URBAN OUTFITTERS INC

Previous 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.

Current wording

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

Previous wording

Beginning in early 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on a substantial number of imports. In February 2026, the U.S. Supreme Court invalidated many of the existing International Economic Emergency Powers Act ("IEEPA") tariffs. In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection to process refunds for IEEPA tariffs. We filed for refunds for previously paid IEEPA tariffs in April 2026 and estimate to realize approximately $100.0 million during fiscal 2027. Due to uncertainty regarding the timing and amount of refunds, we will recognize a financial benefit when the refunds are realized or deemed realizable using a gain contingency accounting model. The principal portion of the refunds will be reflected as a reduction of cost of sales for amounts related to goods already sold or rented, or as a reduction of inventory or rental product for goods remaining on hand. Any associated interest income received on the tariff refunds will be recognized within "Other income, net" in the Condensed Consolidated Statements of Income.

Current wording

Beginning in early 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on a substantial number of imports. In February 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection to process refunds for IEEPA tariffs. We filed for refunds for previously paid IEEPA tariffs in April 2026 and received substantially all of the refund payments in the second quarter of fiscal 2027. We recognized a one-time financial benefit of $100.1 million during the second quarter of fiscal 2027, of which $95.7 million was recorded as a reduction of "Cost of sales" and $4.4 million was recorded as interest income included in "Other income, net" in the Condensed Consolidated Statements of Income.

Previous wording

In response to the U.S. Supreme Court invalidating many of the IEEPA tariffs, in February 2026 the government instituted incremental global tariffs on all imports under Section 122 of the Trade Act of 1974 ("Section 122") and signaled it may seek higher tariffs. In May 2026, a ruling by the CIT stated that the Section 122 tariffs are unauthorized by the statute, but we are required to continue paying them until July 2026. We are monitoring the legal challenges to these tariffs and whether we will be eligible for additional refunds.

Current wording

In response to the U.S. Supreme Court decision, in February 2026 the government instituted temporary global tariffs under Section 122 of the Trade Act of 1974 ("Section 122"). In May 2026, the CIT ruled that the Section 122 tariffs were unauthorized, but we were required to continue paying them through their expiration on July 24, 2026. We continue to monitor the legal challenges to Section 122 tariffs and whether we will be eligible for additional refunds. Effective July 24, 2026, the government instituted new tariffs under Section 301 of the Trade Act of 1974 ("Section 301") as a result of investigations into forced labor practices of various foreign countries. The government indicated that additional Section 301 tariffs may be implemented in the coming months upon the conclusion of its investigation into excess manufacturing capacity.

Previous 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.

Current wording

The potential for additional tariff increases, increased reciprocal tariffs, other restrictive trade measures by the U.S. or foreign jurisdictions and continuing legal challenges to current and proposed tariff regimes may continue to contribute to uncertain global economic conditions, which may impact our operations and financial results throughout fiscal 2027.

Previous wording

The current conflict in the Middle East, which began during the first quarter of fiscal 2027, has contributed to increased geopolitical uncertainty including impacts to global supply chains and energy prices. We are actively employing supply chain strategies to mitigate higher inbound freight costs and higher delivery expenses driven by the fuel surcharges associated with the ongoing conflict. We will continue to monitor the conflict, the duration and magnitude of which remains highly unpredictable and may continue to negatively impact our operations and financial results throughout fiscal 2027.

Current wording

The current conflict in the Middle East, which began during the first quarter of fiscal 2027, has contributed to increased geopolitical uncertainty and disrupted global supply chains and energy markets. In response, we are actively employing supply chain strategies to mitigate higher inbound and outbound freight costs and higher delivery expenses driven by the fuel surcharges associated with the ongoing conflict. We will continue to monitor the conflict, the duration and magnitude of which remains highly unpredictable and may continue to negatively impact our operations and financial results throughout fiscal 2027.

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 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.

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 through 2027. This legislation 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 and six months ended July 31, 2026. The Company continues to assess the impact of the legislation on our financial statements. Based on current guidance, 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

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.

Current wording

Net sales from the Retail segment accounted for approximately 83.1% of consolidated net sales for the six months ended July 31, 2026, compared to 85.4% 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. 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.

Current wording

Anthropologie Group consists of the Anthropologie, Terrain and Maeve brands. 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 Group stores are located in specialty centers, upscale street locations and enclosed malls. Anthropologie 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 and sells merchandise through franchisee-owned stores in the Middle East. Anthropologie Group's North American Retail segment net sales accounted for approximately 45.1% of total Retail segment net sales for the six months ended July 31, 2026, compared to approximately 46.8% 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 six months ended July 31, 2026, compared to approximately 1.8% for the comparable period in fiscal 2026.

Previous 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.

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's wholesale offerings. FP Group's North American Retail segment net sales accounted for approximately 25.9% of total Retail segment net sales for the six months ended July 31, 2026, compared to approximately 24.4% for the comparable period in fiscal 2026. European Retail segment net sales accounted for approximately 1.4% of total Retail segment sales for both the six months ended July 31, 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 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.

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 14.6% of total Retail segment net sales for the six months ended July 31, 2026, compared to approximately 15.2% for the comparable period in fiscal 2026. European Retail segment net sales accounted for approximately 10.5% of total Retail segment net sales for the six months ended July 31, 2026, compared to approximately 9.6% 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 three months ended April 30, 2026, and the comparable period in fiscal 2026.

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 six months ended July 31, 2026, and the comparable period in fiscal 2026.

Previous wording

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

Current wording

Store data for the six months ended July 31, 2026 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 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.

