Q1 2026 Urban Outfitters Inc Earnings Call

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Operator: Good day, ladies and gentlemen, and welcome to the Urban Outfitters Inc. first quarter fiscal 2026 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. If you'd like to ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded.

Speaker Change: Good day, ladies and gentlemen, and welcome to the urban Outfitters, Inc. 's first quarter fiscal 2026 earnings call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session. If you'd like to ask a question. During this session you will need to press star one on your telephone if your question has been.

Oh Mccullough: Answered and you'd like to remove yourself from the queue simply press Star one one again as a reminder, today's program is being recorded I would now like to introduce your host for today's program Oh, No Mccullough executive director of Investor Relations Ms. Mccullough you may begin.

Oona Mccullough: I would now like to introduce your host for today's program, Oona McCullough, Executive Director of Investor Relations. Ms. McCullough, you may begin.

Oona Mccullough: Good afternoon and welcome to the URBN first quarter fiscal 2026 conference call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the three month period ending April 30th, 2025. The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the Securities and Exchange.

Good afternoon, and welcome to the U R. B in first quarter of fiscal 'twenty 'twenty Six conference call earlier. This afternoon. The company issued a press release outlining the financial and operating results for the three months period, ending April 30 of 2025.

Following discussions may include forward looking statements.

Please note that actual results may differ materially from those statements.

Information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the securities and Exchange Commission.

Oona Mccullough: For more detailed commentary on our quarterly performance and the text of today's conference call, please refer to our Investor Relations website at www.urbn.com.

Jack: More detailed commentary on our quarterly performance and the text of today's conference call. Please refer to our Investor Relations website at Www Dot U R. P. M Dot com I will now turn the call over to Jack.

Richard Hayne: I will now turn the call over to Dick. Thanks, Oona, and good afternoon, everyone. We're excited to share that Q1 was another record-breaking quarter for URBN. Both sales and profits exceeded our expectations and easily outpaced last year's Q1 results.

Jack: Thanks, Ana and good afternoon, everyone.

Speaker Change: We're excited to share that Q1 was another record breaking quarter for U R. B.

Jack: Both sales and profits exceeded our expectations and easily outpaced last year's Q1 results.

Francis Conforti: You'll hear more about these strong results from Frank Conforti, our co-president and COO.

Speaker Change: You'll hear more about these strong results from Frank Conforti, our co president and COO.

Melanie Marein: Then Melanie Marein-Efron, our CFO, will walk you through our outlook for Q2 and beyond.

Jack: Then Melanie Miranda <unk>, our CFO will walk you through our outlook for Q2 and beyond.

Richard Hayne: I'll wrap things up with a few closing thoughts before we open it up for your questions.

Speaker Change: I'll wrap things up with a few closing thoughts before we open it up for your questions now over to Frank.

Francis Conforti: Now over to Frank. Thank you, Dick, and good afternoon, everyone. Today, I'm excited to share our company's first quarter results compared to last year.

Frank: Thank you <expletive> and good afternoon, everyone.

Frank: Today I'm excited to share our company's first quarter results compared to last year, and then I'll dive into some detailed notes by brand.

Francis Conforti: And then I'll dive into some detailed notes by. Overall, our teams delivered another outstanding quarter. We are proceeding our plans as we discussed on the recent fourth quarter conference call. Total URBN sales grew by 11%, hitting a Q1 record of $1.3 billion. all of our brands delivered positive sales comps and four of our five brands performed exceptionally well posting record first quarter sales. Urban Outfitters also continued to make significant strides as the brand posted the first positive sales comp in quite some time and delivered continued progress in reducing its operating loss compared to last year.

Frank: Overall, our teams delivered another outstanding quarter exceeding our plans that we discussed on our recent fourth quarter conference call.

Frank: Total U R. B N sales grew by 11% hitting a Q1 record of $1 $3 billion.

Frank: All of our brands delivered positive sales comps and four of our five brands performed exceptionally well posting record first quarter sales.

Frank: Urban Outfitters also continue to make significant strides as the brand posted the first positive sales comp in quite some time and delivered continued progress in reducing its operating loss compared to last year.

Francis Conforti: Our sales growth was partly driven by a 5% increase in the retail segment comp. URBN comps were positive in both channels with stores outperforming digital. newly delivered impressive 60% revenue growth with a 53% increase in average active subscribers. Additionally, the wholesale segment saw a 24% revenue increase, driven by a healthy rise in full price sales at free people.

Frank: Our sales growth was partly driven by a 5% increase in our retail segment comp.

Frank: You are beyond comps were positive in both channels with stores outperforming digital newly.

Frank: Newly delivered impressive 60% revenue growth with a 53% increase in average active subscribers.

Frank: Additionally, the wholesale segment saw a 24% revenue increase driven by a healthy rise in full price sales at free people.

