Urban Outfitters Inc. URBN reported better-than-expected first-quarter earnings on Wednesday and highlighted that it was navigating the tariff-induced headwinds with its diversification strategies by sourcing from multiple countries.
What Happened: The company’s Co-President and COO, Frank Conforti, highlighted during the earnings call that “Quickly after the announcement of tariffs, our teams started working on how to mitigate the impacts with a primary focus on the customer’s experience.”
He underscored that this happened through vendor negotiations, shifting countries of origin, changing transportation modes, from air to boat, and “gently and sparingly” raising prices.
“We currently have no single country that accounts for more than 25% of our production. India, Vietnam, and Turkey are our three largest countries of origin, while China represents less than 5%,” he said.
Conforti also reiterated that URBN is confident in achieving 50 to 100 basis points of gross margin improvement for fiscal year 2026 despite tariff uncertainty.
However, company CFO Melanie Marein-Efron said that Urban Outfitters could face “some fashion risk of bringing product in early” in the second quarter as the company had some early receipts to bring in inventory ahead of the uncertain tariff outlook.
However, she said that the inventory also arrived “earlier than planned.”
Why It Matters: Urban Outfitters reported a revenue of $1.33 billion, which beat the Street estimate of $1.28 billion. Also, the earnings of $1.16 per share beat the analyst consensus estimate of 82 cents by 41.46%.
Talking about the second quarter, the CFO also said that “We believe that it is prudent planning to bring in fall inventory, which is less sensitive to fashion early, given the uncertain tariff outlook and any potential supply chain disruptions that could occur in the future.”
URBN shares ended 2.84% lower on Wednesday and rose 17.45% in after-hours. The company has advanced 4.86% on a year-to-date basis and 51.19% over a year.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended lower on Wednesday. The SPY was down 1.69% to $582.86, while the QQQ dropped 1.39% to $513.04, according to Benzinga Pro data.
Benzinga Edge Stock Rankings shows that URBN had a stronger price trend over the short, medium, and long term. Its value ranking was good at the 78.93th percentile; the details of other metrics are available here.
The futures of the S&P 500, Nasdaq 100, and Dow Jones were trading mixed on Thursday.
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