Previous wording

The increase in our Retail segment net sales during the first six months of fiscal 2026 was due to an increase of $114.0 million, or 5.2%, in Retail segment comparable net sales and an increase of $46.7 million in non-comparable net sales. Retail segment comparable net sales increased 6.3% at Anthropologie, 5.0% at Free People and 3.2% at Urban Outfitters. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in both retail store net sales and digital channel net sales. Comparable store net sales increased as a result of higher store traffic, transactions and conversion rate, while average unit retail and units per transaction decreased. The digital channel comparable net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. The increase in non-comparable net sales during the first six months of fiscal 2026 was primarily due to the impact of the 50 net new Company-owned stores opened since the prior comparable period.

Current wording

The increase in our Retail segment net sales during the first nine months of fiscal 2026 was due to an increase of $203.5 million, or 6.1%, in Retail segment comparable net sales and an increase of $71.1 million in non-comparable net sales. Retail segment comparable net sales increased 6.8% at Anthropologie, 6.4% at Urban Outfitters and 4.7% at Free People. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in both retail store net sales and digital channel net sales. Comparable store net sales increased as a result of higher store traffic, transactions and conversion rate, while average unit retail was flat and units per transaction decreased. The digital channel comparable net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. The increase in non-comparable net sales during the first nine months of fiscal 2026 was primarily due to the impact of the 62 net new Company-owned stores opened since the prior comparable period.

Previous wording

The increase in Subscription segment net sales was primarily driven by a 50.3% increase in the average number of active subscribers in the first six months of fiscal 2026 as compared to the comparable period of fiscal 2025. The increase in Wholesale segment net sales in the first six months of fiscal 2026 was driven by a $26.1 million, or 22.4%, increase in Free People wholesale net sales as compared to the first six months of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Current wording

The increase in Subscription segment net sales was primarily driven by a 47.3% increase in the average number of active subscribers in the first nine months of fiscal 2026 as compared to the comparable period of fiscal 2025. The increase in Wholesale segment net sales in the first nine months of fiscal 2026 was driven by a $32.6 million, or 16.8%, increase in Free People wholesale net sales as compared to the first nine months of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Previous wording

Gross profit percentage for the first six months of fiscal 2026 increased by 191 basis points to 37.2% of net sales compared to 35.3% of net sales in the comparable period of fiscal 2025. Gross profit increased to $1.06 billion in the first six months of fiscal 2026 from $901.7 million in the comparable period of fiscal 2025. The gross profit rate benefited from a non-recurring gain of $4.8 million, or 17 basis points, recorded in the first quarter of fiscal 2026 and store impairment and lease abandonment charges of $4.6 million, or 18 basis points, recorded in the first quarter of fiscal 2025 and not repeated in the current year period. The remaining 156 basis point increase in gross profit rate was primarily due to improved Retail segment markdowns, largely driven by lower markdowns at the Urban Outfitters brand, and leverage in occupancy costs due to the increase in comparable Retail segment and Subscription segment net sales. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Current wording

Gross profit percentage for the first nine months of fiscal 2026 increased by 135 basis points to 37.1% of net sales compared to 35.7% of net sales in the comparable period of fiscal 2025. Gross profit increased to $1.62 billion in the first nine months of fiscal 2026 from $1.40 billion in the comparable period of fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters and Free People and leverage in store occupancy costs due to the increase in comparable Retail segment net sales, partially offset by deleverage in initial merchandise costs. Additionally, the Company recorded store impairment charges of $2.0 million during the first nine months of fiscal 2026 and store impairment and lease abandonment charges of $4.6 million during the first nine months of fiscal 2025. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Previous wording

Selling, general and administrative expenses increased by $70.7 million, or 10.4%, in the first six months of fiscal 2026, compared to the comparable period of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales decreased in the first six months of fiscal 2026 to 26.5% of net sales, compared to 26.7% of net sales in the comparable period of fiscal 2025. The leverage in selling, general and administrative expenses as a percentage of net sales was primarily related to lower litigation expenses in the current year period as compared to the prior year period. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Current wording

Selling, general and administrative expenses increased by $121.1 million, or 11.5%, in the first nine months of fiscal 2026, compared to the first nine months of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales was essentially flat in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Previous wording

Income from operations was 10.7% of net sales, or $302.6 million, for the first six months of fiscal 2026 compared to 8.6% of net sales, or $219.8 million, for the comparable period of fiscal 2025. The increase in operating income dollars was primarily driven by the increase in gross profit dollars. The increase in operating income rate was primarily driven by the improved gross profit rate.

Current wording

Income from operations was 10.2% of net sales, or $446.9 million, for the first nine months of fiscal 2026 compared to 8.9% of net sales, or $348.5 million, for the comparable period of fiscal 2025. The increase in operating income dollars was primarily driven by the increase in gross profit dollars. The increase in operating income rate was primarily driven by the improved gross profit rate.