Francis Conforti: Now, let's talk about gross profit. URBN saw a 20% increase in gross profit dollars, reaching a record $489 million. The gross profit rate also improved nicely by 278 basis points, which includes non-recurring benefits of 74 basis points, rising to 36.8%. The remaining 204 basis point increase was due to better growth margins across all segments. The improvement in gross margins was due to leverage on occupancy and delivery expenses and lower markdowns, largely driven by the Urban Outfitters brand. In the quarter, SG&A increased by 8.1 percent, leveraging by 65 basis points. The growth in SG&A dollars was primarily driven by increased marketing spend, which fueled sales growth for all brands.

Frank: Now, let's talk about gross profit.

Frank: You are being so a 20% increase in gross profit dollars, reaching a record $489 million.

Frank: The gross profit rate also improved nicely by 278 basis points, which includes nonrecurring benefits of 74 basis points rising to 36, 8%.

Frank: The remaining 204 basis point increase was due to better gross margins across all segments.

Frank: The improvement in gross margins was due to leverage on occupancy and delivery expenses and lower markdowns largely driven by the urban Outfitters brand.

Frank: In the quarter SG&A increased by eight 1% leveraging by 65 basis points.

Frank: The growth in SG&A dollars was primarily driven by increased marketing spend which fueled sales growth for all brands.

Francis Conforti: The marketing efforts drove increases in traffic and transactions, both in stores and online, for total URBN, while Nuuly's campaigns resulted in healthy double-digit growth in average active subscribers. Overall, total URBN operating income rose by 72% compared to last year, reaching $128 million, while the operating profit rate improved by over 340 basis points to 9.6%. Net income, so a 75% increase to $108 million or $1.16 per diluted share.

Frank: The marketing efforts drove increases in traffic and transactions both in stores and online for total Europe yen, while noise campaigns resulted in healthy double digit growth in average active subscribers.

Frank: Overall total European operating income rose by 72% compared to last year, reaching $128 million, while the operating profit rate improved by over 340 basis points to nine 6%.

Frank: Net income, sorry, 75% increase to $108 million or $1.16 per diluted share.

Francis Conforti: Moving on to brand performance, starting with Anthropologie. The anthropology team had another fantastic quarter, achieving a 7% increase in their retail segment comp, which marks four years of consecutive quarterly positive comp. This success was fueled by equal strength in the digital and store channels, both of which benefited from increased traffic. Every category saw positive regular price and total sales comps with strong performance across all apparel categories in addition to shoes, accessories, beauty, and home accessories. The team at Anthropologie continues to do an excellent job with their strategy to expand their product offerings to fit their customers' full lifestyle.

Frank: Moving onto brand performance starting with Anthropologie.

Frank: The Anthropologie team had another fantastic quarter, achieving a 7% increase in their retail segment comp, which marks four years of consecutive quarterly positive comps.

Frank: This success was fueled by equal strength in the digital and store channels, both of which benefited from increased traffic.

Frank: Every category, so positive regular price and total sales comps with strong performance across all apparel categories. In addition to shoes accessories beauty and home accessories.

Frank: The team at Anthropologie continues to do an excellent job with their strategy to expand their product offerings to fit their customers' full lifestyle.

Francis Conforti: As mentioned on the last call, the brand recently launched Celendine, an exclusive in-house resort wear label that offers year-round vacation-ready styles. This category's growth has exceeded our expectations. Alongside Celendine, daily practice and the expanded assortments of intimates and loungewear are also seeing impressive growth, and we believe these could become significant categories in the future.

Frank: As mentioned on the last call the brand recently launched selling Dean and exclusive in house resort wear label that offers year round vacation ready styles.

Frank: These categories growth has exceeded our expectations.

Frank: Alongside <unk> daily practice, and the expanded Assortments of intimates and Loungewear are also seeing impressive growth and we believe these could become significant categories in the future.

Francis Conforti: Turning to the home category, the brand saw impressive growth driven by the increase in home accessories and textiles, both of which are benefiting from consumers' desire to refresh their homes. The team is focused on incorporating more newness into these categories, catering to consumers' desire for more frequent updates for their home.

Frank: Turning to the home category the brand saw impressive growth driven by the increase in home accessories, and textiles, both of which are benefiting from consumers' desire to refresh their homes.

Frank: The team is focused on incorporating more newness into these categories catering to consumers' desire for more frequent updates for their homes.

Francis Conforti: The brand's ability to create compelling product assortments in conjunction with strategic marketing investments and exceptional creative content have enabled them to succeed in their goal of attracting new, younger customers while deepening engagement with their existing For more information visit www.urbanoutfitters.com The brand drove growth across new, retained, and reactivated customers in the quarter. These efforts led to strong traffic increases in both stores and digital during the first quarter. The Anthropologie brand delivered exceptional top line growth and the 10th straight quarter of double digit operating profit growth, resulting in a record first quarter operating Based on our current plans, we believe the Anthropologie Group could deliver a mid-single digit positive retail segment comp in Q2.

Frank: The brand's ability to create compelling product assortments in conjunction with strategic marketing investments and exceptional creative content have enabled them to succeed in their goal of attracting new younger customers, while deepening engagement with their existing ones.

