Item 1A. Risk Factors
There are risks associated with an investment in our securities. The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained in this Annual Report on Form 10-K. Any of these risk factors could lead to material adverse effects on our business, operating results and financial condition. These risk factors reflect the Company's beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. Additional risks and uncertainties not currently known to us or that we currently do not view as material may also become materially adverse to our business in future periods or if circumstances change. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
Macroeconomic and Industry Risks
Our reportable segments are sensitive to economic conditions, inflation, market disruptions and other factors that affect consumer confidence and discretionary spending.
Consumer purchases and rentals of discretionary retail items and specialty retail products, including our products, may decline during recessionary periods and also may decline at other times when disposable income is lower. A prolonged economic downturn could have a material adverse impact on our business, financial condition or results of operations.
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Economic conditions, both on a global level and in particular markets, may have significant effects on consumer confidence and discretionary spending that would in turn, affect our business or the retail industry generally. Some of these economic conditions include inflation, wages and employment, consumer debt, reductions in net worth based on severe market declines, residential real estate and mortgage markets, taxation, grocery, fuel and energy prices, interest rates, volatility in credit markets, credit availability, political and economic crises, the impact of retaliatory or reciprocal tariffs on global trade policies and other macroeconomic factors. These factors may affect consumer purchases and rentals of our merchandise and adversely impact our results of operations and continued growth. The impacts of inflation could lead us to increase prices, and if customers respond negatively to such price increases, could adversely impact our sales, gross margin and operating income. The economic conditions may also affect department stores and specialty retail businesses and impact their ability to purchase merchandise from our Wholesale segment. It is difficult to predict near term and/or future economic, capital and credit market conditions and what impact they will have on our business.
In addition, there is a risk that consumer confidence may decline as a result of market disruptions caused by severe weather conditions, unseasonable weather, or natural disasters, including as a result of climate change, health hazards, actual or threatened health epidemics and pandemics, terrorist activities, political crises or other major events or the prospect of these events, which could negatively impact our financial position and results of operations. The recovery we receive under any insurance we maintain for these purposes may be delayed or may be insufficient to fully offset potential losses.
We rely heavily on our ability to identify changes in fashion.
Customer tastes and fashion trends are volatile and can change rapidly. Our success depends in part on our ability to effectively predict and respond to changing fashion tastes and consumer demands, and to translate market trends into appropriate product offerings. If we are unable to predict or respond to changing styles or trends successfully or if we misjudge the market for products or new product lines, our sales may be impacted, and we may be faced with a substantial amount of unsold inventory or missed opportunities. In response, we may be forced to rely on additional markdowns or promotional sales to dispose of excess, slow-moving inventory, which could decrease our revenues or gross profit margins. Conversely, if we underestimate consumer demand for our merchandise, our manufacturers fail to supply quality products in a timely manner, or we experience transportation capacity constraints and delays, we may experience inventory shortages, which may negatively impact customer relationships, diminish brand loyalty and result in lost sales. In addition, we could be at a competitive disadvantage if we are unable to leverage data analytics to obtain timely customer insights to appropriately respond to customer demands.
Compared to our Retail and Subscription segments, our Wholesale segment is more sensitive to changes in fashion trends because of longer lead times in the manufacturing and sale of its apparel. Our fashion decisions, if unsuccessfully forecasted, constitute a material risk and may have an adverse effect on our financial condition and results of operations.
Existing and increased competition in the specialty retail, wholesale apparel and apparel subscription rental industries may reduce our net revenues, profits and market share.
The specialty retail and wholesale apparel industries are each highly competitive. Our Retail segment competes on the basis of, among other things, the location of our stores, website and mobile application presentation, website and mobile application design, the breadth, quality, style, price and availability of our merchandise and the level of customer service offered. Our Anthropologie and Free People stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers.
Additionally, the internet and other technologies facilitate competitive entry and comparison shopping in our Retail and Subscription segments. Our digital channel competes against numerous websites and mobile applications, which may have a greater volume of web traffic or more effective marketing through online media and social networking sites. We offer an omni-channel shopping experience for our customers and use social media and mobile applications as a way to interact with them to enhance their shopping experiences. Omni-channel retailing is constantly evolving, and we must keep pace with changing customer expectations and new developments by our competitors. There is no assurance that we will be able to continue to successfully maintain or expand our digital sales channels and respond to shifting consumer traffic patterns and digital buying trends. Our inability to adequately respond to these risks and uncertainties or successfully maintain and expand our digital business could have an adverse impact on our results of operations.
In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. Our Wholesale segment competes with numerous wholesale companies, many of whose products have a wider distribution, based on the quality, fashion and price of its product offerings. Our Nuuly subscription business primarily operates in an apparel subscription rental market in which our competitors offer varying types of subscription rental models and products that may have greater appeal to consumers.
New competitors frequently enter, and existing competitors enter or increase their presence in, the markets in which we operate, expand their merchandise offerings, add new sales channels or change their pricing strategies, all of which affect the competitive landscape. In addition, many of our competitors have greater name recognition and greater financial, marketing and other resources than us.
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We cannot assure you that we will continue to be able to compete successfully against existing or future competitors. Changing economic and retail environments may result in our competitors forcing a markdown or promotional sales environment, which could impair our ability to achieve our historical profit margins. Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations.
Our business depends on effective marketing to drive high customer traffic.
We have many initiatives in our marketing programs particularly with regard to our websites, mobile applications and our social media presence. If our competitors increase their spending on marketing, if our marketing expenses increase, if our marketing becomes less effective than that of our competitors, or if we do not adequately leverage technology and data analytics capabilities needed to generate concise competitive insight, we could experience a material adverse effect on our results of operations. Among other factors, (1) a failure to sufficiently innovate or maintain effective marketing strategies and (2) a growing number of U.S. and foreign laws and regulations that make it more difficult or costly to digitally market, such as the European Union General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act of 2018 (“CCPA”), may adversely impact our ability to maintain brand relevance and drive increased sales.
We rely significantly on international sources of production.
We receive a substantial portion of our apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources. The majority of these purchases are settled in U.S. dollars. To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their products, the following risks may adversely impact our business:
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Any event causing a disruption of imports, including the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns, acts of terrorism, natural disasters and port security considerations or labor disputes;
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New initiatives may be proposed that may have an impact on the trading status of certain countries and may include retaliatory duties, tariffs or other trade sanctions that, if enacted, could increase the cost of products purchased from suppliers in such countries or restrict the importation of products from such countries;
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Changes to U.S. and foreign trade policies, including the enactment of tariffs (such as retaliatory or reciprocal tariffs), border adjustment taxes, and increases in duties or quotas applicable to the products we sell could increase the cost and reduce the supply of products available to us. In 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on a substantial number of imports. Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government. Certain of these tariffs have been paused or modified from time to time as trade discussions ensued. In February 2026, in response to the U.S. Supreme Court invalidating many of the existing International Economic Emergency Powers Act tariffs, the administration instituted incremental global tariffs on all imports and has signaled it may seek higher tariffs. 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. While we have been and continue to regularly evaluate global trade policies and take appropriate actions when necessary to mitigate the risks associated with tariffs, even with our various mitigation strategies in place, tariffs could have a negative impact on our financial results;
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Impacts of ongoing conflicts around the globe (such as the hostilities in the Middle East and the war between Russia and Ukraine) and the related sanctions imposed by the United States, the European Union, United Kingdom and others, as well as any potential delays in shipments through the regions and additional transportation costs;
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Changes resulting from the United States-Mexico-Canada Agreement (USMCA);
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Significant labor issues, such as strikes or shortage of workers to manage inbound vessels at any of our ports in the United States or abroad, which could make it difficult or impossible for us to bring foreign-sourced products into the United States;
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Financial or political instability in any of the countries in which the products we purchase are manufactured, if the instability affects the production or export of merchandise from those countries;
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A significant disruption in the supply of the fabrics or raw materials used by our vendors in the manufacture of our products, as our vendors may not be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all;
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Fluctuation in the prices of raw materials, such as cotton and synthetic fabrics, as increases in such costs can increase the cost of merchandise and potentially lead to reduced consumer demand or reduced margins;
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The shortage of transportation capacity (such as the availability of inbound ocean containers and vessels, cargo space for inbound airplanes, and trucks to transport products from ports to our distribution facilities) can result in transportation cost
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premiums and also delay delivery of merchandise to our distribution facilities leading to an increase in markdowns both of which can adversely affect our gross profit;
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The cost of fuel is a significant component in transportation costs; therefore, increases in petroleum prices can adversely affect our gross profit;
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Increased regulation related to environmental costs, such as carbon taxes and emissions management systems, which could adversely affect our costs of doing business, including utility, transportation and logistics costs; and
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Decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.
Our operating results fluctuate from period to period.
Our business experiences seasonal fluctuations in net sales and operating income, with a more significant portion of net sales typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory. Any decrease in sales or gross profit during this period, or in the availability of working capital needed in the months preceding this period, could have a more material adverse effect on our business, financial condition and results of operations than in other periods. Seasonal fluctuations also affect our inventory levels, as we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant amount of inventory, especially before the holiday selling periods. If we are not successful in selling our inventory during this period, we may be forced to rely on markdowns or promotional sales to dispose of the excess inventory or we may not be able to sell the inventory at all, which could have a material adverse effect on our business, financial condition and results of operations.
War, terrorism, civil unrest, other violence, or public health crises, including epidemics and pandemics, may negatively impact availability of our merchandise, customer traffic to our stores or otherwise adversely impact our business.
In the event of war (including the ongoing hostilities in the Middle East and the war between Russia and Ukraine), terrorism, civil unrest or other violence, our ability to obtain merchandise available for sale in our stores or on our websites may be negatively impacted. A substantial portion of our merchandise is imported from other countries, see “We rely significantly on international sources of production.” If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution and fulfillment centers and stores, as well as fulfilling website and mobile application orders.
Our stores are located in public areas where large numbers of people typically gather. Terrorist attacks, threats of terrorist attacks, civil unrest, or health epidemics and pandemics involving public areas could cause people not to visit areas where our stores are located. In addition, other types of violence in malls or in other public areas could lead to lower customer traffic in areas in which we operate stores. If any of these events were to occur, we may be required to suspend operations temporarily or for an extended period of time in some or all of our stores in the impacted areas, which could have a material adverse impact on our business, financial condition and results of operations.
Fluctuations in foreign currency exchange rates could have a material adverse impact on our business.
Due to our international operations, we are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and liabilities denominated in currencies other than the U.S. dollar. In addition, certain of our subsidiaries transact in currencies other than their functional currency, including intercompany transactions, which results in foreign currency transaction gains or losses. As a result, our sales, gross profit and gross profit rate from international operations will be negatively impacted during periods of a strengthened U.S. dollar relative to the functional currencies of our foreign subsidiaries. Fluctuations in foreign currency exchange rates could adversely impact consumer spending, delay or prevent successful penetration into new markets or adversely affect the profitability of our international operations. Certain events, such as the uncertainty as to the on-going hostilities in Ukraine and the Middle East and uncertainty with respect to trade policies, tariffs (such as retaliatory or reciprocal tariffs) and government regulations affecting trade between the U.S. and other countries, have increased global economic and political uncertainty in recent years and could result in volatility of foreign currency exchange rates as these events develop.
We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts, and our liquidity and operations could be adversely affected if a financial institution holding such funds fails.
