URBAN OUTFITTERS INC

Previous wording

Certain matters contained in this filing with the United States Securities and Exchange Commission (“SEC”) may contain forward-looking statements and are being made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, including geopolitical instability, impacts of the conflict in the Middle East and impacts of the war between Russia and Ukraine and from related sanctions imposed by the United States, European Union, United Kingdom and others, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises (such as the coronavirus (COVID-19)), labor shortages and increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, our effective utilization of technological advancements, including in artificial intelligence, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs such as retaliatory tariffs), border adjustment taxes or increases in duties or quotas, the unexpected closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rat…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain matters contained in this filing with the United States Securities and Exchange Commission (“SEC”) may contain forward-looking statements and are being made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, currency fluctuations, economic conditions and legal or regulatory changes, the effects of war and geopolitical instability, including impacts of the conflicts in the Middle East and impacts of the war between Russia and Ukraine and from related sanctions imposed by the United States, European Union, United Kingdom and others, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, labor shortages and increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, our effective utilization of technological advancements, including in artificial intelligence, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs such as retaliatory tariffs), border adjustment taxes or increases in duties or quotas, the unexpected closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our filings with the SEC, including those set forth in I…

Excerpt shortened here; the source contains the full paragraph.

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, third-party 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, 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

As used in this document, unless otherwise defined, "Anthropologie" refers to our Anthropologie and Terrain brands and "Free People" refers to our Free People and FP Movement brands.

Current wording

As used in this document, unless otherwise defined, "Anthropologie" refers to our Anthropologie, Terrain and Maeve brands and "FP Group" refers to our Free People and FP Movement brands.

Previous wording

During 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on virtually all imports. Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government. Certain of these tariffs have been paused or modified from time to time and the uncertainty of tariff rates among multiple jurisdictions is contributing to overall macroeconomic volatility and increasing recessionary concerns. The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions. These factors may continue to contribute to uncertain global economic conditions (including inflationary costs, consumer spending patterns and volatility in foreign currencies), which may impact our operations.

Current wording

The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions. There also continues to be legal challenges to current and proposed tariff regimes. These factors may continue to contribute to uncertain global economic conditions (including inflationary costs, consumer spending patterns and volatility in foreign currencies), which may impact our operations.

Previous 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);

Current wording

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

Previous wording

Even with these mitigation strategies in place, we 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. We will continue to monitor ongoing developments related to tariffs.

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 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.

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 fiscal 2026 income tax provision nor the Company's interim period income tax provision for the three months ended April 30, 2026. The Company continues to assess the impact of the legislation on our financial statements. We do not expect a material impact to our financial statements for the fiscal year ending January 31, 2027, however, additional guidance from the Internal Revenue Service and U.S. Treasury may affect the interpretation and application of certain provisions.

Previous wording

Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. All Company-owned Retail segment shopping channels are closely integrated, including retail locations, websites, mobile applications, social media and third-party platforms, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. We manage and analyze our performance based on a single Retail segment omni-channel rather than separate channels and believe that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance.

Current wording

Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. All Company-owned Retail segment shopping channels are closely integrated, including retail locations, websites, mobile applications, social media and third-party platforms and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. We manage and analyze our performance based on a single Retail segment omni-channel rather than separate channels and believe that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance.

Previous wording

We monitor Retail segment metrics including customer traffic, conversion rates and average units per transaction at our stores and on our websites and mobile applications. We also monitor average unit selling price and transactions at our stores and average order value on our websites and mobile applications. We believe that changes in any of these metrics may be caused by a response to our brands’ fashion offerings, our marketing campaigns, circulation of our catalogs and an overall growth in brand recognition.

Current wording

We monitor Retail segment metrics including customer traffic, conversion rates and average units per transaction at our stores and on our websites and mobile applications. We also monitor average unit selling price and transactions at our stores and average order value on our websites and mobile applications. We believe that changes in any of these metrics may be caused by a response to our brands’ fashion offerings, our marketing campaigns and an overall growth in brand recognition.

Previous 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.

Current wording

Net sales from the Retail segment accounted for approximately 82.4% of consolidated net sales for the three months ended April 30, 2026, compared to 85.0% for the comparable period in fiscal 2026.

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 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.

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. The Maeve brand is designed to appeal to the modern woman seeking a versatile wardrobe by offering a comprehensive range of women's apparel, shoes and accessories. We are in the early stages of testing Maeve as a standalone brand which we will continue to evaluate over the coming years. 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 and sells merchandise through franchisee-owned stores in the Middle East. Anthropologie's North American Retail segment net sales accounted for approximately 46.5% of total Retail segment net sales for the three months ended April 30, 2026, compared to approximately 48.6% for the comparable period in fiscal 2026. European Retail segment net sales accounted for approximately 1.7% of total Retail segment net sales for the three months ended April 30, 2026, compared to approximately 1.8% for the comparable period in fiscal 2026.

