Urban Outfitters Inc. URBN Nuuly subscription business continues to stand out as one of the company’s fastest-growing segments, reinforcing the value of its diversified operating model. During the first quarter of fiscal 2027, Nuuly generated $167.3 million in revenues, representing a 34.5% year-over-year increase. The performance was primarily driven by continued growth in subscribers, highlighting rising consumer acceptance of apparel rental as a complementary alternative to traditional retail.
Subscriber expansion remained the key growth catalyst. Average active subscribers increased 33% year over year, adding roughly 110,000 subscribers versus the prior-year period. Management noted that the platform is now approaching 500,000 active subscribers, reflecting sustained demand and effective customer acquisition efforts. Healthy retention rates, combined with targeted marketing campaigns, continue to support consistent subscriber growth and strengthen customer engagement.
Nuuly's financial performance also demonstrated improving operating efficiency. The business generated $10 million in operating profit, translating into a 6% operating margin during the quarter. Operating leverage from the expanding subscriber base more than offset continued investments in marketing, underscoring the platform's ability to scale profitably while maintaining a disciplined approach to long-term growth.
Profitability also continued to improve as Nuuly scaled its operations. Subscription segment gross profit increased 39%, while the gross margin expanded by 85 basis points to 28.7%. Higher sales, supported by a growing subscriber base, helped drive stronger unit economics and demonstrated the business's ability to generate increasing profitability alongside rapid revenue growth.
Management remains focused on expanding Nuuly while improving profitability. The company believes its ability to grow subscribers alongside stronger operating economics highlights the scalability of the business and reinforces confidence in its significant long-term growth potential. Our model estimates that the net sales of the Nuuly segment will increase 20% year over year in fiscal 2027.
URBN’s Price Performance, Valuation & Estimates
Shares of Urban Outfitters have lost 0.7% over the past three months compared with the industry’s 2.7% decline.
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From a valuation standpoint, URBN trades at a trailing price-to-sales ratio of 0.96X, below the industry’s average of 1.48X. It has a Value Score of B.
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The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2027 earnings implies year-over-year growth of 12.7%, while the same for fiscal 2028 indicates an uptick of 10.2%. Estimates for fiscal 2027 and 2028 have been revised upward by 5 cents and 7 cents, respectively, over the past seven days.
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URBN currently sports a Zacks Rank #1 (Strong Buy).
Other Key Picks in Retail
Genesco Inc. GCO is a Nashville-based specialty retail and branded company. It sells footwear and accessories in retail stores. The company flaunts a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Genesco’s current fiscal-year earnings indicates growth of 55.2% from the year-ago actuals. GCO delivered a trailing four-quarter average earnings surprise of 3.8%.
Designer Brands Inc. DBI designs, produces and retails footwear and accessories. It offers shoes, boots, sandals, sneakers, socks, handbags and accessories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Designer Brands’ current fiscal-year earnings and sales suggests growth of 137.5% and 0.5%, respectively, from the year-ago actuals. DBI delivered a trailing four-quarter average earnings surprise of 112.8%.
Tapestry, Inc. TPR is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The company sports a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 36.3% and 13.8%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.
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Urban Outfitters, Inc. (URBN): Free Stock Analysis Report
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