We hold a portion of our cash and cash equivalents in deposit accounts at multiple financial institutions. The balance held in these accounts typically exceeds the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000 per depositor and per institution. If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay
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in accessing all or a portion of our funds. Any such loss or lack of timely access to these funds could adversely impact our short-term liquidity and operations.
Strategic Risks
We may not be successful in expanding our business, executing our omni-channel strategy, opening new retail stores or extending our existing store leases.
The retail environment is rapidly evolving with customer shopping preferences continuing to change. We have made significant investments in capital spending and labor to develop our omni-channel strategy pursuant to which all available Company-owned Retail segment shopping channels are fully integrated, including stores, websites, mobile applications and customer contact centers. As omni-channel retailing continues to grow and evolve, our customers increasingly interact with our brands through smartphones, tablets and a variety of media, and expect seamless integration across all touchpoints. Our success depends on our ability to introduce innovative means of engaging our customers and our ability to respond to shifting consumer traffic patterns and digital buying trends. There is no assurance that we will be able to continue to successfully maintain or expand our digital sales channels and omni-channel initiatives, or that we will realize a return on our significant investments, and failure to adequately respond to these risks and uncertainties or to successfully maintain and expand our digital business may have an adverse impact on our results of operations.
Our growth strategy also depends on our ability to open and operate new retail stores on a profitable basis and to effectively extend our existing store leases. There can be no assurance that these stores will achieve long term success. Further, our operating complexity will increase as our store base grows, and we may face challenges in managing our future growth. Such growth will require that we continue to expand and improve our operating capabilities, and expand, train and manage our employee base. We may be unable to hire and train a sufficient number of qualified personnel or successfully manage our growth.
Our expansion prospects also depend on a number of other factors, many of which are beyond our control, including, among other things, competition, the availability of financing for capital expenditures and working capital requirements and the availability of suitable sites for new store locations on acceptable lease terms. There can be no assurance that we will be able to achieve our store expansion goals, nor is there any assurance that our newly opened stores will achieve revenue or profitability levels comparable to those of our existing stores in the time periods estimated by us, or at all. If our stores fail to achieve, or are unable to sustain, acceptable revenue, profitability and cash flow levels, we may incur additional store asset impairment charges, significant costs associated with closing those stores or both, which could adversely affect our results of operations and financial condition.
We may not be successful expanding our business internationally and our ability to conduct business in international markets may be adversely affected by legal, regulatory, political, economic, and public health risks.
Our current growth strategy includes plans to continue to open new stores, expand our digital marketing and grow our wholesale customer base and retail and digital presence internationally over the next several years. As we seek to expand internationally, we face competition from more established international competitors. In addition, international stores and digital operations have different operational characteristics, including employment and labor, transportation, logistics, real estate and legal requirements. Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ internationally, and as a result, sales of our merchandise may not be successful, or the margins on those sales may not be in line with those we anticipate. Additionally, our ability to conduct business internationally may be adversely impacted by political, economic, and public health risks, as well as the global economy. Any challenges that we encounter as we expand internationally may divert financial, operational and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations.
To the extent we expand internationally under franchise arrangements, we may face counterparty and/or operational risk. In addition, we are increasingly exposed to foreign currency exchange rate risk with respect to our revenue, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We currently do not utilize hedging instruments to mitigate these foreign currency risks. In the future, however, we may initiate strategies to hedge certain foreign currency risks that may not succeed in offsetting all of the negative impact of foreign currency exchange rate movements on our business and results of operations.
As we continue to expand our international operations, we are subject to certain U.S. laws, including the Foreign Corrupt Practices Act, as well as the laws of the foreign countries in which we operate, including the U.K. Bribery Act. We are required to ensure compliance with these laws. Violations of these laws could subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results.
Changes in international trade and customs regulations, including the imposition of new tariffs or additional administrative requirements for the import and export of goods, could add friction and cost to transportation and logistics. Other countries in which we do business may adopt similar provisions. Any of these effects, among others, could materially adversely affect our business, results of operations, and financial condition.
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We may not be successful in introducing additional store concepts or brands.
We may, from time to time, seek to develop and introduce new concepts or brands in addition to our established brands. Our ability to succeed in the early stages of new concepts could require significant capital expenditures and management attention. Additionally, any new concept is subject to certain risks, including customer acceptance, competition, product differentiation, challenges relating to economies of scale in merchandise sourcing and the ability to attract and retain qualified personnel, including management and designers. There can be no assurance that we will be able to develop and grow these or any other new concepts to a point where they will become profitable, or generate positive cash flow. If we cannot successfully develop and grow these new concepts, our financial condition and results of operations may be adversely impacted.
We may develop new concepts through acquisitions, and we may not be successful in integrating those acquisitions.
Acquisitions involve numerous risks, including the diversion of our management’s attention from other business concerns, the possibility that current operating and financial systems and controls may be inadequate to deal with our growth and the potential loss of key employees.
We also may encounter difficulties in integrating any businesses we may acquire with our existing operations. The success of these transactions depends on our ability to successfully merge corporate cultures, operations and financial systems; realize cost reduction synergies; and, as necessary, retain key personnel of acquired companies.
In addition, there may be liabilities that we fail, or are unable, to discover in the course of performing due diligence investigations on any company that we may acquire, or have recently acquired. Also, there may be additional costs relating to acquisitions including, but not limited to, possible purchase price adjustments. Any of our rights to indemnification from sellers to us, even if obtained, may not be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business or property acquired. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business and financial condition.
Operational Risks
We rely on information technology systems, and a material disruption or failure of such systems could adversely affect our business.
The efficient operation and successful growth of our business depends upon our information systems, including our ability to operate, maintain and develop them effectively. A failure of those systems could disrupt our business, subject us to liability, damage our reputation or otherwise impact our financial results.
Our operations, in particular our digital sales, are subject to numerous risks, including reliance on third-party computer hardware/software, rapid technological change (including the successful utilization of data analytics, artificial intelligence and machine learning), liability for online content, violations of state or federal laws, including those relating to online privacy, credit card fraud, risks related to the failure of the information technology systems that operate our websites, including computer viruses, telecommunications failures and electronic break-ins and similar disruptions. The potential issues associated with implementing technology initiatives and the time and resources required in seeking to optimize the benefits of new elements of our systems and infrastructure could reduce the efficiency of our operations in the short term.
We regularly evaluate our information technology systems and have implemented modifications and/or upgrades to the information technology systems that support our business. Modifications include replacing legacy systems with successor systems, making changes to legacy systems or acquiring new systems with new functionality. There are inherent risks associated with replacing and modifying our information technology systems, including inaccurate system information and system disruptions, which we may not be able to alleviate through testing, training, staging implementation and in-sourcing certain processes, or by securing appropriate commercial contracts with third-party vendors supplying such replacement and redundancy technologies; however, we may not be effective in identifying and mitigating every risk to which we are exposed. Further, if our information systems or other technologies are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations in the interim. Although we have not experienced any interruptions or shutdowns of our systems for any material length of time for the reasons described above, such disruptions could lead to delays in our business operations and, if significant, affect our sales and profitability.
If we are unable to safeguard against security breaches with respect to our information technology systems, our business and our reputation may be adversely affected.
During the course of business, we obtain and transmit confidential customer, employee, vendor and Company information through our information technology systems. The protection of customer, employee, vendor and Company data is critical. Although we have implemented systems and procedures that are designed to protect customer, employee, vendor and Company information, prevent data loss and other security breaches, and otherwise identify, assess, and analyze cybersecurity risks, these measures may not be effective.
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Development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures increase and become more sophisticated.
We face an evolving threat landscape in which cybercriminals, among others, employ an increasingly complex array of techniques (including through the use of artificial intelligence) designed to access personal data and other information, including, for example, the use of fraudulent or stolen access credentials, malware, ransomware, phishing, denial of service, supply chain and other types of attacks. Our and our suppliers’ and service providers’ information technology systems also may be damaged or disrupted, or personal or sensitive information compromised, from a number of other causes, including power outages, system failures, catastrophic events, or employee inadvertence.
While, to the best of our knowledge, we have not experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a security breach or cyber-attack that could materially increase financial risk to the Company or our customers, such a security breach or cyber-attack could adversely affect our business and operations, including by damaging our reputation and our relationships with our customers, employees and shareholders, exposing us to litigation, fines, penalties or remediation costs and inhibiting our ability to accept debit and credit cards as forms of payment. Further, because many of our corporate and showroom employees maintain hybrid office and remote work schedules, our business may be more vulnerable to cybersecurity breach attempts due to offsite working by employees, increased use of public Wi-Fi and use of office equipment off premises.
Our efforts to protect customer, employee, vendor and Company information may also be adversely impacted by data security or privacy breaches that occur at our third-party vendors or unrelated third parties whose information technology systems we use directly or indirectly. While we believe we are diligent in selecting vendors, systems and procedures to enable us to maintain the integrity of our systems, we recognize that there are inherent risks and we cannot assure that any future interruptions, shutdowns or unauthorized breaches or disclosures will not occur.
The regulatory environment surrounding information security and privacy is demanding, with the frequent imposition of new and changing requirements, such as the GDPR and CCPA. With a heightened degree of public awareness and scrutiny regarding information security and privacy, customers have a high expectation that companies will adequately protect their personal information from cyber-attack or other security breaches. See Item 1C: Cybersecurity for further discussion.
If we fail to effectively utilize technological advancements, including artificial intelligence, our business and financial performance could be negatively impacted.
Our industry is highly competitive and is undergoing rapid changes due to technological advancements in areas such as artificial intelligence (AI), data analytics and machine learning. Our future success depends in part on our ability to effectively utilize these technological advancements. Our competitors may outpace us in incorporating AI into their business and engagement with customers, which could adversely affect our competitiveness and operational outcomes. Our efforts to utilize these technological advancements may not be successful, may result in substantial integration and maintenance costs and may expose us to additional risks. These technologies are subject to evolving laws, regulations, guidance and industry standards, and the use of AI tools by our employees or our third-party service providers may expose us to legal liability or regulatory risk, including with respect to third-party intellectual property, privacy, publicity, contractual, or other rights. Personal data within any dataset, collected from our business, is vulnerable to unintentional dissemination or intentional destruction, which could lead to heightened business and security costs, reputational damage, administrative penalties or legal expenses. The content, analyses or recommendations generated by AI, if deficient, inaccurate or biased, could adversely impact our business, financial condition and operational results, as well as our reputation. Moreover, ethical concerns associated with AI could lead to brand damage, competitive disadvantages or legal repercussions. Our use of artificial intelligence systems to automate, streamline processes and increase efficiency may increase the likelihood of system failures or errors in our processes or create negative experiences for our customers. Any problems with our implementation or use of AI or other technological advancements could negatively impact our business or results of our operations.
In addition, customers are increasingly using AI shopping assistant tools, which could transform commerce in ways we fail to anticipate and impact our ability to attract and retain customers. If we or our third-party providers fail to deliver effective, reliable, and user-friendly digital platforms that meet changing customer expectations, we could lose sales, harm our reputation, and face competitive disadvantages. Rapidly evolving AI regulations may impose additional compliance obligations and costs, and any failure to comply could result in penalties or adversely affect our business and financial results.
We depend on key personnel and may not be able to retain or replace these employees or recruit additional qualified personnel, which could adversely impact our business.