Frank: Brand drove growth across new retained and reactivated customers in the quarter. These efforts led to strong traffic increases in both stores and digital during the first quarter.

Frank: The Anthropologie brand delivered exceptional top line growth and the 10th straight quarter of double digit operating profit growth, resulting in a record first quarter operating income.

Frank: Based on our current plans, we believe the Anthropologie group could deliver a mid single digit positive retail segment comp in Q2.

Francis Conforti: Next, I want to highlight the fantastic performance of the Free People team this quarter. They delivered an 11% increase in total retail and wholesale segment sales and double digit operating profit growth for the brand. Their double digit sales growth was driven by a 3% retail segment comp, a 26% rise in free people wholesale segment revenues, and over 200% increase in non-comp sales. The positive retail segment comp was driven by a low single-digit comp in both the stores and digital channels. Throughout the quarter, free people saw positive comp sales growth across all major categories.

Frank: Next I want to highlight the fantastic performance of the free people team this quarter.

Frank: They delivered an 11% increase in total retail and wholesale segment sales and double digit operating profit growth for the brand.

Frank: They're double digit sales growth was driven by a 3% retail segment comp a 26% rise in free people wholesale segment revenues and over 200% increase in non comp sales.

Frank: The positive retail segment comp was driven by a low single digit comp in both the stores and digital channel.

Frank: The quarter free people saw a positive comp sales growth across all major categories.

Francis Conforti: The FB movement brand also delivered robust total retail and wholesale segment sales growth of 29% driven by total retail segment growth of 16% a 6% retail segment comp. and explosive 78% growth in FB movement wholesale segment revenue. Non-comp sales growth was boosted by the opening of 43 new stores, including 14 free people brand and 29 FB movement brand locations over the past 12 months.

Frank: The FP movement brand also delivered robust total retail and wholesale segment sales growth of 29% driven by total retail segment growth of 16%.

Frank: 6% retail segment comp.

Frank: And explosive 78% growth in FTE movement wholesale segment revenue.

Frank: Non comp sales growth was boosted by the opening of 43, new stores, including 14 free people brand and twenty-nine FP movement brand locations over the past 12 months.

Francis Conforti: Based on our current plans, we believe the Free People Group's retail segment could deliver a mid-single-digit positive comp in Q2. Free People Wholesale revenues increased by 26% during the quarter, driven by full price sales gains in specialty and department stores. The profitability of Free People Wholesale improved significantly from the prior year.

Frank: Based on our current plans, we believe the free people groups retail segment could deliver a mid single digit positive comp in Q2.

Frank: Free people wholesale revenues increased by 26% during the quarter driven by full price sales gains in specialty and department stores.

Frank: The profitability of free people wholesale improved significantly from the prior year.

Francis Conforti: Now, let's move on to the Urban Outfitters brand. Urban Outfitters recorded a positive 2% global retail segment comp for the quarter.

Frank: Now, let's move on to the urban Outfitters brand.

Frank: Urban Outfitters recorded a positive 2% global retail segment comp for the quarter.

Francis Conforti: Congratulations to the team on much improved business and the first positive comp in some time. North America recorded a negative 4% retail segment comp and Europe an exceptionally strong positive 14% retail segment comp. The total global comp was driven by positive store comps partially offset by negative digital comp in North America. The digital business in North America continues to anniversary heavy promotional activity from the prior year, which will begin to abate after the second quarter this year. Positive global comps were a result of strong regular price business in most categories in both channels, which led to a significant reduction in markdowns versus last year and an improvement in profitability levels for the brand.

Frank: Congratulations to the team on much improved business and the first positive comp in some time.

Frank: North America recorded a negative 4% retail segment comp in Europe, and exceptionally strong positive, 14% retail segment comp.

Frank: The total global comp was driven by positive store comps, partially offset by negative digital comp in North America.

Frank: The digital business in North America continues to anniversary heavy promotional activity from the prior year, which will begin to abate after the second quarter. This year.

Frank: Positive global comps were a result of strong regular price business in most categories in both channels, which led to a significant reduction in markdowns versus last year and an improvement in profitability levels for the brand.

Francis Conforti: In North America, the teams continue to focus on the Pillars of Transformation strategy Shea spoke to last year. focus on the customer, evolving the product assortment. rebuild our customer base, adapt our channels to offer a more relevant experience, and deliver profitable growth. The teams have evolved the product assortment to be more relevant for the customer. denim, lounge, accessories, and home sales were all comp positive in the quarter. Notable market brands have been added to the assortment, including a successful Bagu collaboration and the recent addition of the Nike brand, currently available online and in 40 stores.

Frank: In North America. The teams continue to focus on the pillars of transformation strategy Chase spoke to last year.

Frank: Focus on the customer evolving the product assortment.

Frank: Rebuild our customer base.

Frank: <unk>, our channels to offer a more relevant experience and deliver profitable growth.

Frank: The teams have evolved the product assortment to be more relevant for the customer.

