Urban Outfitters Inc Goldman Sachs Global Consumer and Retail Conference

Thank you very much for having us, Brooke, Goldman. Thank you all for being here. I missed my morning workout this morning.

I am sorry. I talk fast normally already, and I am probably going to be a little sped up, even more so than normal.

Opening remarks, it was just another incredible second quarter and quarterly performance for us, 10% top-line growth to $1.7 billion. All retail segment brands comp positive again, both channels comp positive. Free People clicking on all cylinders at 10%. Urban Outfitters just continuing their turn and their momentum here in North America. Global, the brand comp was 8%, and Anthropologie at 3%, which I think is something almost like 5 years of positive comps now for Anthropologie. Nuuly, another just impressive quarter at 29% of top-line growth and driving that type of growth while increasing profitability, dollars, and rates, and wholesale was up 19%. It was our most profitable operating profit quarter ever. We grew year over year quarter by 11%, so just a fantastic performance.

As proud as we are, honestly, of all the brands, I think the one thing that I want to continually stress, and I think that maybe can be a little underappreciated for us right now, is the strength of the collective. I think we've now had eight straight quarters of record sales and record operating profits. I sit here, and I start to reflect at now being here 20 years. I'm not quite the tenure Danny's got in the front row, but there's the bald spots growing for sure. I think about 20 years ago, we really had two significant brands with Urban Outfitters and Anthropologie. When both were clicking at the same time, it was great. Then when one would stub its toe a little bit, it definitely caused some inconsistency in our performance.

Now we've got three meaningful brands with the size of Free People, between Urban, Anthropologie, and Free People. I think we've got two of the best growth stories in the industry with Nuuly and FP Movement. The power of the collective is just incredible. If you think about a few years ago, you had Urban Outfitters that we were going through a leadership transition, and the business wasn't performing up to expectations. We had a startup that was just starting to find its way in operating profit, but we were still delivering top-line growth and bottom-line growth on the backs of Free People and Anthropologie. Right now, there's a lot of conversation about Anthropologie being a little bit off of the bullseye, but you've got Free People clicking on all cylinders, you've got Nuuly delivering robust growth, and you've got the Urban Outfitters turnaround.

I think that the strength of the collective is honestly the thing that we're the most proud of right now. The quarterly results and the individual pieces, we're certainly very proud of the brands and our leaders, but I think the strength of the collective is really something meaningful right now that is a strong differentiator for us and something that we're very excited about going forward. Just that diversification in the model. If you think about the age demographic from Urban to Free People to Anthropologie, you think about the channels from stores to digital to wholesale to subscription rental. There's just a lot of ways and a lot of levers that we can win sort of quarter after quarter.

Great. We choreographed a little bit. I am going to hand this one to Melanie, so she is not just sitting down there. Melanie, you want to talk to Anthropologie, please?

Absolutely. Thank you, Frank, and thanks again, Brooke, for having us. We are very optimistic that, as Frank said, they are slightly off the bullseye and that they will return to mid-single digit comp growth at some point. The confidence we have in it is really based on the leadership and team that they have. I am sorry echo. I apologize. Tricia Smith joined the group over 5 years ago, and they have had 22 quarters of positive comp growth, and I think it is almost 4 years of double-digit operating profit rate. So they have had strong results, and it is really driven by the team that she has brought around her and the strategies that they have put in place. Modernizing the product, bringing in new consumers into the brand without losing any of the diehard Anthropologie fans, and modernizing the selling environment.

The team is agile and kind of following the reads that they got this summer, and they are confident that the business will improve.

I think for Anthropologie right now, we are in still such a strong fashion cycle and such a strong bottom cycle remains. They have gotten really strong reads with the early promotional events that they ran, I think it was in the end of July. Then we are just so excited about where the fashion is going and excited about the reads that they felt like some of the things that we are winning, they just needed to transition out of faster and pour into the new, which is the model. We always talk about the bullseye. They are not just throwing darts right now. They have got a strong amount of conviction as to where they are going, and where the business and what the assortment should look like.