We believe that we have benefited substantially from the leadership and experience of our senior executives, including our co-founder, Chairman of the Board and Chief Executive Officer, Richard A. Hayne. The loss of the services of any of our senior executives could have a material adverse effect on our business and prospects, as we may not be able to find suitable management personnel to replace departing executives on a timely basis. In addition, if our senior executives do not fully integrate within the structure of our management team and core business, we may be adversely affected. We do not have an employment agreement with our Chief Executive
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Officer or most other key personnel. In addition, as our business expands, we believe that our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for personnel in the retail industry. Our inability to meet our staffing requirements in the future could impair our ability to increase revenue and could otherwise harm our business.
Increases in labor costs, including wages, and labor shortages could adversely impact our operational results, financial condition and results of operations.
Our retail store and distribution and fulfillment center operations are subject to laws governing such matters as minimum wages, working conditions and overtime pay. As minimum wage rates increase or related laws and regulations change, we may need to increase not only the wage rates of our minimum wage employees, but also the wages paid to our other hourly or salaried employees. Any increase in the cost of our labor could have an adverse effect on our operating results, financial condition and results of operations. In addition, we operate in a competitive labor market, in which wage actions by other retailers and companies may require us to increase salary and wage rates, bonuses and other incentives in order to attract and retain talented employees across all of our retail store, distribution and fulfillment center, showroom and home office operations. Labor shortages and increased employee turnover could also increase our labor costs. This in turn could lead us to increase prices and, if customers respond negatively to such price increases, could adversely impact our sales, gross margin and operating income. We are also subject to risks related to other store and distribution and fulfillment center expenses and operational costs. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in our prices to customers, our profitability may decline.
Damage or disruption to our distribution or fulfillment centers could have material adverse effects on our operations.
We operate multiple distribution and fulfillment centers worldwide to support our Retail, Subscription and Wholesale segments. See Item 1: Business—Company Operations—Distribution for more information on our distribution and fulfillment centers. Damage to, or disruption of the operations at, any of these centers due to work stoppages, system failures, accidents, economic conditions, severe weather or natural disasters, including as a result of climate change, demographic and population changes, health epidemics and pandemics, as well as other unforeseen events and circumstances could have a material adverse effect on our financial condition, results of operations or cash flows. Our distribution and fulfillment centers utilize computer-controller and automated equipment, which means the operations are complicated and may be subject to a number of risks related to security or computer viruses or malware, the proper operation of software and hardware, power interruptions or other system failures. In addition, if any of our distribution or fulfillment centers were to close unexpectedly or operate significantly below historical efficiency levels for an extended period of time, the other centers may not be able to support the resulting additional volume demands. As a result, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores and customers during the time it takes for us to re-open or replace the center.
Legal, Tax, Regulatory and Compliance Risks
We may be unable to protect our trademarks and other intellectual property rights.
We believe that our trademarks and service marks are important to our success and our competitive position due to their name recognition with our customers. We devote substantial resources to the establishment and protection of our trademarks and service marks on a worldwide basis. We are not aware of any valid claims of infringement or challenges to our right to use any of our trademarks and service marks in the United States. Nevertheless, there can be no assurance that the actions we have taken to establish and protect our trademarks and service marks will be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of the trademarks, service marks and intellectual property of others. Also, others may assert rights in, or ownership of, our trademarks and other intellectual property, and we may not be able to successfully resolve these types of conflicts to our satisfaction.
In addition, we face additional risks as we continue to expand our business outside the United States. Effective trademark and service mark protection may not be available in every country in which we sell our products, or the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. This could increase the risk that our intellectual property is misappropriated. We may also encounter jurisdictions in which one or more third parties have a pre-existing trademark registration. This may prevent us from registering our own marks in those jurisdictions and could adversely affect our ability to effectively operate our business or market certain products.
Manufacturers and third-party vendors may not comply with our legal and social compliance program requirements, which may subject us to risks related to evolving environmental, social and governance regulations and activities that may adversely affect our business.
We have a manufacturer compliance program that is monitored on a regular basis by our buying offices. Our production facilities are either certified as in compliance with our program, or areas of improvement are identified and corrective follow-up action is taken.
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All manufacturers are required to follow applicable national labor laws, as well as international compliance standards regarding workplace safety, such as standards that require clean and safe working environments, clearly marked exits and paid overtime. We believe in protecting the safety and working rights of the people who manufacture the products we sell, while recognizing and respecting cultural and legal differences found throughout the world. We require our third-party vendors to register through an online website and agree that they and their suppliers will abide by certain standards and conditions of employment. If our third-party vendors fail to comply with our social compliance program, our reputation may be adversely affected.
Various governing bodies and regulators have been focused on Environmental, Social and Governance ("ESG") matters and related disclosures. This has resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting ESG-related requirements and expectations. For example, developing and acting on ESG-related initiatives, including design, sourcing and operations decisions, and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time-consuming. These ESG initiatives are subject to evolving regulatory requirements, including the potential adoption of new laws or regulations, and changes in the interpretation of existing laws or regulations.
If we fail to meet our global environmental and sustainability goals or if such goals do not meet the expectations of our customers or shareholders, our reputation could be adversely affected, which could adversely affect our business, financial performance and growth.
We maintain an Impact Committee, co-chaired by our Chief Sourcing & GTC Officer and Chief Administrative Officer and reporting to our Board of Directors, to set sustainability policies and goals, provide oversight of those policies, and track and report progress toward our goals. The Impact Committee also maintains functional working groups, which focus on three areas: Environmental & Social, Data Privacy & Security, and Governance. The working groups are comprised of operational management representatives and are responsible for recommending policies and goals to the Impact Committee, implementing policies established by the Impact Committee, and tracking and reporting to the Impact Committee on progress towards goals falling within the working groups' ambit. These policies and goals and their status are published in the Company's Impact Report. There can be no assurances that our ESG policies, goals or actions will be perceived as adequate. Any failure or perceived failure to achieve our goals or demonstrate progress towards the environmental, social and governance ideals of our customers and shareholders could harm our reputation and value of our brands, which could adversely affect our business, financial performance and growth.
We may also communicate certain ESG-related initiatives and goals in our SEC filings or in other public disclosures, such as the Company's Impact Report. These ESG-related initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost-effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure. Further, statements about our ESG-related initiatives and goals, and progress against these goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. In addition, we could be criticized for the scope or nature of such initiatives or goals, or for any revisions to these goals, by our customers and shareholders, including whether implementing ESG-related initiatives or goals are deemed inconsistent with our fiduciary duties or other legal or regulatory obligations. If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG-related goals on a timely basis, or at all, it could harm our reputation and the value of our brands, which could adversely affect our business, financial performance, growth and stock price.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including but not limited to revenue recognition, leases, impairment of goodwill and intangible assets, inventory, income taxes and litigation, are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change or increase volatility of our reported or expected financial performance or financial condition. See Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of recent accounting pronouncements.
We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities.
Our effective income tax rate depends on many factors, including changes in tax laws or treaties and their interpretation, accounting guidance, and our ability to sustain tax positions on examination. We operate in multiple jurisdictions, which increases the complexity of our tax profile and may result in greater volatility in our effective tax rate. Adverse audit outcomes or increased compliance requirements could increase our tax obligations and adversely affect our results of operations.
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International tax reform initiatives, including the Organization for Economic Cooperation and Development's global minimum tax framework, have been enacted or proposed in certain jurisdictions in which we operate, and additional guidance continues to evolve. In addition, recent and future changes to U.S. tax legislation, including the provisions of the 2025 One Big Beautiful Bill Act, may affect our tax obligations. While the ultimate impact of these developments remains uncertain, they could increase our tax expense or effective tax rate in future periods.
We are subject to numerous regulations and legal matters that could adversely affect our business.
We are subject to customs, child labor, tax, employment, privacy, truth-in-advertising, e-commerce and other laws, including consumer protection regulations and zoning and occupancy ordinances that regulate retailers generally and/or govern the importation, promotion and sale of merchandise and the operation of retail stores and distribution and fulfillment centers. Additional legal and regulatory requirements (such as the “conflict minerals” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010), and the fact that foreign laws occasionally conflict with domestic laws, have increased the complexity of the regulatory environment and the cost of compliance. If these laws change without our knowledge, or are violated by importers, designers, manufacturers or distributors, we could experience delays in shipments and receipt of products or be subject to fines or other penalties under the controlling regulations, any of which could adversely affect our business. In addition, various governmental authorities in jurisdictions in which we do business regulate the quality and safety of the merchandise we sell. If we or our vendors are unable to comply with regulatory requirements on a timely basis or at all, or to adequately monitor new regulations that may apply to us, significant fines or penalties could be incurred or we could have to curtail some aspects of our sales or operations, which could have a material adverse effect on our financial results.
Moreover, legal actions may be filed against us from time to time, including class actions. These actions may assert commercial, tort, intellectual property, customer, employment, data privacy, securities or other claims. We may also be impacted by litigation trends, including class action lawsuits involving former employees, consumers and shareholders, which could have a material adverse effect on our reputation, the market price of our common shares, or our results of operations, financial condition and cash flows.
Item 1B. Unresolved Staff Comments
We have no outstanding comments with the staff of the SEC.
Item 1C. Cybersecurity
Risk Management and Strategy
We are committed to safeguarding the personal information of our customers and potential customers as well as our own sensitive data and information. The full Board of Directors (the "Board") is responsible for the Company's general risk oversight, including cybersecurity and data privacy risks. Members of the Company's senior management also have day-to-day responsibility for risk management and establishing risk management practices. The Board oversees senior management in their risk management capacities, regularly reviewing and analyzing the Company's risk levels and reviewing and analyzing inventory risk each quarter as part of their review of quarterly financial statements. Members of the Company's senior management have an open line of communication to the Board and have the discretion to raise issues from time-to-time in any manner they deem appropriate.
The Audit Committee supports the Board by considering and reviewing the adequacy of the Company’s internal controls with management and the Company’s internal audit department, including the processes for identifying significant cybersecurity/data privacy risks or exposures, and elicits recommendations for the improvements to such procedures where desirable.The Audit Committee periodically reviews the Company’s data security and privacy policies, procedures and risks. Members of management are expected to report matters to the Audit Committee or to the Board as a whole, as appropriate. Management’s reporting on issues relating to risk management typically occurs through direct communication with directors or committee members as matters requiring attention arise.
We maintain a Data Privacy & Security working group that is responsible for setting data security and privacy policies, overseeing those policies, and tracking and reporting on data security and privacy performance. The working group is comprised of our Chief Information Security Officer, Global Data Privacy Officer, Chief Administrative Officer, and General Counsel.The working group reports to the Audit Committee at least annually. In addition, the Company has an Impact Committee that maintains functional working groups that focus on a number of issues, including Data Privacy & Security.The Impact Committee reports to the Board at least annually.The Company's Global Data Privacy Officer reports to the Audit Committee at least quarterly and provides the Audit Committee with updates regarding the Company's data privacy environment. We also have a Chief Information Security Officer who provides quarterly updates to management and reports to the Audit Committee at least annually regarding the Company's data security environment.