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 24.0% 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.

Current wording

FP Group consists of the Free People brand and the FP Movement brand. 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. FP Group stores are located in enclosed malls, upscale street locations and specialty centers. FP Group 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 FP Group wholesale offerings. FP Group's North American Retail segment net sales accounted for approximately 25.2% of total Retail segment net sales for the three months ended April 30, 2026, compared to approximately 23.8% for the comparable period in fiscal 2026. European Retail segment net sales accounted for approximately 1.3% of total Retail segment net sales for both the three months ended April 30, 2026, and the comparable period in fiscal 2026.

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 15.3% 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.

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 14.3% of total Retail segment net sales for the three months ended April 30, 2026, compared to approximately 14.8% for the comparable period in fiscal 2026. European Retail segment net sales accounted for approximately 10.3% of total Retail segment net sales for the three months ended April 30, 2026, compared to approximately 8.9% for the comparable period in fiscal 2026.

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 nine months ended October 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 three months ended April 30, 2026, and the comparable period in fiscal 2026.

Previous wording

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

Current wording

Store data for the three months ended April 30, 2026 was as follows:

Previous wording

We plan for future store growth for our brands to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements. We plan for future digital channel growth to come from expansion domestically and internationally.

Current wording

We plan for future store growth for our brands to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise agreements. We plan for future digital channel growth to come from expansion domestically and internationally.

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 nine months ended October 31, 2025, compared to approximately 6.8% 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 in their possession that was delivered as part of the customer's monthly subscription rental order or through the Nuuly website or mobile application, which will ship along with their next monthly subscription rental order. Our Subscription segment net sales accounted for approximately 11.3% of consolidated net sales for the three months ended April 30, 2026, compared to approximately 9.4% for the comparable period in fiscal 2026.

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 5.5% of consolidated net sales for the nine months ended October 31, 2025, compared to 5.3% for the comparable period in fiscal 2025.

Current wording

Our Wholesale segment includes the FP Group and Urban Outfitters brand 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 FP Group brands and the BDG and “iets frans” apparel collections under the Urban Outfitters brand. Our Wholesale segment net sales accounted for approximately 6.3% of consolidated net sales for the three months ended April 30, 2026, compared to 5.6% for the comparable period in fiscal 2026.

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 nine months ended October 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, 2026, which are included in our Annual Report on Form 10-K filed with the SEC on April 1, 2026. 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 three months ended April 30, 2026.

Previous 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.

Current wording

Net sales for the first quarter of fiscal 2027 were $1.48 billion, compared to $1.33 billion in the first quarter of fiscal 2026. The $151.8 million increase was attributable to a $90.4 million, or 8.0%, increase in Retail segment net sales, a $42.9 million, or 34.5%, increase in Subscription segment net sales and an $18.5 million, or 24.8%, increase in Wholesale segment net sales.

Previous 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.

Current wording

The increase in our Retail segment net sales during the first quarter of fiscal 2027 was due to an increase of $61.7 million, or 5.6%, in Retail segment comparable net sales and an increase of $28.7 million in non-comparable net sales. Retail segment comparable net sales increased 9.8% at FP Group, 9.3% at Urban Outfitters and 1.9% at Anthropologie. Retail segment comparable net sales increased in both Europe and North America. The overall increase in Retail segment comparable net sales was driven by high single-digit positive growth in digital channel net sales and mid single-digit positive growth in retail store net sales. The digital channel comparable net sales increase was driven by increases in sessions and average order value, while conversion rate and units per transaction decreased. Comparable store net sales increased as a result of higher store traffic and average unit retail, while transactions were flat and conversion rate and units per transaction decreased. The increase in non-comparable net sales during the first quarter of fiscal 2027 was primarily due to the impact of the 59 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 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.

Current wording

The increase in Subscription segment net sales was primarily driven by a 33.3% increase in the average number of active subscribers in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. The increase in Wholesale segment net sales in the first quarter of fiscal 2027 was driven by an $18.3 million, or 26.2%, increase in FP Group wholesale net sales due to an increase in net sales to specialty customers.

Previous 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.

Current wording

Gross profit percentage for the first quarter of fiscal 2027 decreased by 16 basis points to 36.6% of net sales compared to 36.8% of net sales in the first quarter of fiscal 2026. Gross profit increased to $542.6 million in the first quarter of fiscal 2027 from $489.1 million in the first quarter of fiscal 2026. The decrease in gross profit rate was due to a non-recurring gain of $4.8 million, or 36 basis points, recorded in the prior year quarter not repeated in the current year quarter. This was partially offset by a 20 basis point improvement in the underlying gross profit rate primarily due to improved Retail segment markdowns driven by lower markdowns at FP Group and Urban Outfitters, partially reduced by deleverage in initial merchandise costs due to tariffs. The increase in gross profit dollars was due to higher net sales.