Frank: Denim lounge accessories and home sales were all comp positive in the quarter.

Frank: Notable market brands have been added to the assortment, including a successful <unk> collaboration and the recent addition of the Nike brand currently available online and in 40 stores.

Francis Conforti: Regular price sales for the brand were positive for the second consecutive quarter and accelerated from Q4 last year, showing continued improvement in the product offering, inventory management, and marketing campaign. Marketing and creative efforts have improved significantly. Our focus on acquiring new customers has been successful, with positive growth in new customers, entering the brand in the right demographic. Lastly, as mentioned before, the brand showed an improvement in profitability versus last year, largely due to a lower markdown.

Frank: Regular price sales for the brand were positive for the second consecutive quarter and accelerated from Q4 last year showing continued improvement in the product offering inventory management and marketing campaigns.

Frank: Marketing and creative efforts have improved significantly.

Frank: Our focus on acquiring new customers has been successful with positive growth in new customers entering the brand in the right demographic.

Frank: Lastly, as mentioned before the brand showed an improvement in profitability versus last year, largely due to a lower markdown rate.

Francis Conforti: Now turning to Europe. Our European business delivered a 14% comp driven by double digit comp increases in the digital and store channel. During the quarter, the brand achieved positive comps across apparel, home, and accessories. Strong sales comps and improved maintained margins fueled a healthy increase in operating profit for the European team.

Frank: Now turning to Europe.

Frank: Our European business delivered a 14% comp driven by double digit comp increases in the digital and store channels.

Frank: During the quarter the brand achieve positive comps across apparel home and accessories strong sales comps and improved maintain margins fueled a healthy increase in operating profit for the European team.

Francis Conforti: Based on our current plans, we believe the global Urban Outfitters brand could deliver a low single digit positive comp for the second quarter.

Frank: Based on our current plans, we believe the global urban Outfitters brand it could deliver a low single digit positive comp for the second quarter.

Francis Conforti: Finally, let's touch on the Nuuly business, which delivered another exceptional quarter. Nuuly added over 40,000 average active subscribers since the end of the fourth quarter, and has grown average active subscribers by over 110,000 compared to the prior year. This beat even our most optimistic expectations. This growth in average subscribers contributed to a 60% increase in brand revenue and added nearly 400 basis points of revenue growth to total URBN top line. The strong revenue growth in the first quarter resulted in leverage in almost every expense line item, helping to deliver a record first quarter operating profit of over 5%.

Frank: Finally, let's touch on the newly business, which delivered another exceptional quarter.

Frank: Newly added over 40000 average active subscribers since the end of the fourth quarter and has grown average active subscribers by over 110000 compared to the prior year.

Frank: This beat even our most optimistic expectations.

Frank: This growth in average subscribers contributed to a 60% increase in brand revenue and added nearly 400 basis points of revenue growth to total <unk> topline.

Frank: The strong revenue growth in the first quarter resulted in leverage in almost every expense line item, helping to deliver a record first quarter operating profit of over 5%.

Francis Conforti: The current momentum in the Nuuly business has continued into May, where we now sit above 380,000 active subscribers. The performance at Nuuly over the past year has fortified our confidence that our business model is strong and the rental market opportunity is very large. We are thrilled that Nuuly now appears to be leading the industry with an opportunity to continue to see significant growth.

Frank: The current momentum in the annuity business has continued into may where we now sit above 380000 active subscribers.

Frank: The performance at newly over the past year has fortified our confidence that our business model is strong and the rental market opportunity is very large we are thrilled that newly now appears to be leading the industry with an opportunity to continue to see significant growth.

Francis Conforti: Based on our current plans, we believe Newly could deliver a healthy double-digit revenue and profit growth in the second quarter.

Frank: Based on our current plans, we believe newly could deliver a healthy double digit revenue and profit growth in the second quarter.

Francis Conforti: Now moving on to Tara. We would like to give you as much clarity as possible, but unfortunately, you all know this is not possible given the continued uncertainty with news on tariffs changing daily. We can only offer our perspective based on what we know today. Our current assumptions are based on a 10% global tariff on all items entering the U.S., except for items from China, where we are assuming a 30% tariff.

Frank: Now moving on to tariffs, we would like to give you as much clarity as possible, but unfortunately, you. All know this is not possible given the continued uncertainty with news on tariffs changing daily.

Frank: We can only offer our perspective based on what we know today.

Frank: Our current assumptions are based on a 10% global tariff on all items entering the U S except for items from China, where we are assuming a 30% tariff.

Francis Conforti: First, I want to acknowledge the amazing work our sourcing, brand, and logistics teams have done. Over the last several years, the teams have worked hard to diversify our countries of origin, as well as dual source most of our own brand products. This means many of our products are made in two different origins, enabling us to shift production from one country to another if needed. We currently have no single country that accounts for more than 25% of our production. India, Vietnam, and Turkey are our three largest countries of origin, while China represents less than five. Quickly, after the announcement of tariffs, our team started working on how to mitigate the impacts with a primary focus on the customer's experience.