Our Chief Information Security Officer is certified as a Certified Information Systems Security Professional (CISSP) and an Information Systems Security Management Professional (ISSMP). He has significant experience in monitoring, implementation and management within the disciplines of information and personal data security, disaster recovery, and asset management. He has over 10 years of service in U.S. Army Cyber Operations and within U.S. Army Cyber Command. Our Global Data Privacy Officer has served
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as our head of Internal Audit for over 10 years and has received privacy-related certifications from the International Association of Privacy Professionals (IAPP) including Certified Information Privacy Manager (CIPM) and Certified Information Privacy Professional / Europe (CIPP/e).
We perform an annual training exercise for all employees and hold several cybersecurity awareness campaigns throughout the year. Where deemed appropriate, we engage independent security professionals to evaluate the Company’s security environment. For example, we comply with Payment Card Industry Standards and are audited annually by a third party to confirm compliance with those Standards. In addition, the Company employs third party penetration testers to identify potential security weaknesses for evaluation and remediation. We also partner with government organizations and industry associations to share intelligence and quickly respond to emergent threats.
In order to identify, assess, protect, detect, respond to and recover from cybersecurity threats, we seek to employ multiple industry best practices, processes and controls to minimize the personal information in our possession, including pseudonymization, anonymization, tokenization and encryption. In addition, the Company maintains technical and organizational measures to ensure that personal information is accessible only by authorized personnel. In the event of a data breach, the Company is committed to notifying impacted customers and/or appropriate government entities in accordance with applicable law without unreasonable delay and in all events within the time period specified by applicable law.
The Company plans to use reasonable, cost effective, and secure methods for notifications in the event of a data breach. While we have experienced and may continue to experience certain cybersecurity incidents, we do not believe any such incidents incurred to date have materially affected our Company, results of operations, or financial condition. Additional information about cybersecurity risks we face is discussed in Item 1A — "Risk Factors — Operational Risks — 'If we are unable to safeguard against security breaches with respect to our information technology systems, our business and our reputation may be adversely affected'," which should be read in conjunction with the information above.
Item 2. Properties
Home Offices. Since 2006, our North American home office has been located in several buildings on one campus in the historic core of the Philadelphia, Pennsylvania Navy Yard. The consolidated offices at the Navy Yard campus allow for an efficient operation of our Philadelphia-based offices and will help to support our growth needs for the foreseeable future. Our North American home offices are approximately 575,000 square feet.
Our European home office occupies approximately 70,000 square feet at the former Truman Brewery Site in London, England. The office houses all of our brand and shared leadership teams as well as a wholesale showroom and photo studio. The term of this lease is set to expire in July 2029, and we have the option to renew for up to an additional 10 years.
Distribution. We operate multiple distribution and fulfillment centers worldwide to support our Retail, Subscription and Wholesale segments in North America and Europe.
Retail Segment
Our Retail segment distribution and fulfillment centers receive and distribute our retail store merchandise and fulfill website and mobile application orders around the world. The primarily Retail segment facilities that support our North America Retail segment operations are as follows:
•
1,000,000 square foot omni-channel fulfillment center we own in Gap, Pennsylvania;
•
291,000 square foot distribution center we own in Gap, Pennsylvania;
•
956,000 square foot omni-channel fulfillment center we own in Indiana, Pennsylvania;
•
880,000 square foot omni-channel fulfillment center we own in Kansas City, Kansas;
•
463,000 square foot fulfillment center we own in Reno, Nevada; and
•
214,500 square foot distribution center we lease in Reno, Nevada, which is set to expire in June 2027, and we have the option to renew for up to an additional twenty years.
Our European Retail segment operations are supported by a 400,000 square foot omni-channel fulfillment center we own in Peterborough, England and a third-party logistics provider in the Netherlands.
Subscription Segment
Our Subscription segment operations are supported by the following facilities:
•
1,024,000 square foot fulfillment center in Raymore, Missouri which we operated under a lease until we purchased it in March 2026; and
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•
309,000 square foot fulfillment center we lease in Bristol, Pennsylvania. The lease is set to expire in July 2034, and we have the option to renew for up to an additional ten years.
Wholesale Segment
Our Wholesale segment operations are predominantly supported by our omni-channel fulfillment centers in Gap, Pennsylvania and Peterborough, England.
Improvements in recent years, as described in Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources, were necessary to adequately support our growth. We believe that our centers are well maintained and in good operating condition.
Retail Locations. All of our retail locations are leased, well maintained and in good operating condition. Our retail locations generally have initial lease terms of five to fifteen years with renewal options for an additional five to ten years. Total estimated selling square feet for locations open, under lease as of January 31, 2026, by Anthropologie, Free People brand, FP Movement brand and Urban Outfitters was approximately 1,837,000, 406,000, 133,000 and 2,118,000, respectively. The average store selling square feet is approximately 7,200 for Anthropologie, 2,300 for the Free People brand, 1,500 for the FP Movement brand and 8,400 for Urban Outfitters. Selling square feet can sometimes change due to factors such as floor moves, use of staircases and cash register configuration.
The following table shows the location of each of our existing retail locations, as of January 31, 2026:
Franchisee-Owned Stores(1) 2 — — 7 — 9
(1)
Located in the Middle East.
Wholesale Showrooms. In addition to the stores listed above, the Wholesale segment operates sales and showroom facilities in London, Los Angeles, New York City and Dallas that are leased through 2029, 2030, 2033 and 2036, respectively.
Item 3. Legal Proceedings
We are party to various legal proceedings arising from normal business activities. Management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common shares are traded on the NASDAQ Global Select Market under the symbol “URBN.”
Holders of Record
On March 25, 2026, there were 74 holders of record of our common shares.
Dividend Policy
Our current credit facility includes certain limitations on the payment of cash dividends on our common shares. We have not paid any cash dividends since our initial public offering and do not anticipate paying any cash dividends on our common shares in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
All of the Company’s equity compensation plans have been approved by its shareholders. See Note 11, “Share-Based Compensation,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for details of the Company’s equity compensation plans and outstanding awards. Additional information about our equity compensation plans is incorporated herein by reference to Item 12 of this Annual Report on Form 10-K.
Stock Performance
The following graph and table compares the cumulative total shareholder return on our common shares with the cumulative total return on the Standard and Poor’s 500 Composite Stock Index and the Standard and Poor’s 500 Apparel Retail Index for the period beginning January 29, 2021, and ending January 30, 2026, assuming the reinvestment of any dividends and assuming an initial
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investment of $100 in each. The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of the common shares or the referenced indices.
BasePeriodJan-21 INDEXED RETURNSYears Ended
Company/Market/Peer Group Jan-22 Jan-23 Jan-24 Jan-25 Jan-26
A summary of the repurchases of our common shares under the Company's share repurchase program for the quarter ended January 31, 2026, is as follows:
(1)
In addition to the shares repurchased under the share repurchase program, for the quarter ended January 31, 2026, the Company acquired and subsequently retired 2,845 common shares from employees to meet payroll tax withholding requirements on vested share-based awards. These shares do not reduce the number of shares that may yet be purchased under our publicly announced share repurchase program.
(2)
On June 4, 2019, the Company's Board of Directors authorized the repurchase of 20,000,000 shares under a share repurchase program. See Note 12, "Shareholders' Equity," of the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information regarding the Company's share repurchases.
Item 6. Selected Financial Data
Reserved.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We operate under three reportable segments – Retail, Subscription and Wholesale. Our Retail segment primarily includes our Anthropologie, Free People, FP Movement and Urban Outfitters brands. Our Retail segment products and services are sold directly to our customers through our retail locations, websites, mobile applications, social media and third-party digital platforms, customer contact centers and franchisee-owned stores. Our Subscription segment includes the Nuuly brand, which offers customers a more sustainable way to explore fashion primarily through a monthly women’s apparel subscription rental service. Our Wholesale segment includes our Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. Our Wholesale segment primarily designs, develops and markets apparel, intimates, activewear and shoes.
Our fiscal year ends on January 31. All references to our fiscal years refer to the fiscal years ended on January 31 in those years. For example, our fiscal year 2026 ended on January 31, 2026, our fiscal year 2025 ended on January 31, 2025, and our fiscal year 2024 ended on January 31, 2024.
As used in this document, unless otherwise defined, "Anthropologie" refers to our Anthropologie, Terrain and Maeve brands and "Free People" refers to our Free People and FP Movement brands.
Macroeconomic Environment and Other Recent Developments
During 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on a substantial number of imports. Certain foreign jurisdictions responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government. Certain of these tariffs have been paused or modified from time to time and the uncertainty of tariff rates among multiple jurisdictions is contributing to overall macroeconomic volatility and increasing recessionary concerns. In February 2026, in response to the U.S. Supreme Court invalidating many of the existing International Economic Emergency Powers Act ("IEEPA") tariffs, the government instituted incremental global tariffs on all imports and has signaled it may seek higher tariffs. 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. The process for obtaining refunds for IEEPA tariffs is currently not finalized, but we are analyzing available options to preserve our refund rights and expect further guidance. 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.
We have been and continue to regularly evaluate global trade policies and take appropriate actions when necessary to mitigate the risks associated with tariffs. These actions include:
•
Negotiating better terms with our vendors;
•
Shifting our countries of origin (where possible) to enable the dual sourcing of most of our own branded products (we currently have no single country that represents the majority of our production);
•
Shifting our mode of transportation from air to ocean; and
•
Gently raising prices in a strategic fashion where we believe we could without affecting the overall customer experience.
Even with these mitigation strategies in place, we believe that tariffs could have a negative impact on our financial results.
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. The Company continues to assess the impact of the legislation on our consolidated financial statements. Additional guidance from the Internal Revenue Service and U.S. Treasury may affect the interpretation and application of certain provisions.
Retail Segment
Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. All Company-owned Retail segment shopping channels are closely integrated, including retail locations, websites, mobile applications, social media and third-party platforms and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. We manage and analyze our performance based on a single Retail segment omni-channel rather than separate channels and believe that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance.
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Our comparable Retail segment net sales data is equal to the sum of our comparable store and comparable digital channel net sales. A store is considered to be comparable if it has been open at least 12 full months, unless it was materially expanded or remodeled within that year or was not otherwise operating at its full capacity within that year due to store specific closures from events such as damage from fire, flood and natural weather events. A digital channel is considered to be comparable if it has been operational for at least 12 full months. Sales from stores and digital channels that do not fall within the definition of comparable store or digital channel are considered to be non-comparable. Franchise net sales and the effects of foreign currency translation are also considered non-comparable.
We monitor Retail segment metrics including customer traffic, conversion rates and average units per transaction at our stores and on our websites and mobile applications. We also monitor average unit selling price and transactions at our stores and average order value on our websites and mobile applications. We believe that changes in any of these metrics may be caused by a response to our brands’ fashion offerings, our marketing campaigns and an overall growth in brand recognition.
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 47.2% of total Retail segment net sales for fiscal 2026, compared to approximately 47.8% of total Retail segment net sales for fiscal 2025. European Retail segment net sales accounted for approximately 1.8% of total Retail segment net sales for both fiscal 2026 and fiscal 2025.
The Free People brand focuses its product offering on private label merchandise targeted to 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. Free People stores are located in enclosed malls, upscale street locations and specialty centers. Free People 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 Free People and FP Movement brands' wholesale offerings. Free People's North American Retail segment net sales accounted for approximately 23.8% of total Retail segment net sales for fiscal 2026, compared to approximately 23.4% of total Retail segment net sales for fiscal 2025. European Retail segment net sales accounted for approximately 1.2% of total Retail segment net sales for fiscal 2026, compared to approximately 1.1% of total Retail segment net sales for fiscal 2025.