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 11.0% of consolidated net sales for the six months ended July 31, 2026, compared to approximately 9.3% for the comparable period in fiscal 2026.

Previous 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.

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 5.9% of consolidated net sales for the six months ended July 31, 2026, compared to 5.3% 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, 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.

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 six months ended July 31, 2026.

Previous 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.

Current wording

Net sales for the second quarter of fiscal 2027 were $1.66 billion, compared to $1.50 billion in the second quarter of fiscal 2026. The $157.2 million increase was attributable to a $103.3 million, or 8.0%, increase in Retail segment net sales, a $39.7 million, or 28.6%, increase in Subscription segment net sales and a $14.2 million, or 18.6%, increase in Wholesale segment net sales.

Previous 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.

Current wording

The increase in our Retail segment net sales during the second quarter of fiscal 2027 was due to an increase of $76.8 million, or 6.2%, in Retail segment comparable net sales and an increase of $26.5 million in non-comparable net sales. Retail segment comparable net sales increased 10.0% at FP Group, 8.4% at Urban Outfitters and 3.0% at Anthropologie Group. 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, average order value and units per transaction, while conversion rate 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 second quarter of fiscal 2027 was primarily due to the impact of the 57 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 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.

Current wording

The increase in Subscription segment net sales was primarily driven by a 30.4% increase in the average number of active subscribers in the second quarter of fiscal 2027 as compared to the second quarter of fiscal 2026. The increase in Wholesale segment net sales in the second quarter of fiscal 2027 was driven by a $14.0 million, or 19.2%, increase in FP Group wholesale net sales due to an increase in net sales to specialty customers and department stores.

Previous 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.

Current wording

Total inventory at July 31, 2026, as compared to July 31, 2025, increased by $82.3 million, or 11.8%, to $778.5 million. Total Retail segment inventory increased 12.0% and Retail segment comparable inventory increased 8.4%. Wholesale segment inventory increased 10.0%. The increase in Retail segment inventory was due to the increase in net sales and timing of inventory receipts. The increase in Wholesale segment inventory was due to the increase in net sales.

Previous 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.

Current wording

Income from operations was 17.4% of net sales, or $288.7 million, for the second quarter of fiscal 2027 compared to 11.6% of net sales, or $174.4 million, for the second quarter of fiscal 2026. 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 increase in gross profit rate.

Previous 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.

Current wording

Our effective tax rate for the second quarter of fiscal 2027 was 19.4%, compared to 21.5% in the second quarter of fiscal 2026. The decrease in the effective tax rate for the second quarter of fiscal 2027 was primarily related to the release of a valuation allowance against certain foreign net deferred tax assets of $16.2 million, or 5.4%. The remaining change in the effective tax rate was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings.

Previous 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.

Current wording

Gross profit percentage for the first six months of fiscal 2027 increased by 299 basis points to 40.2% of net sales compared to 37.2% of net sales in the comparable period of fiscal 2026. Gross profit increased to $1.26 billion in the first six months of fiscal 2027 from $1.06 billion in the comparable period of fiscal 2026. The increase in gross profit rate was due to a one-time benefit related to refunds for previously paid IEEPA tariffs of $95.7 million, or 305 basis points. The remaining decrease of 6 basis points in gross profit rate was primarily due to an increase in Retail segment markdowns driven by Anthropologie Group and the impact of a prior year gain of $4.8 million, or 17 basis points, not repeated in the current year period, partially offset by leverage in store occupancy costs due to the increase in comparable Retail segment store net sales. The increase in gross profit dollars was due to higher net sales and the IEEPA tariff refunds.

Previous 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.

Current wording

Selling, general and administrative expenses increased by $83.1 million, or 11.0%, in the first six months of fiscal 2027 compared to the comparable period of fiscal 2026. Selling, general and administrative expenses deleveraged 4 basis points as a percentage of net sales in the first six months of fiscal 2027 to 26.6% compared to the comparable period of fiscal 2026. The deleverage in selling, general and administrative expenses as a percentage of net sales was primarily related to deleverage in marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, along with increased artificial intelligence technology investments benefiting the Company's current and future operations. The deleverage was partially offset by a discrete benefit of $6.9 million, or 22 basis points, in the current year period resulting from the reversal of a litigation accrual, as well as leverage in store payroll expenses due to the growth in Retail segment store net sales. The dollar growth in selling, general and administrative expenses was primarily due to increased marketing expenses to support customer growth and increased net sales in the Retail and Subscription segments, increased store payroll expenses to support the growth in Retail segment store net sales and increased artificial intelligence technology investments benefiting the Company's current and future operations.

Previous 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.

Current wording

The increase in working capital as of July 31, 2026, as compared to January 31, 2026, was primarily due to an increase in inventory. The increase in working capital as of July 31, 2026, as compared to July 31, 2025, was primarily due to a net increase in cash and cash equivalents and current marketable securities and an increase in inventory.

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 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.

Current wording

Our primary recurring source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs. Cash provided by operating activities in the first six months of fiscal 2027 also benefited from the receipt of refunds for previously paid IEEPA tariffs which was a significant driver in the year-over-year increase in operating cash flows.

Previous 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.

Current wording

Cash provided by investing activities in the first six 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 six months of fiscal 2027 was $268.1 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, as well as expand our store base. Cash paid for property and equipment in the first six months of fiscal 2026 was $107.5 million, which was primarily used to expand our store base and distribution network.

Previous 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.

Current wording

Cash used in financing activities in the first six 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 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.

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, invest in artificial intelligence, 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.