Urban Outfitters (URBN) Stock Forecast & Price Target

Urban Outfitters reported a strong financial performance with retail sales in North America growing by 10% year-over-year while also achieving significant expansion in gross margin by 110 basis points to 37.6%, attributed to lower markdowns and improved occupancy cost leverage. The company experienced an increase in its operating margin by 90 basis points to 11.6% during the second quarter of fiscal 2025, reflecting overall operational efficiency. Additionally, the digital sales segment supported the retail store strength with significant increases in customer engagement, while the wholesale segment also saw an 8% year-over-year increase in sales.

Urban Outfitters has experienced stagnation in its operating margin, remaining flat at 9.4%, indicating limited profitability improvements despite a slight beat against consensus expectations. The company has faced a 6% year-over-year decline in wholesale segment sales, alongside a decrease in digital sales attributed to lower average order values and units per transaction. Additionally, Urban Outfitters anticipates a significant gross margin pressure of 75 basis points in the second half of the fiscal year due to new tariff policies, further complicating its financial outlook.