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 15.3% of total Retail segment net sales for fiscal 2026, compared to approximately 16.2% of total Retail segment net sales for fiscal 2025. European Retail segment net sales accounted for approximately 10.0% of total Retail segment net sales for fiscal 2026, compared to approximately 8.9% of total Retail segment net sales for fiscal 2025.
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 fiscal 2026 and fiscal 2025.
Net sales from the Retail segment accounted for approximately 85.7%, 88.2% and 90.8% of total consolidated net sales for fiscal 2026, 2025 and 2024, respectively.
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Store data for fiscal 2026 was as follows:
January 31, Stores Stores January 31,
Anthropologie
Free People
Free People Brand
Free People Brand Global Total 167 18 (5 ) 180
Urban Outfitters
Menus & Venues (2) 9 — — 9
Franchisee-Owned Stores (3) 9 — — 9
(1)
FP Movement brand stores are all located in North America.
(2)
Menus & Venues includes various casual restaurants and event venues, all of which are located in North America.
(3)
Franchisee-owned stores are located in the Middle East.
Selling square footage by brand as of January 31, 2026, and January 31, 2025, was as follows:
Selling square footage (in thousands):
(1)
Menus & Venues locations and franchisee-owned stores are not included in selling square footage.
We plan for future store growth for our brands to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise agreements. We plan for future digital channel growth to come from expansion domestically and internationally.
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Projected store openings and closings for fiscal 2027 are as follows:
January 31,2026 ProjectedOpenings ProjectedClosings January 31,2027
Menus & Venues 9 1 (1 ) 9
Franchisee-Owned Stores 9 — — 9
Subscription Segment
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. Net sales from the Subscription segment accounted for approximately 9.2%, 6.8%, and 4.6% of total consolidated net sales for fiscal 2026, 2025 and 2024, respectively.
Wholesale Segment
Our Wholesale segment includes the Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets women’s contemporary apparel, intimates, FP Movement activewear and shoes under the Free People and FP Movement brands and the BDG and “iets frans” apparel collections under the Urban Outfitters brand. Net sales from the Wholesale segment accounted for approximately 5.1%, 5.0% and 4.6% of total consolidated net sales for fiscal 2026, 2025 and 2024, respectively.
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.
Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K. We believe that the following discussion addresses our critical accounting policies, which 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.
Revenue Recognition
Merchandise: Merchandise is sold through retail stores and the digital sales channel, as well as to wholesale customers, franchise partners and subscription customers. Revenue is recognized when control of the promised goods is transferred to the customer. We have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation. Accordingly, we will recognize merchandise revenue for the Retail segment for our single performance obligation at the point of sale, when furniture is delivered or at the time of shipment for non-furniture merchandise, which is when transfer of control to the customer occurs.
A subscription customer may purchase merchandise through the Nuuly website or mobile application, which will ship along with their next monthly subscription rental order. We recognize revenue for these merchandise sales at the time of shipment. A subscription customer may also elect to purchase merchandise already in their possession that was delivered as part of their monthly subscription rental order. We recognize revenue for these merchandise sales when the customer completes the transaction through the website or mobile application.
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Revenue does not include taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. Revenue is recognized net of estimated customer returns. Uncollectible accounts receivable in the Retail and Subscription segments primarily results from unauthorized credit card transactions. We maintain an allowance for doubtful accounts for our Wholesale segment accounts receivable, which we review on a regular basis and believe is sufficient to cover potential credit losses and billing adjustments. Payment terms in our Wholesale segment vary by customer.
Subscription Fees: Revenue for the Subscription segment is primarily generated through monthly subscription fees. The monthly subscription rental fee is recognized over the monthly period over which the customer's monthly subscription fee pertains. The subscription automatically renews on a monthly basis until cancelled or paused by the customer at which point the customer will not be billed for future months until the subscription is no longer paused.
Gift Cards: We account for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer. At the time of issuance, we have an open performance obligation for the future delivery of promised goods or services. The liability remains outstanding until the card is redeemed by the customer, at which time we recognize revenue. Over time, a portion of the outstanding gift cards will not be redeemed by the customer which we refer to as “breakage.” Revenue is recognized from breakage over time in proportion to gift card redemptions. Judgment is used in determining the amount of breakage revenue to be recognized and is based on historical gift card redemption patterns. Gift card breakage revenue is included in net sales and is not material. Our gift cards do not expire.
Sales Return Reserve
We record a sales return reserve for estimated product returns where the sale has occurred during the period reported, but the return is likely to occur subsequent to the period reported. The reserve for estimated product returns is based on our most recent historical return trends. If the actual return rate is materially different than our estimate, sales returns would be adjusted in the future. The costs of returns are recorded as a current asset rather than net with the sales return reserve. As of January 31, 2026, and 2025, reserves for estimated sales returns totaled $77.0million and $90.4 million, representing 3.5% and 4.4% of total liabilities, respectively.
Inventory
We value our inventory, which consists primarily of general consumer merchandise held for sale, at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method and includes the cost of merchandise and import-related costs, including freight, import duties and taxes and agent commissions. A periodic review of inventory is performed in order to determine if inventory is properly stated at the lower of cost or net realizable value. Factors we consider in our review, such as future expected consumer demand and fashion trends, current aging, current and anticipated retail markdowns or wholesale discounts and class or type of inventory, are analyzed to determine estimated net realizable value. Criteria that we consider in our review of aging trends include average selling cycle and seasonality of merchandise, the historical rate at which merchandise has sold below cost during the prior 12 months and the value and nature of merchandise currently held in inventory and priced below original cost. A provision is recorded to reduce the cost of inventory to its estimated net realizable value, if appropriate. Any significant unanticipated changes in the factors noted above could have a significant impact on the value of our inventory and our reported operating results. Our estimates generally have been accurate, and our reserve methods have been applied on a consistent basis. The majority of inventory at January 31, 2026, and 2025 consisted of finished goods. Raw materials and work-in-process were not material to the overall inventory value. Inventory as of January 31, 2026 and 2025 totaled $700.9million and $621.1 million, representing 14.0% and 13.7% of total assets, respectively.
Rental Product
The cost of our Subscription segment rental product is amortized to cost of sales over the subscription period based on the cost of each unit rented, which is estimated based on the number of times the unit is expected to be rented and the cost of the rental product. Lost, damaged and retired rental product is also charged to cost of sales. We make assumptions as to the number of times each unit can be rented. If the actual number of times a unit can be rented were to vary significantly from our estimates, it could materially affect the amount of rental product amortization included in cost of sales. Rental product is included in "Other assets" in the Consolidated Balance Sheets. Purchases of rental product were $232.4 million, $175.7 million, and $150.7 million for fiscal 2026, 2025 and 2024, respectively. Rental product as of January 31, 2026, and January 31, 2025, totaled $246.4 million and $216.1 million, representing 4.9% and 4.8% of total assets, respectively.
Impairment of Long-lived Assets
We review the carrying values of our definite-lived, long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events that result in an impairment review include plans to close a retail location, distribution or fulfillment center, a significant decrease in the operating results of a long-lived asset or significant adverse changes in the business climate. Our retail locations are reviewed for impairment at the retail location level, which is the lowest level at which individual cash flows can be identified. Newly opened retail locations may take time to generate positive operating and cash flow results. Factors such
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as store type (e.g., mall versus free-standing), location (e.g., urban area versus college campus or suburb), current marketplace awareness of our brands, local customer demographic data and current fashion trends are all considered in determining the time frame required for a retail location to achieve positive financial results. When events indicate that an asset may be impaired and the estimated undiscounted cash flows (based on forecasts of sales and gross profit) are less than the carrying amount of the asset, the impaired asset is adjusted to its estimated fair value and an impairment loss is recorded. The estimated fair value of the asset or asset group is based on future cash flows of the asset or asset group. For lease right-of-use assets, the Company determines the estimated fair value of the assets by comparing the discounted contractual rent payments to estimated market rent using an acceptable valuation methodology. During fiscal 2026, we recorded impairment charges for four retail locations, totaling $2.0 million, with a carrying value after impairment of $9.9 million related to the right-of-use assets. During fiscal 2025, we recorded impairment charges for one retail location, totaling $0.8 million, with a carrying value after impairment of $1.5 million related to the right-of-use assets. During fiscal 2024, we recorded impairment charges for 15 retail locations, totaling $3.6 million, with a carrying value after impairment of $41.0 million related to the right-of-use assets. Additionally, during fiscal 2024 we recorded an asset impairment charge of $6.4 million related to the write-off of "Property and Equipment, net" of the Nuuly Thrift marketplace which the Company wound down in fiscal 2025.
Leases
We have operating leases for stores, distribution and fulfillment centers, corporate offices and equipment that are recognized as right-of-use assets and lease liabilities. We sublease certain properties to third parties. We have elected not to record a lease liability and right-of-use asset for leases with original terms of 12 months or less. We have elected the practical expedient to not separate non-lease components from lease components as it pertains to real estate leases.
Store leases generally have initial lease terms that range from 5 to 15 years, some of which contain options to extend the lease for one or two 5-year periods. Payments related to a renewal period are included in the lease liability and right-of-use asset only when we are reasonably certain that we will exercise the option to renew the lease for an extended period of time. Certain leases may contain variable lease payments such as rent based on a percentage of net sales. Variable lease payments may be subject to a breakpoint threshold of fixed rent. Variable lease payments, other than those that depend on an index or a rate, are not included in the measurement of the lease liability. The lease liability is calculated at the present value of certain future payments, discounted using our incremental borrowing rate, which approximates the rate of interest we would pay to borrow an amount equal to the lease payments on a fully collateralized basis over a similar term. Significant judgment is used in determining the incremental borrowing rate related to estimates for credit rating, credit spread and the impact of collateral. We developed incremental borrowing rates at a lease portfolio level. The right-of-use asset is initially equal to the value of the lease liability less any amounts received from the landlord as incentives or tenant improvement allowances.
Accounting for Income Taxes
As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the tax jurisdictions in which we operate. This process involves estimating our actual current tax obligations together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income. A valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax asset will not be realized. In making such a determination, we consider all material available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. Actual results could differ from this assessment if adequate taxable income is not generated in future periods. Net deferred tax assets as of January 31, 2026, and January 31, 2025, totaled $35.6million and $48.5 million, respectively, representing less than 1.0% and 1.1% of total assets, respectively.
To the extent we believe that recovery of a deferred tax asset is at risk, we establish valuation allowances. To the extent we establish valuation allowances or increase the allowances in a period, we record additional income tax expense in the Consolidated Statements of Income. Valuation allowances were $26.3 million as of January 31, 2026, and $32.5 million as of January 31, 2025. Valuation allowances are based on evidence of our ability to generate sufficient taxable income in certain foreign and state jurisdictions. In the future, if enough evidence of our ability to generate sufficient future taxable income in these jurisdictions becomes apparent, we would be required to reduce our valuation allowances, resulting in a reduction in “Income tax expense” in the Consolidated Statements of Income. On a quarterly basis, management evaluates the likelihood that we will realize the deferred tax assets and adjusts the valuation allowances, if appropriate.
We consider certain earnings of non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future United States cash generation will be sufficient to meet future United States cash needs and our specific plans for reinvestment of those subsidiaries’ earnings. Should we decide to repatriate the foreign earnings, we would need to adjust our income tax provision in the period we determined that the earnings will no longer be indefinitely invested outside the United States.