Frank: First I want to acknowledge the amazing work, our sourcing brand and logistics teams have done.

Frank: Over the last several years the teams have worked hard to diversify our countries of origin as well as dual source most of our own brand products. This means many of our products are made in two different origins, enabling us to shift production from one country to another if needed.

Frank: We currently have no single country that accounts for more than 25% of our production.

Frank: India, Vietnam, and Turkey are our three largest countries of origin, while China represents less than 5%.

Frank: Quickly after the announcement of tariffs our team started working on how to mitigate the impacts with a primary focus on the customer experience.

Francis Conforti: We are working hard towards minimizing the impact on the consumer. We have several mitigation tactics that we've been working on. First, negotiating better terms with our vendors. Second, shifting our countries of origin where possible. Third, shifting our mode of transportation from air to boat. And lastly, gently and sparingly raising some price. Please note that any price increases will be very strategic, protecting opening price points and only targeting areas where we believe we could raise prices without affecting the overall customer experience. As of today, based on the previously stated assumptions, we believe that tariffs could have a minimal negative impact on gross margins in the second quarter and potentially a negative 20 basis points impact in the back half of the year.

Frank: We're working hard towards minimizing the impact on the consumer.

Frank: We have several mitigation tactics that we've been working on first negotiating better terms with our vendors.

Frank: Shifting our countries of origin where possible.

Frank: Third shifting our motive transportation from air to boat, and lastly, gently and sparingly raising some prices. Please.

Frank: Please note that any price increases will be very strategic protecting opening price points and only targeting areas, where we believe we could raise prices without affecting the overall customer experience.

Frank: As of today based on the previously stated assumptions, we believe that tariffs could have a minimal negative impact on gross margins in the second quarter and potentially a negative 20 basis points impact in the back half of the year.

Francis Conforti: Although tariffs present a temporary headwind to our business, we are confident in our ability to manage through this environment and still achieve 50 to 100 basis points of gross margin improvement for fiscal year 2020.

Frank: Although tariffs presents a temporary headwind to our business. We are confident in our ability to manage through this environment and still achieve 50 to 100 basis points of gross margin improvement for fiscal year 2026.

Francis Conforti: Again, I want to stress that this plan is based on what we know today.

Frank: Again, I want to stress that this plan is based on what we know today.

Richard Hayne: In summary, it was an exceptional quarter. All brands delivered positive sales comps. Both the wholesale and subscription segments drove double-digit sales growth, and all brands and geographies recorded healthy operating income improvement. We could not be prouder of the teams and their amazing expertise.

Frank: In summary, it was an exceptional quarter all brands delivered positive sales comps.

Frank: The wholesale and subscription segments drove double digit sales growth in all brands and geographies recorded healthy operating income improvement, we could not be prouder of the teams and their amazing execution.

Melanie Marein: I will now turn the call over to Mel. Thanks, Frank, and good afternoon, everyone. Let me walk you through how we're thinking about our second quarter financial performance. We're off to a solid start this quarter. And based on what we're seeing so far, we're planning for total company sales to grow in the high single digit. In our retail segment, comp sales could grow mid-single-digit, driven by mid-single-digit positive retail segment comps at Anthropologie and Free People brands, while Urban Outfitters brand could be low-single-digit positive comps. At Newly, the brand could deliver mid-double-digit revenue growth driven by continued subscriber momentum.

Melanie Miranda: I will now turn the call over to Melanie.

Melanie Miranda: Thanks, Frank and good afternoon, everyone. Let me walk you through how we're thinking about our second quarter financial performance, we're off to a solid start this quarter and based on what we're seeing so far we're planning for total company sales to grow in the high single digits in our retail segment comp sales could.

Melanie Miranda: Grow mid single digit driven by mid single digit positive retail segment comps at Anthropologie and free people brands, while urban outfitters brand could be low single digit positive comps.

Melanie Miranda: At newly the brand could deliver mid double digit revenue growth driven by continued subscriber momentum finally, our wholesale segment could produce low double digit growth.

Melanie Marein: Finally, our wholesale segment could produce low double-digit growth. As Frank mentioned, we believe gross profit margins could improve by about 50 to 100 basis points compared to last year, both for the second quarter and the full fiscal year. This improvement could come from lower markdowns at Urban Outfitters and occupancy leverage partially offset by lower initial product margins due to higher U.S. Our current assumptions on tariffs are based on 10% global tariff on all items entering the U.S., except for items from China, where we are assuming a 30%. Turning to SG&A, we expect expenses to grow roughly in line with sales based on current sales performance.

Speaker Change: As Frank mentioned, we believe gross profit margins could improve by about 50 to 100 basis points compared to last year, both for the second quarter and the full fiscal year. This improvement could come from lower markdowns at urban outfitters, and occupancy leverage partially offset by lower initial.

Speaker Change: Product margins due to higher U S tariffs.

