Urban Outfitters Beats Q2 Estimates: Retail Sales Up, But Gross Margin Faces Headwinds

Urban Outfitters (URBN) exceeded earnings expectations for the second quarter of fiscal 2025, reporting strong sales growth across various brands. However, the company anticipates a decline in gross margin for the third quarter due to higher markdowns, though they remain optimistic about improvement in the fourth quarter. Despite the challenges, URBN’s continued focus on expanding its footprint and optimizing its retail strategy suggests a positive outlook for the future.

Urban Outfitters’ Earnings: Growth Amidst Challenges

Urban Outfitters, a mid-cap consumer discretionary company, delivered strong Q2 2025 earnings exceeding analyst expectations. However, concerns about the struggling Urban Outfitters brand, despite impressive performance from other segments, caused a decline in share prices. The company acknowledges the need to understand and cater to the Gen-Z customer and address price perception issues.

Urban Outfitters Stock Downgraded Amid Slowing Sales Growth

Telsey Advisory Group downgraded Urban Outfitters (URBN) to Market Perform, citing slowing sales trends and concerns about earnings risk. Despite strong second-quarter results, the company experienced a slight slowdown in retail sales in July and August, leading to a lowered price target. However, the analyst remains optimistic about the company’s overall growth prospects.

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