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Results of Operations
As a Percentage of Net Sales
The tables below set forth, for the periods indicated, the results of operations and the percentage of our net sales represented by certain statement of operations data. The tables should be read in conjunction with the discussions that follow.
(amounts in millions)
Fiscal Year EndedJanuary 31,
Store impairment and lease abandonment charges (1) 2.0 4.6 11.9
Asset impairment (2) — — 6.4
Interest expense (4.9 ) (6.1 ) (7.7 )
AS A PERCENTAGE OF NET SALES
Store impairment and lease abandonment charges (1) 0.0 0.1 0.2
Selling, general and administrative expenses 26.2 26.2 26.0
Asset impairment (2) — — 0.1
Income from operations 9.8 8.5 7.2
Interest expense (0.1) (0.1) (0.2)
Income before income taxes 9.7 9.0 7.4
Period over Period Change:
(1)
During fiscal 2026, we recorded store impairment charges for four retail locations, totaling $2.0 million. During fiscal 2025, we recorded store impairment charges for one retail location and lease abandonment charges for one retail location, totaling $4.6 million. During fiscal 2024, we recorded store impairment charges for 15 retail locations and lease abandonment charges for two retail locations, totaling $11.9 million.
(2)
During fiscal 2024, we recorded a charge of $6.4 million related to the write-off of "Property and equipment, net" of the Nuuly Thrift marketplace which the Company wound down in fiscal 2025.
(3)
During fiscal 2026, we made a $46.0 million charitable contribution to a donor-advised fund.
Fiscal 2026 Compared to Fiscal 2025
Net sales in fiscal 2026 increased by 11.1% to $6.17 billion, from $5.55 billion in fiscal 2025. The $614.7 million increase was attributable to a $386.0 million, or 7.9%, increase in Retail segment net sales, a $190.0 million, or 50.2%, increase in Subscription segment net sales and a $38.7 million, or 14.0%, increase in Wholesale segment net sales.
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The increase in our Retail segment net sales during fiscal 2026 was due to an increase of $278.8 million, or 6.0%, in Retail segment comparable net sales and an increase of $107.2 million in non-comparable net sales. Retail segment comparable net sales increased 7.3% at Urban Outfitters, 5.9% at Anthropologie and 4.8% at Free People. Retail segment comparable net sales increased in both Europe and North America. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in both digital channel sales and retail store sales. The digital channel net sales increase was driven by increases in sessions and units per transaction, while average order value and conversion rate decreased. Comparable retail store net sales increased as a result of higher store traffic, transactions, conversion rate and average unit retail, which were partially offset by a decrease in units per transaction. The increase in non-comparable net sales during fiscal 2026 was due to the impact of the 78 net new Company-owned stores and restaurants opened since the prior comparable period and the positive impact of foreign currency translation.
The increase in Subscription segment net sales during fiscal 2026 was primarily driven by a 45.3% increase in average active subscribers in the current year versus the prior year period. The increase in Wholesale segment net sales in fiscal 2026 was driven by a $39.1 million, or 15.2%, increase in Free People wholesale sales primarily due to increases in sales to specialty customers, partially offset by a decrease of less than $1.0 million in Urban Outfitters wholesale sales.
Gross profit percentage for fiscal 2026 increased to 36.0% of net sales, from 34.7% of net sales in fiscal 2025. Gross profit increased to $2.22 billion for fiscal 2026 from $1.93 billion in fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters and Free People, leverage in store occupancy costs due to the increase in comparable Retail segment net sales and leverage in delivery expense due to a reduction in packages per order, partially offset by deleverage in initial merchandise costs. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate. Additionally, the Company recorded $2.0 million of store impairment charges during fiscal 2026, and $4.6 million of store impairment and lease abandonment charges during fiscal 2025.
Total inventory at January 31, 2026 increased by $79.8 million, or 12.8%, to $700.9 million from $621.1 million at January 31, 2025. Total Retail segment inventory increased 13.4% and Retail segment comparable inventory increased 5.3%. Wholesale segment inventory increased 8.5%. The increase in inventory for both segments was due to the increase in sales and timing of inventory receipts.
Selling, general and administrative expenses increased by $159.2 million, or 11.0%, compared to the prior year, and expressed as a percentage of net sales, leveraged 2 basis points. The leverage in selling, general and administrative expenses as a percentage of net sales was primarily related to leverage in store payroll expenses due to the Retail segment stores net sales growth. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the growth in Retail segment store net sales.
Income from operations for fiscal 2026 was 9.8% of net sales, or $605.6 million, compared to 8.5% of net sales, or $473.8 million, for fiscal 2025. The increase in operating income dollars was primarily driven by the increase in gross profit dollars. The increase in operating income rate was primarily due to the higher gross profit rate.
During fiscal 2026, the Company made a $46.0 million charitable contribution to a donor-advised fund, which is included in "Other expense" in our Consolidated Statements of Income.
Our effective tax rate for fiscal 2026 was 22.1% compared to 19.5% in fiscal 2025. The increase in the effective tax rate was primarily due to the non-recurrence of a significant tax reserve release recorded in the prior year. See Note 10, “Income Taxes,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for a reconciliation of the statutory U.S. federal income tax rate to our effective tax rate.
Fiscal 2025 Compared to Fiscal 2024
Net sales in fiscal 2025 increased by 7.7% to $5.55 billion, from $5.15 billion in fiscal 2024. The $397.4 million increase was attributable to a $218.0 million, or 4.7%, increase in Retail segment net sales, a $142.5 million, or 60.4%, increase in Subscription segment net sales and a $36.9 million, or 15.5%, increase in Wholesale segment net sales.
The increase in our Retail segment net sales during fiscal 2025 was due to an increase of $151.2 million, or 3.4%, in Retail segment comparable net sales and an increase of $66.8 million in non-comparable net sales. Retail segment comparable net sales increased 8.9% at Free People and 7.7% at Anthropologie and decreased 8.7% at Urban Outfitters. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in digital channel sales and low single-digit positive growth in retail store sales. The digital channel net sales increase was driven by increases in sessions, while average order value decreased. Conversion rate and units per transaction were flat. Comparable retail store net sales increased as a result of higher store traffic and transactions, which were partially offset by a decrease in units per
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transaction. Conversion rate and average unit retail price were flat. The increase in non-comparable net sales during fiscal 2025 was due to the impact of the 33 net new Company-owned stores and restaurants opened since the prior comparable period and the positive impact of foreign currency translation.
The increase in Subscription segment net sales during fiscal 2025 was primarily driven by a 51.3% increase in average active subscribers in the current year versus the prior year period. The increase in Wholesale segment net sales in fiscal 2025 was driven by a $39.1 million, or 17.9%, increase in Free People wholesale sales primarily due to increases in sales to specialty customers and department stores, partially offset by a decrease of $2.2 million in Urban Outfitters wholesale sales.
Gross profit percentage for fiscal 2025 increased to 34.7% of net sales, from 33.3% of net sales in fiscal 2024. Gross profit increased to $1.93 billion for fiscal 2025 from $1.72 billion in fiscal 2024. The increase in gross profit rate was primarily due to higher initial merchandise markups for all segments primarily driven by Company cross-functional initiatives. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate. Additionally, the Company recorded $4.6 million of store impairment and lease abandonment charges during fiscal 2025, and $11.9 million of store impairment and lease abandonment charges during fiscal 2024.
Total inventory at January 31, 2025 increased by $70.9 million, or 12.9%, to $621.1 million from $550.2 million at January 31, 2024. Total Retail segment inventory increased 10.1%. Retail segment comparable inventory increased 11.3%. Wholesale segment inventory increased 43.7%. The increase in inventory for both segments was to support increased sales and planned early receipts.
Selling, general and administrative expenses increased by $113.7 million, or 8.5%, compared to the prior year, and expressed as a percentage of net sales, deleveraged 19 basis points. The deleverage in selling, general and administrative expenses as a rate to sales was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the growth in Retail segment store net sales.
Income from operations for fiscal 2025 was 8.5% of net sales, or $473.8 million, compared to 7.2% of net sales, or $369.8 million, for fiscal 2024. The increase in operating income dollars was primarily driven by the increase in gross profit. The increase in operating income rate was primarily due to the higher gross profit rate.
Our effective tax rate for fiscal 2025 was 19.5% compared to 24.6% in fiscal 2024. The decrease in the effective tax rate was primarily due to the tax benefit from the release of a portion of our income tax reserves as a result of a lapse of the statute of limitations for federal tax purposes. See Note 10, “Income Taxes,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for a reconciliation of the statutory U.S. federal income tax rate to our effective tax rate.
Liquidity and Capital Resources
The following tables set forth certain balance sheet and cash flow data for the periods indicated. These tables should be read in conjunction with the discussion that follows:
(amounts in millions)
January 31,
Cash, cash equivalents and marketable securities $ 1,157.8 $ 1,020.6 $ 779.2
Fiscal Year Ended
January 31,
Net cash provided by operating activities $ 575.2 $ 502.8 $ 509.4
Net cash used in investing activities (311.7 ) (308.8 ) (521.6 )
Net cash used in financing activities (191.4 ) (77.1 ) (12.1 )
The increase in working capital at January 31, 2026, as compared to January 31, 2025, and January 31, 2024, was primarily due to the increases in cash, cash equivalents and current marketable securities and inventory, partially offset by the timing of disbursements.
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During the last three years, we have satisfied our cash requirements primarily through our cash flow from operating activities, and through the sales and maturities of marketable securities. Our primary uses of cash have been to fund business operations, purchase inventory and rental product, repurchase our common shares, open new stores and expand and improve our distribution network.
Cash Flows from Operating Activities
For all periods, 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 increase in cash flows from operations for fiscal 2026 compared to fiscal 2025 was primarily due to higher net income in fiscal 2026. The decrease in cash flows from operations for fiscal 2025 compared to fiscal 2024 was primarily due to higher inventory purchases in fiscal 2025 and the timing of disbursements, partially offset by higher net income in fiscal 2025.
Cash Flows from Investing Activities
For all periods, cash used in investing activities was primarily related to the purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities. Cash paid for property and equipment for fiscal 2026, 2025 and 2024 was $260.2 million, $182.6 million and $199.6 million, respectively, which was primarily used to expand our store base and fulfillment center network in all fiscal years, as well as expand our home office in fiscal 2026 to support our growing business.
Cash Flows from Financing Activities
Cash used in financing activities in fiscal 2026 was primarily related to $153.9 million of repurchases of our common shares under our share repurchase program. Cash used in financing activities in fiscal 2025 was primarily related to $52.3 million of repurchases of our common shares under our share repurchase program. Cash used in financing activities in fiscal 2024 was primarily related to repurchases of our common shares from employees to meet payroll tax withholding requirements on vested share-based awards.
Credit Facilities
See Note 8, "Debt," in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for certain financial information regarding the Company's debt.
Capital and Operating Expenditures
During fiscal 2027, we plan to open approximately 57 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 and invest in omni-channel marketing at appropriate levels. We may also 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 which has increased from prior estimates primarily due to the purchase of our Nuuly fulfillment center in Raymore, Missouri in March 2026 that we previously leased. 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.
Share Repurchases
See Note 12, “Shareholders’ Equity,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for certain financial information regarding the Company’s share repurchases.