Previous wording

Our effective tax rate for the first six months of fiscal 2026 was 21.5%, compared to 23.2% in the first six months of fiscal 2025. The decrease in the effective tax rate for the six months ended July 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain state and local valuation allowances.

Current wording

Our effective tax rate for the first nine months of fiscal 2026 was 22.2%, compared to 23.6% in the first nine months of fiscal 2025. The decrease in the effective tax rate for the nine months ended October 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain valuation allowances.

Previous wording

The increase in working capital as of July 31, 2025, as compared to January 31, 2025, was primarily due to an increase in inventory. The increase in working capital as of July 31, 2025, as compared to July 31, 2024, was primarily due to an increase in inventory and the increase in cash, cash equivalents and current marketable securities, partially offset by the timing of disbursements.

Current wording

The increase in working capital as of October 31, 2025, as compared to January 31, 2025, was primarily due to an increase in inventory, partially offset by the timing of disbursements. The increase in working capital as of October 31, 2025, as compared to October 31, 2024, was primarily due to an increase in cash, cash equivalents and current marketable securities and inventory, partially offset by the timing of disbursements.

Previous wording

Our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs. The increase in cash provided by operating activities in the first six months of fiscal 2026 compared to the first six months of fiscal 2025 was primarily due to higher net income in the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

Current wording

Our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs. The increase in cash provided by operating activities in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025 was primarily due to higher net income and a lower increase in inventory in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

Previous wording

Cash used in investing activities in the first six months of fiscal 2026 and fiscal 2025 primarily related to the purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities. Cash paid for property and equipment in the first six months of fiscal 2026 and 2025 was $107.5 million and $98.9 million, respectively, which was primarily used to expand our store base and distribution network in both periods.

Current wording

Cash used in investing activities in the first nine months of fiscal 2026 and fiscal 2025 primarily related to the purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities. Cash paid for property and equipment in the first nine months of fiscal 2026 and 2025 was $191.4 million and $144.1 million, respectively, which was primarily used to expand our store base and distribution network in both periods, as well as expand our home office in the first nine months of fiscal 2026 to support our growing business.

Previous wording

Cash used in financing activities in the first six months of fiscal 2026 and the first six months of fiscal 2025 primarily related to repurchases of our common shares under our share repurchase program and from employees to meet payroll tax withholding requirements on vested share-based awards.

Current wording

Cash used in financing activities in the first nine months of fiscal 2026 and the first nine months of fiscal 2025 primarily related to repurchases of our common shares under our share repurchase program and from employees to meet payroll tax withholding requirements on vested share-based awards.

Previous wording

During fiscal 2026, we plan to open approximately 69 new Company-owned retail locations, expand or relocate certain existing retail locations, expand our home office to support our growing business, invest in our distribution network, invest in new products, markets and brands, purchase inventory and rental product for our operating segments at levels appropriate to maintain our planned sales volumes, upgrade our systems, improve and expand our digital capabilities, invest in omni-channel marketing when appropriate and repurchase our common shares. We believe that our new brand initiatives, new store openings, merchandise expansion programs, international growth opportunities and our marketing, social media, website and mobile initiatives are significant contributors to our sales growth and plan to continue our investment in these initiatives for all brands. We anticipate our capital expenditures during fiscal 2026 will be approximately $270 million primarily related to retail store expansion and support, technology and distribution network investments and home office expansion to support our growing business. All fiscal 2026 capital expenditures are expected to be financed by cash flow from operating activities and existing cash and cash equivalents. We believe that our new store investments generally have the potential to generate positive cash flow within a year. We may also enter into one or more acquisitions or transactions related to the expansion of our brand offerings, including additional franchise and joint venture agreements. We believe that our existing cash and cash equivalents, availability under our current credit facilities and future cash flows provided by operations will be sufficient to fund these initiatives.

Current wording

During fiscal 2026, we plan to open approximately 69 new Company-owned retail locations, expand or relocate certain existing retail locations, expand our home office to support our growing business, invest in our distribution network, invest in new products, markets and brands, purchase inventory and rental product for our operating segments at levels appropriate to maintain our planned sales volumes, upgrade our systems, improve and expand our digital capabilities, invest in omni-channel marketing at appropriate levels and repurchase our common shares. We believe that our new brand initiatives, new store openings, merchandise expansion programs, international growth opportunities and our marketing, social media, website and mobile initiatives are significant contributors to our sales growth and plan to continue our investment in these initiatives for all brands. We anticipate our capital expenditures during fiscal 2026 will be approximately $300 million which increased from prior estimates largely due to the timing of expenditures for our distribution network. All fiscal 2026 capital expenditures are expected to be financed by cash flow from operating activities and existing cash and cash equivalents. We believe that our new store investments generally have the potential to generate positive cash flow within a year. We may also enter into one or more acquisitions or transactions related to the expansion of our brand offerings, including additional franchise and joint venture agreements. We believe that our existing cash and cash equivalents, availability under our current credit facility and future cash flows provided by operations will be sufficient to fund these initiatives.