Speaker Change: Our current assumptions on tariffs are based on 10% global tariff on all items entering the U S except for items from China, where we are assuming a 30% tariff.

Speaker Change: Turning to SG&A, we expect expenses to grow roughly in line with sales based on current sales performance and plans.

Melanie Marein: The planned growth in SG&A is mainly driven by higher marketing spend to support customer and sales growth, along with increased store labor costs related to new store locations. As always, if sales performance fluctuates, we maintain a certain level of variable SG&A spending that we can adjust up and down depending on how our business is performing. We're planning for an effective tax rate of about 23.5% for Q2 and the full year.

Speaker Change: The planned growth in SG&A is mainly driven by higher marketing spend to support customer and sales growth along with increased store labor costs related to new store locations as.

Speaker Change: As always if sales performance fluctuate, we maintain a certain level of variable SG&A spending that we could adjust up and down depending on how our business is performing.

Speaker Change: We're planning for an effective tax rate of about 23, 5% for Q2 and the full year.

Melanie Marein: Now, on to inventory. While our teams continue to focus on increasing inventory turns, the uncertainty around tariffs means we are likely to bring in fall product a bit early. Because of that, inventory growth in Q2 may grow at a rate above sale.

Speaker Change: Now onto inventory, while our teams continue to focus on increasing inventory turns the uncertainty around tariffs means we are likely to bring in final product a bit earlier because of that inventory growth in Q2 may grow at a rate above sales growth.

Melanie Marein: For FY26, capital expenditures are planned at approximately $240 million. The FY26 capital project spend is broken down as follows. Approximately 50% is related to retail store expansion and support. Approximately 25% is related to supporting technology and logistics investments. And the remaining 25% is for home office expansion to support our growing.

Speaker Change: For FY 'twenty six capital expenditures are planned at approximately $240 million the FY 'twenty six capital.

Speaker Change: Projects that is broken down as follows.

Speaker Change: Generally 50% is related to retail store expansion in support of <unk>.

Speaker Change: Like 25% is related to supporting technology, and logistics investments and the remaining 25% is for home office expansion to support our growing businesses.

Melanie Marein: Lastly, we're planning to open approximately 64 new stores and close approximately Most of our net new store growth will come from FP Movement, Free People, and Anthropology. Specifically, we're planning 25 new FP movement stores, 15 new free people stores, and 16 new anthropology.

Speaker Change: Lastly, we're planning to open approximately 64, new stores and close approximately 17. This fiscal year most of our net new store growth will come from FP movement free people and Anthropologie, specifically were planning 25, new FP movement stores 15, new free people stores.

Speaker Change: <unk> and 16, new Anthropologie stores.

Melanie Marein: As a reminder, the foregoing does not constitute a forecast, but is simply a reflection of our current. the company disclaims any obligation to update forward.

Speaker Change: As a reminder, the foregoing does not constitute a forecast but is simply a reflection of our current views the company disclaims any obligation to update forward looking statements.

Richard Hayne: With that, I'll hand it back over to. Thanks, Melanie. What a fantastic start to the year. Operating Profit came in just shy of our ambitious 10% goal. An incredible achievement. Huge congratulations to all URBN teams for delivering such impressive results. Despite the noise in the headlines and the broader economic uncertainty, Our customers continue to show resilience in Q1. We haven't seen any signs of a demand slowdown. In fact, customers were eager for fresh spring fashion and our teams delivered. from compelling assortments to stand out store experiences and inspiring marketing. We exceeded their expectations. The result, positive comps across every brand and every segment.

Speaker Change: With that I'll hand, it back over to <expletive>.

Speaker Change: Thanks, Melanie what a fantastic start to the year operating profit came in just shy of our ambitious 10% goal and an incredible achievement.

Speaker Change: Huge congratulations to all <unk> teams for delivering such impressive results.

Speaker Change: Despite the noise in the headlines in the broader economic uncertainty.

Speaker Change: Our customers continue to show resilience in Q1.

Speaker Change: We haven't seen any signs of a demand slowdown.

Speaker Change: In fact customers, who are eager for fresh spring fashion and our teams delivered from.

Speaker Change: Compelling assortments to standout store experiences and inspiring marketing.

Speaker Change: Exceeded their expectations the result.

Speaker Change: Positive comps across every brand in every segment.

Richard Hayne: This performance speaks volumes about the strength of our strategies, the quality of our execution, and the appeal of our brand. Most of all, it affirms the talent of our leaders and their team. We're attracting new customers, keeping our loyal ones, and growing our market share across the board. Each brand is playing a valuable role in the URBN portfolio. Anthropologie and Free People are two larger brands. Continue to grow revenue and deliver healthy mid-teen operating margins. FP Movement is growing faster than its sister brand, and thanks to new store openings and strong wholesale demand. and newly our women's apparel rental business is one of the most exciting high growth concepts in the market today.

Speaker Change: This performance speaks volumes about the strength of our strategies the quality of our execution and the appeal of our brands.

Speaker Change: Most of all it affirms the town of our leaders and their teams.