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Contractual Obligations
The following table summarizes our contractual obligations as of January 31, 2026:
Payments Due by Period(in thousands)
Description TotalObligations Less ThanOneYear More ThanOneYear
Tax contingencies (5) — — —
(1)
Excluded from the amounts above are $92,989 of operating lease payments related to the Nuuly fulfillment center in Raymore, Missouri, which we purchased in March 2026. Refer to Note 9, “Leases,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
(2)
Refer to Note 15, “Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
(3)
Refer to Note 10, "Income Taxes," in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
(4)
Refer to Note 15, “Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
(5)
Excluded from the table above are tax contingencies of $2,028 because we cannot reasonably estimate in which future periods these amounts will ultimately be settled. As a result, the $2,028 liability was classified as a non-current liability in the Company's Consolidated Balance Sheets as of January 31, 2026.
Commercial Commitments
The following table summarizes our commercial commitments as of January 31, 2026:
Amount of Commitment Per Period(in thousands)
Description TotalAmountsCommitted Less ThanOneYear More ThanOneYear
(1)
Consists primarily of outstanding letter of credit commitments in connection with import inventory purchases. Refer to Note 15, “Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
(2)
Consists primarily of stand-by letters of credit for customs, construction, lease guarantees and insurance. Refer to Note 8, “Debt,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Other Matters
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies—Recent Accounting Pronouncements,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of recently adopted and issued accounting pronouncements.
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Seasonality
Our business experiences seasonal fluctuations in net sales and net income, with a more significant portion of net sales typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, the seasonality also impacts our working capital requirements, particularly with regard to inventory.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the following types of market risks—fluctuations in the purchase price of merchandise, as well as other goods and services, the value of foreign currencies in relation to the U.S. dollar and changes in interest rates. Due to our inventory turnover rate and our historical ability to pass through the impact of any generalized changes in our cost of goods to our customers through pricing adjustments, commodity and other product risks are not expected to be material. We purchase the majority of our merchandise in U.S. dollars, including a majority of the goods for our stores located in Canada and a portion of the goods for our stores located in Europe.
Our exposure to market risk for changes in foreign currencies is due to our financial statements being presented in U.S. dollars and our international subsidiaries transacting in currencies other than U.S. dollars. Fluctuations in exchange rates in effect during or at the end of the reporting period may affect the value of the reported amounts of revenues, expenses, assets and liabilities. As we expand our international operations, the potential impact of currency fluctuations increases.
Our exposure to market risk for changes in interest rates relates to our cash, cash equivalents and marketable securities and the Credit Facility. As of January 31, 2026, and 2025, our cash, cash equivalents and marketable securities consisted primarily of cash on hand and in banks, money market accounts, corporate, municipal and pre-refunded municipal bonds rated "BBB" or better, commercial paper and federally insured or guaranteed investment vehicles such as certificates of deposit, United States treasury securities and federal government agencies and mutual funds. Due to the short average maturity and conservative nature of our investment portfolio, we believe a 100 basis point change in interest rates would not have a material effect on the Consolidated Financial Statements. As the interest rates on a material portion of our cash, cash equivalents and marketable securities are variable, a change in interest rates earned on the cash, cash equivalents and marketable securities would impact interest income along with cash flows, but would not impact the fair market value of the related underlying instruments.
We are exposed to market risks relating to changes in interest rates on outstanding borrowings under our Credit Facility because these borrowings bear interest at variable rates. A 100 basis point change in our applicable interest rate would not have a material impact to interest expense for the year ended January 31, 2026.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated by reference from Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality and from our Consolidated Financial Statements and related notes thereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on this review, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of January 31, 2026.
Management’s Annual Report on Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Securities Exchange Act Rule 13a-15(f). Our system of internal control is designed to provide reasonable, not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of January 31, 2026.
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The effectiveness of internal control over financial reporting as of January 31, 2026, was audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that is included within this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting during the fiscal quarter ended January 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
During the fiscal quarter ended January 31, 2026, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" as each term is defined in Item 408(a) of Regulation S-K.
On March 2, 2026, Richard A. Hayne, Chief Executive Officer and Chairman of the Board of Directors, terminated a Rule 10b5-1 trading arrangement that was previously adopted on July 10, 2025. The trading arrangement was for the sale of up to 800,000 common shares of the Company commencing October 10, 2025 and continuing through October 9, 2026 that was intended to satisfy the affirmative defense of Rule 10b5-1(c).
On March 2, 2026, a trust of which Margaret A. Hayne, Co-President and Chief Creative Officer, and a director of the Company, is one of three trustees, terminated a Rule 10b5-1 trading arrangement that was previously adopted on July 10, 2025. The trading arrangement was for the sale of up to 700,000 common shares of the Company commencing October 10, 2025 and continuing through October 9, 2026 that was intended to satisfy the affirmative defense of Rule 10b5-1(c).
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Urban Outfitters, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Urban Outfitters, Inc. and subsidiaries (the “Company”) as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of January 31, 2026, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for the year ended January 31, 2026, and our report dated April 1, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
April 1, 2026
35
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the name, age and position of each of our executive officers and directors:
Name Age Position
Richard A. Hayne 78 Chairman of the Board and Chief Executive Officer
Melanie Marein-Efron 56 Chief Financial Officer
Francis J. Conforti 50 Co-President and Chief Operating Officer, URBN
Azeez Hayne 49 Chief Administrative Officer, URBN
Edward N. Antoian (1) 70 Director
Kelly Campbell (2) 48 Director
Harry S. Cherken, Jr. 76 Director
Mary C. Egan (3) 58 Director
Amin N. Maredia (2)(3) 53 Director
Wesley McDonald (1)(2) 63 Director
Todd R. Morgenfeld (1)(2) 54 Director
John C. Mulliken (3) 53 Director
(1)
Member of the Audit Committee.
(2)
Member of the Compensation and Leadership Development Committee.
(3)
Member of the Nominating and Governance Committee.
Mr. R. Hayne co-founded Urban Outfitters in 1970. He has been Chairman of the Board of Directors since the Company’s incorporation in 1976 and, until February 2016, also served as the Company’s President. Mr. Hayne served as the Company’s principal executive officer until 2007 and again beginning in January 2012. Margaret A. Hayne, Co-President and Chief Creative Officer of Urban Outfitters, Inc., is Mr. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer of the Company, is Mr. Hayne’s nephew. Mr. Hayne’s long tenure leading the Company as Chairman of the Board of Directors, his tenure as principal executive officer and his exceptional leadership skills make him uniquely qualified to serve as a director.
Ms. Marein-Efron joined the Company in January 2013 as Director of Financial, Planning & Analysis, was subsequently promoted to Executive Director Finance & Corporate Development, and in November 2020 was promoted to Chief Financial Officer. Prior to joining the Company, Ms. Marein-Efron worked at Campbell Soup Company, Godiva Chocolate and General Motors in various senior finance roles. She began her career at Arthur Andersen in 1991 in the financial advisory consulting practice. Ms. Marein-Efron has served on the board of directors of Bloomin' Brands (NASDAQ: BLMN) since August 2022. Ms. Marein-Efron holds a B.S. in Economics and M.B.A in Finance from the Wharton School of the University of Pennsylvania and is a Certified Public Accountant.
Mr. Conforti joined the Company in March 2007 as Director of Finance and SEC Reporting. After being promoted to Controller and then to Chief Accounting Officer, he was appointed Chief Financial Officer in April 2012, and Co-President and Chief Operating Officer in October 2020. Prior to joining the Company, Mr. Conforti, a Certified Public Accountant, worked for AlliedBarton Security Services, LLC for five years, serving as Controller for three years. Mr. Conforti began his career at KPMG in 1998 where he held various audit roles.
Ms. Harrington has served as Chief Executive Officer of the Urban Outfitters Group since January 2021 and as Chief Executive Officer of the Free People Group since October 2020. Prior to that, Ms. Harrington served as President of the Free People Group beginning in August 2016 and Chief Merchandising Officer of the Free People Group from February 2015 to August 2016 and Merchandise Director of the Free People Group from March 2010 to February 2015. Ms. Harrington joined the Free People brand in 2002 to help launch the first store. Prior to joining Free People, Ms. Harrington spent time within the merchant organizations of Bloomingdales and The Gap. Ms. Harrington has a BS in Psychology from Queen’s University.
Mr. A. Hayne joined the Company in February 2015 as Associate General Counsel and was appointed General Counsel and Corporate Secretary in June 2015, and Chief Administrative Officer in October 2020. Before joining the Company, Mr. Hayne worked for Morgan Lewis & Bockius LLP, serving as a partner in their Labor & Employment Practice Group from October 2010 through January 2015. After graduating from the University of Virginia School of Law in 2001, Mr. Hayne began his legal career in Pepper Hamilton LLP’s Commercial Litigation department before moving to Morgan Lewis & Bockius LLP in July 2003. Richard A. Hayne, the Company’s current Chairman and Chief Executive Officer, is Mr. Hayne’s uncle, and Margaret A. Hayne, the Company’s current Co-President and Chief Creative Officer, is Mr. Hayne’s aunt.
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Ms. Hayne joined the Company in August 1982. She is an over 40-year veteran of the retail and wholesale industry. She has served as Co-President of the Company since October 2020 and as Chief Creative Officer of Urban Outfitters, Inc. since November 2013. Ms. Hayne previously served as Chief Executive Officer of Free People from August 2015 until October 2020 and President of Free People from March 2007 until August 2016. Richard A. Hayne, the Company’s current Chairman and Chief Executive Officer, is Ms. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer of the Company, is Ms. Hayne’s nephew. As an employee of the Company for over 40 years and a director since 2013, Ms. Hayne brings a wealth of both Company-specific and industry-wide knowledge and experience to the Board of Directors.
Ms. Smith joined the Company in April 2021 as the Global Chief Executive Officer of the Anthropologie Group. Prior to joining the Company, she was the Executive Vice President and Chief Merchandising Officer at Tilly’s from October 2019 through April 2021. Ms. Smith began her career on the sales floor at Nordstrom in Southern California that eventually led her to the role of Executive Vice President & General Merchandise Manager of Women’s, Young Contemporary, Designer, and Specialized Apparel, which she held from October 2016 to September 2019, and was an instrumental leader for a variety of significant merchandise management roles over her 25 year career.
Mr. Antoian has been a Principal and Senior Strategic Advisor with Sequoia Financial Group since March 2023. From January 2008 until February 2023, Mr. Antoian was a partner at Zeke Capital Advisors, a financial advisory firm of which he is a founder. From 1997 until March 2019, Mr. Antoian was a partner and Senior Portfolio Manager at Chartwell Investment Partners. Prior to that, Mr. Antoian worked at Delaware Management Co. as a Senior Portfolio Manager and at E.F. Hutton in Institutional Sales and as a certified public accountant for Price Waterhouse. Mr. Antoian holds an MBA in Finance and has financial and investment experience as a result of his experience as a CFA, CPA, financial advisor and portfolio manager. In addition to URBN, Mr. Antoian serves on the board of directors for Swarmer Inc. (NASDAQ: SWMR). Mr. Antoian also serves as a director of a not-for-profit entity and three private companies. As an independent director, Mr. Antoian brings his in-depth understanding of, and expertise in, finance and accounting to the Board of Directors.