Previous 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.

Current wording

Total inventory at April 30, 2026, as compared to April 30, 2025, increased by $63.1 million, or 9.5%, to $726.9 million. Total Retail segment inventory increased 10.6% and Retail segment comparable inventory increased 10.0%. Wholesale segment inventory decreased 1.2%. The increase in Retail segment inventory was due to the increase in net sales as well as early receipts to reduce the potential risk of shipping delays due to the Middle East conflict.

Previous 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.

Current wording

Selling, general and administrative expenses increased by $42.0 million, or 11.7%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. Selling, general and administrative expenses deleveraged 5 basis points as a percentage of net sales in the first quarter of fiscal 2027 to 27.2% compared to the first quarter of fiscal 2026. The deleverage in selling, general and administrative expenses as a percentage of net sales includes a discrete benefit of $6.9 million, or 47 basis points, in the current year quarter due to the reversal of a litigation accrual, offset by 52 basis points of deleverage primarily related to marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, along with increased technology investments to support AI initiatives. The dollar growth in selling, general and administrative expenses was primarily due to increased store payroll expenses to support the growth in Retail segment store net sales, as well as increased marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments.

Previous 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.

Current wording

Income from operations was 9.4% of net sales, or $139.7 million, for the first quarter of fiscal 2027 compared to 9.6% of net sales, or $128.2 million, for the first quarter of fiscal 2026. The increase in operating income dollars was driven by the increase in gross profit dollars. The decrease in operating income rate was driven by the deleverage in selling, general and administrative expenses.

Previous 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.

Current wording

Our effective tax rate for the first quarter of fiscal 2027 was 20.7%, compared to 21.4% in the first quarter of fiscal 2026. The decrease in the effective tax rate for the first quarter of fiscal 2027 was primarily attributable to the favorable impact of equity activity in the current year quarter.

Previous 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.

Current wording

The decrease in working capital as of April 30, 2026, as compared to January 31, 2026, was due to a decrease in cash, cash equivalents and current marketable securities resulting from the repurchases of our common shares under our share repurchase program in the first quarter of fiscal 2027, partially offset by the timing of disbursements and an increase in inventory. The increase in working capital as of April 30, 2026, as compared to April 30, 2025, was primarily due to an increase in inventory and the timing of disbursements, partially offset by a decrease in cash, cash equivalents and current marketable securities.

Previous wording

During the last two years, we have satisfied our cash requirements primarily through our cash flow from operating activities and through the sales and maturities of marketable securities. Our primary uses of cash have been to fund business operations, purchase inventory and rental product, repurchase our common shares, open new stores and expand and improve our distribution network.

Current wording

During the last two years, we have satisfied our cash requirements primarily through our cash flow from operating activities and through the sales and maturities of marketable securities. Our primary uses of cash have been to fund business operations, purchase inventory and rental product, repurchase our common shares, expand and improve our distribution network and open new stores.

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 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.

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 decrease in cash provided by operating activities in the first three months of fiscal 2027 compared to the first three months of fiscal 2026 was primarily due to the timing of disbursements.

Previous 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.

Current wording

Cash provided by investing activities in the first three months of fiscal 2027 and fiscal 2026 primarily related to the net sales and maturities of marketable securities which were primarily used to fund the repurchases of our common shares under our share repurchase program, partially offset by the purchases of property and equipment. Cash paid for property and equipment in the first three months of fiscal 2027 was $193.2 million, which was primarily used to expand and improve our distribution network including our purchase of the Nuuly fulfillment center in Raymore, Missouri in March 2026 that we previously leased. Cash paid for property and equipment in the first three months of fiscal 2026 was $46.2 million, which was primarily used to expand our store base.

Previous 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.

Current wording

Cash used in financing activities in the first three months of fiscal 2027 and fiscal 2026 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 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.

Current wording

During fiscal 2027, we plan to open approximately 54 new Company-owned retail locations, expand or relocate certain existing retail locations, expand our fulfillment center network, invest in logistics capabilities, expand our home office to support our growing business, 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 2027 to be approximately $475 million. All fiscal 2027 capital expenditures are expected to be financed by cash flow from operating activities and existing cash, cash equivalents and marketable securities. 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 agreements. We believe that our existing cash, cash equivalents and marketable securities, availability under our current credit facility and future cash flows provided by operations will be sufficient to fund these initiatives.