Speaker Change: We're attracting new customers, keeping our loyal ones and growing our market share across the board.

Speaker Change: Each brand is playing a valuable role in the <unk> portfolio.

Speaker Change: Anthropologie and free people, our two larger brands continue to grow revenue and deliver healthy mid teen operating margins.

Speaker Change: FP movement is growing faster than the sister brand and.

Speaker Change: Thanks to new store openings and strong wholesale demand.

Speaker Change: And newly our women's apparel rental business is one of the most exciting high growth concepts in the market today.

Richard Hayne: Both FP Movement and Nuuly are nicely profitable, gaining brand awareness and showing real potential to scale. Urban Outfitters North America is making steady progress. stores were compositive for the quarter and the number of new full price customers grew nicely. In Europe, after a slower start in Q1 last year, Urban delivered powerful comp sales gains that led to a jump in profitability. All in all, I'm delighted with how our brands are performing. Yes, we're keeping a close eye on supply chain risk and global uncertainty. But as Frank said, based on what we know today, we believe we can continue to grow revenue and expand margins, not just in Q2, but for the full year and beyond.

Speaker Change: Both FP movement, and newly are nicely profitable gaining brand awareness and showing real potential to scale.

Speaker Change: Urban Outfitters, North America is making steady progress.

Speaker Change: Stores were comp positive for the quarter and the number of new full price customers grew nicely.

Speaker Change: In Europe after a slower start in Q1 last year.

Speaker Change: And delivered powerful comp sales gains that led to a jump in profitability.

Speaker Change: All in all I'm delighted with how our brands are performing.

Speaker Change: Yes, we're keeping a close eye on supply chain risks and global uncertainty.

Speaker Change: But as Frank said based on what we know today. We believe we can continue to grow revenue and expand margins not just in Q2, but for the full year and beyond we are confident <unk> is well positioned for continued success.

Richard Hayne: We're confident URBN is well positioned for continued success.

Richard Hayne: Before we move to Q&A, I want to thank our co-presidents, Megan Frank, our brand leaders, Tricia, Sheila, and Dave, and their incredible teams across merchandising, creative, and operations. I also want to recognize our shared service teams and our 28,000 associates around the world. Your hard work made this record quarter possible, so thank you.

Speaker Change: Before we move to Q&A I want to thank our co presidents Megan Frank our brand leaders, Tricia, Sheila and Dave and their incredible teams across merchandising creative and operations.

Speaker Change: I also want to recognize our shared service teams and our 28000 associates around the world.

Speaker Change: Your hard work made this record quarter possible. So thank you.

Richard Hayne: To our global partners, thank you for your cooperation as we work together to navigate the new trade rules.

Speaker Change: Through our global partners. Thank you for your cooperation as we work together to navigate the new trade rules and to our shareholders. Thank you for your continued support.

Richard Hayne: And to our shareholders, thank you for your continued support.

Operator: That wraps up our prepared remarks.

Speaker Change: That wraps up our prepared remarks now let's take your questions.

Operator: Now, let's take your questions. Certainly.

Operator: And ladies and gentlemen, we just ask that you please limit yourselves to one question each. You may get back in the queue as time allows.

Speaker Change: Certainly and ladies and gentlemen, we just ask that you. Please limit yourselves to one question. Each you may get back in the queue. As time allows our first question for today comes from the line of Lorraine Hutchinson from Bank of America. Your question. Please.

Lorraine Hutchinson: Our first question for today comes from the line of Lorraine Hutchinson from Bank of America. Your question, please. Good afternoon. I was hoping you could talk about some of the key drivers of success at UO Europe. Was it branded products, different label products? And which of these learnings can you apply to help bolster the U.S. UO business?

Speaker Change: Thanks, Good afternoon.

Lorraine Hutchinson: I was hoping you could talk about some of the key drivers of success.

Speaker Change: Europe was at branded product different unable product and which of these learnings can you apply to help bolster the U S.

Francis Conforti: Okay, Lorraine, I'll try that and then ask Sheila to... back me up. I'm going to ascribe much of the progress to products. They have a number of really strong bottoms that are propelling their business in that area. And now they have added great tops to that. And to your question, the urban brand in North America is also sharing in a number of those items. And it's helping them very much as well. So products is number one. Number two, I think they have a very strong marketing group and some of their marketing. initiatives have proven to be very successful in growing the customers.

Speaker Change: Okay.

Speaker Change: By that and then ask Sheila.

Speaker Change: Back me up.

Speaker Change: I'm going to ascribe much of the progress too.

Speaker Change: They have a number of really strong bottoms.

Speaker Change: That are propelling their business in that area and now they have added.

Speaker Change: Great tops to that and.

Speaker Change: To your question.

Speaker Change: The urban brand in North America.

Speaker Change: Is.

Speaker Change: Also sharing in a number of those items and it's helping them very much as well. So product is number one number two I think they have a very strong.

Speaker Change: Marketing group and some of their.

Speaker Change: Marketing.