Ms. Campbell was most recently the President of Peacock, NBCUniversal’s streaming service, a position she held from November 1, 2021 until March 15, 2025. Prior to joining Peacock, Ms. Campbell served as President of Hulu from February 2020 to October 2021 and as Chief Marketing Officer of Hulu from August 2017 to February 2020. From 2005 to 2017, Ms. Campbell held a variety of roles at Google across the Google Ads and Google Cloud businesses. Ms. Campbell brings extensive experience in Marketing and subscription businesses to the Company's Board of Directors. In addition to URBN, Ms. Campbell serves on the board of directors for the Match Group (NASDAQ: MTCH), where she serves as a member of the Nominating & Corporate Governance Committee and National CineMedia (NASDAQ: NMCI), where she serves as the chair of the Compensation & Leadership Development Committee and a member of the Audit Committee.
Mr. Cherken retired from the law firm of Faegre Drinker Biddle & Reath LLP in Philadelphia, Pennsylvania on December 31, 2022. Mr. Cherken was a partner of that firm from November 1984 to January 2020 and Senior Counsel from January 2020 to December 2022. Mr. Cherken also formerly served as managing partner of the firm and as either Chair or Co-Chair of its Real Estate Group for 18 years. As a real estate lawyer for over 45 years representing public and private companies in the acquisition, construction, development, financing, leasing, management, consolidation and disposition of commercial real estate, he has extensive experience with various types of real estate transactions and retail leases, including negotiating real estate transactions and leases on behalf of the Company nearly from its inception. He also holds a master's in liberal arts degree and has served and continues to serve as a trustee of various not-for-profit entities and academic institutions. In 2021, Mr. Cherken was appointed Honorary Consul for Philadelphia of the Republic of Armenia.
Ms. Egan has been advising consumer brands for three decades. Since 2018, she has focused primarily on high growth private equity and venture-capital backed as Principal of Egan Advisory Group. In 2013, Ms. Egan founded Gatheredtable, a consumer software as a service company offering customized meal planning and served as its Chief Executive Officer until Gatheredtable was sold to a strategic buyer in 2018. From 2010 to 2012, Ms. Egan served as head of global strategy and corporate development for Starbucks Corporation and in 2012 led Starbucks’ food category in the Americas. From 1996 to 2010, Ms. Egan was a management consultant , Partner and Managing Director at The Boston Consulting Group, where she partnered with several leading consumer and retail brands to develop and successfully implement aggressive growth strategies. Ms. Egan previously served as a director of American Campus Communities from 2018 until the company was purchased by Blackstone in 2022; she presently serves as a director of Noodles & Company (NASDAQ: NDLS), where she serves as a member of the Nominating & Corporate Governance Committee and a member of the Audit Committee. Ms. Egan also serves as a director of the Space Needle Company (featuring Seattle's iconic landmark) as well as the non-profit Kripalu Center for Yoga and Health. Ms. Egan’s decades of experience partnering with management teams to develop and implement consumer-centric strategies for high growth omni-channel consumer brands, as well as working extensively with founders and entrepreneurs, gives her a unique set of skills to contribute to the Board of Directors.
Mr. Maredia is a Co-founder of, and Managing Partner since 2018, at Meaningful Partners, a consumer-focused fund that invests across the consumer value chain. Previously, Mr. Maredia served as the Chief Executive Officer of Sprouts Farmers Market, Inc.
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(NASDAQ: SFM) (“Sprouts”), the second largest healthy grocer in the United States, beginning in 2015. He also served on the board of directors of Sprouts. Mr. Maredia served as Chief Financial Officer of Sprouts from 2011 to 2015. Before Sprouts, Mr. Maredia served in key global strategic roles at Burger King Corporation, including leading strategy, global business development and finance. Mr. Maredia has also been deeply involved in local and global community work for over two decades around health, education and economic development with various domestic and global organizations. Mr. Maredia attended the Harvard Business School management program and has an undergraduate degree in Accounting from the University of Houston. Mr. Maredia’s in-depth experience in the consumer sector, including multi-unit, digital ecommerce and high growth omni-channel businesses, as well as his public company experience as Chief Executive Officer, Chief Financial Officer and board member provides him valuable expertise to serve as a director.
Mr. McDonald has been retired since 2017. Previously, he served as Chief Financial Officer of Kohl’s Corporation (KSS) from 2003 to 2017. Before joining Kohl’s, Mr. McDonald served as Chief Financial Officer and Vice President of Abercrombie & Fitch Co. (ANF). Earlier in his career, he held several positions of increasing responsibility at Target Corporation (TGT). Mr. McDonald currently serves on the Board of Directors of Wingstop Inc., which operates and franchises over 3,000 stores worldwide. Mr. McDonald’s experience as a chief financial officer and in other senior executive leadership roles working with publicly traded consumer products companies provides him with a distinctive set of qualifications and skills to serve as a director.
Mr. Morgenfeld was most recently the Chief Financial Officer and Head of Business Operations of Pinterest, Inc. (NYSE: PINS), a position he held from 2020 to 2023. From 2016 to 2020, he served as the Chief Financial Officer of Pinterest, Inc. Before joining Pinterest, Mr. Morgenfeld served as Vice President of Finance at Twitter from 2015 to 2016 and Treasurer and Senior Vice President of Corporate Development and Corporate Financial Analytics for Hewlett- Packard Company from 2013 to 2015. Prior to his role at Hewlett-Packard, Mr. Morgenfeld was an investment partner at Silver Lake from 2004 to 2013. Mr. Morgenfeld graduated first in his class from the United States Military Academy and also holds an MBA degree from Stanford University. Mr. Morgenfeld also serves on the board of directors of AppLovin Corporation (NASDAQ: APP), which delivers a software platform for mobile application developers to improve the marketing and monetization of their products, and Axon Enterprise, Inc. (NASDAQ: AXON), a technology leader in global public safety. His significant finance and consumer internet experience provides valuable expertise to the Board of Directors.
Mr. Mulliken is currently a Senior Lecturer at Harvard Business School where he has taught in the Strategy Unit since September 2024. Until 2025, he served as a Senior Advisor with The Boston Consulting Group (“BCG”), a global management consulting firm where Mr. Mulliken served as a management consultant on topics of retail, consumer goods and technology, and a frequent advisor to high growth technology companies. Prior to rejoining BCG in 2020, Mr. Mulliken served on the executive team at Wayfair Inc. (NYSE: W) for a decade, as Chief Technology Officer and Senior Vice President of Strategic Initiatives. Mr. Mulliken founded and led several lifestyle brands including Joss & Main and Birch Lane. He also led the acquisition and integration of DwellStudio as well as the ground-up creation of a proprietary ad tech business and tech stack. Mr. Mulliken previously served as the Chief Integrated Product Officer at IndigoAg, an agricultural technology company. Mr. Mulliken also serves on the board at Bombas, a direct-to consumer apparel company. Mr. Mulliken has a 25-year track record of leading innovation and growth as an investor, technology executive and management consultant. Mr. Mulliken earned his undergraduate degree in Mathematics from Reed College and his MBA in Corporate Finance from London Business School. Mr. Mulliken’s decades of experience in ecommerce and multichannel retail as Chief Technology Officer and member of the executive team of a publicly traded company, as well as a strategy consultant and independent director, provides him valuable perspective as a director.
Code of Conduct and Ethics
We have a written Code of Conduct and Ethics (the “Code”) that applies to our directors and employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. The Code includes guidelines relating to compliance with laws, including anti-bribery and illegal payment laws, the ethical handling of actual or potential conflicts of interest, the use of corporate opportunities, protection and use of our confidential information, accepting gifts and business courtesies, accurate financial reporting and procedures for promoting compliance with, and reporting violations of, the Code. The Code is available on our website at www.urbn.com. We intend to post any amendments to the Code and also to disclose any waivers (to the extent applicable to the Company’s Chief Executive Officer, Chief Financial Officer or Principal Accounting Officer) on our website.
Other Information
Other information required by Item 10 relating to the Company’s directors is incorporated herein by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Shareholders under the headings: "Audit Committee," "Delinquent Section 16(a) Reports," "Governance Summary & Highlights," and "Insider Trading Policy."
Item 11. Executive Compensation
Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Shareholders under the heading: "Compensation of Executive Officers."
38
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Shareholders under the heading: "Principal Shareholders and Management Ownership."
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Shareholders under the headings: "Board of Directors," and "Certain Business Relationships."
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34). Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Shareholders under the headings: "Relationship with Auditors," "Audit Committee Report," and "Audit and Other Fees."
39
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements
Consolidated Financial Statements filed herewith are listed in the accompanying index on page F-1.
(2) Financial Statement Schedule
None
All other schedules are omitted because they are not applicable or not required, or because the required information is included in the Consolidated Financial Statements or notes thereto.
(3) Exhibits
The Exhibits listed below are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
ExhibitNumber Description
40
ExhibitNumber Description
21.1* List of Subsidiaries.
23.1* Consent of Deloitte & Touche LLP.
32.1** Section 1350 Certification of the Company’s Principal Executive Officer.
41
ExhibitNumber Description
32.2** Section 1350 Certification of the Company’s Principal Financial Officer.
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
* Filed herewith
** Furnished herewith
+ Compensatory plan
P Paper filing
Item 16. Form 10-K Summary
None.
42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
URBAN OUTFITTERS, INC.
April 1, 2026 By: /s/ RICHARD A. HAYNE
Richard A. Hayne
Chief Executive Officer(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/ S / EDWARD N. ANTOIAN Edward N. Antoian Director April 1, 2026
/ S / MARY C. EGAN Mary C. Egan Director April 1, 2026
/ S / MARGARET A. HAYNE Margaret A. Hayne Director April 1, 2026
/ S / AMIN N. MAREDIA Amin N. Maredia Director April 1, 2026
/ S / WESLEY MCDONALD Wesley McDonald Director April 1, 2026
/ S / TODD R. MORGENFELD Todd R. Morgenfeld Director April 1, 2026
/ S / JOHN C. MULLIKEN John C. Mulliken Director April 1, 2026
43
URBAN OUTFITTERS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets as of January 31, 2026 and January 31, 2025 F-4
Notes to Consolidated Financial Statements F-9
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Urban Outfitters, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Urban Outfitters, Inc. and subsidiaries (the "Company") as of January 31, 2026 and 2025, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in lnternal Control - lntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 1, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Retail Location Asset Impairment — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company evaluates retail location assets for impairment when events or changes in circumstances exist that may indicate that the carrying amounts of retail location assets may not be recoverable. Events that result in an impairment review include plans to close a retail location, a significant decrease in the operating results of the retail location or significant adverse changes in the business climate. When such events or changes in circumstances occur, the Company evaluates its retail location assets for impairment by comparing the undiscounted future cash flows expected to be generated by the location to the location assets’ carrying amount. If the carrying amount of the location assets exceed the estimated undiscounted future cash flows, an analysis is performed to estimate the fair value of the assets. An impairment charge is recorded if the fair value of the retail location assets is less than the carrying amount. Retail location asset impairment charges of $1.989 million are included in the Company's Store Impairment and Lease Abandonment Charges for the fiscal year ended January 31, 2026.
The Company makes significant assumptions to evaluate retail location assets for possible indications of impairment. When an
F-2
indication of impairment is identified, management makes significant assumptions to estimate cash flows from forecasts of sales and gross profit for retail locations and, when the carrying amount of the location assets exceed those cash flows, to determine the fair value of the Company’s lease right-of-use assets.