Speaker Change: Initiatives are proving to be very successful in growing our customers.

Francis Conforti: And I think that about does it.

Speaker Change: And I think that doesn't kill anything you want and I would add just that.

Sheila Harrington: Sheila, anything you want to add? I would add just that the women's wear in Europe has... I'm very excited to see the momentum over the quarter starting in Q3 last year. They had tremendous growth Q4 and that accelerated into Q1 very nicely. I do think there's strong partnership between Europe and North America that I'm quite excited about with Shea and Emma's leadership. So I think we're only at the beginning.

Speaker Change: Women's wear and Europe has continued to find momentum.

Speaker Change: Over the quarter and starting in Q3 last year that tremendous growth Q4, and accelerated into Q1 very nicely and do you think the strong partnership between Europe, and North America and quite excited about let's say in Mo's leadership.

Speaker Change: We're only at the beginning.

Speaker Change: Thank you.

Speaker Change: Our next question.

Adrienne Yih: It comes from the line of Adrienne Yih from Barclays. Your question, please. Great. Thank you very much. I have to say, I don't think I've seen all of the brands with this spot on at the same time in years. So really, you know, Dick, like you said, congrats to, like, all the brand leads. My questions are... You're welcome. So a couple of quick ones.

Speaker Change: It comes from the line of Adrian <unk> from Barclays. Your question. Please.

Speaker Change: Alright, Thank you very much.

Speaker Change: I have to say I don't think I've seen all of the brands with the spot on at the same time in years. So really no take like you had said congrats to like all the brand leads.

Ken: Mike This is Ken.

Speaker Change: Youre welcome.

Speaker Change: So couple of quick ones on <unk>.

Francis Conforti: Primarily on Urban Outfitters, I know at one point you were talking about kind of a different format, perhaps making them smaller to be more productive. Has that actually happened yet?

Speaker Change: Carolyn on urban Outfitters.

Speaker Change: The.

Speaker Change: I know at one point, you were talking about kind of a different format, perhaps making them smaller to be more productive.

Speaker Change: Actually happened yet.

Melanie Marein: And then on Melanie, on the early inventory, is that to avoid tariffs? Because I know you're on a shorter cycle than most, or is it to kind of anticipate congestion? So just curious about that.

Lorraine Hutchinson: And then on Melanie on the early inventory is that to avoid tariffs because I know you don't have a shorter cycle than most or is it kind.

Speaker Change: I anticipate congestion so just curious about that my final one would be.

Melanie Marein: My final one would be, you're always on air, and to try to kind of cut some costs by going to boat increases sort of some uncertainty, so I'm wondering if that is consistent with the speed model. Thank you.

Speaker Change: Always on air and to try to kind of cut some costs by going to both increase and sort it.

Speaker Change: Some uncertainty so I'm wondering if that is consistent with the speed model. Thank you.

Speaker Change: Yeah.

Speaker Change: Yeah.

Melanie Marein: I can answer the inventory question and then we can answer the other ones that you have, Adrienne. So our inventory position at the end of the first quarter really reflects the fact that inventory transit times were faster than average. We also probably had some early receipts to bring in inventory ahead of the uncertain tariff outlook, but a lot of it had to do with the inventory arriving earlier than planned.

Speaker Change: Okay I can answer the inventory question and then we can answer any other ones that you have Adrian so our inventory position at the end of the first quarter really reflects the fact that inventory transit times were faster than planned.

Speaker Change: We also probably had some early receipts to bring in inventory ahead of the uncertain tariff outlook, but a lot of it had to do with the inventory arriving earlier than planned in the second quarter.

Melanie Marein: In the second quarter, the story changes a little bit. I think it, while there is some fashion risk of bringing product in early, we believe that it is prudent planning to bring in fall inventory, which is less sensitive to fashion early, given the uncertain tariff outlook and any potential supply chain disruptions that it could cause. That could occur in the future. So those are our current plans for Q2, again, that we would likely have inventory ahead of our sales.

Speaker Change: The story changes a little bit I think it while there is some fashion risk of bringing product in early.

Speaker Change: Is that it is prudent planning to bring in inventory, which is less sensitive to fashion early given the uncertain tariff outlook and any potential supply chain disruptions that could occur.

Speaker Change: In the future.

Speaker Change: So those are our current plans for Q2 again that light.

Speaker Change: We have inventory ahead of our sales graph adrianne to your last question.

Melanie Marein: Adrienne, to your last question, going from air to boat definitely adds about 30 days. to delivery time, and you're right, there is always a risk as you go out in time that the fashion might not be as accurate as we would like it to be. So to offset that, we are working very hard to use some of the advanced technologies to shorten that time.

Speaker Change: Going from air to boat definitely adds about.

Speaker Change: 30 days.

Speaker Change: Delivery time, and Youre right. There is always a risk as you.

Speaker Change: Go out in time.

Speaker Change: <unk> might not be as accurate as we would like to compete so to offset that we are working very hard.

Speaker Change: To use some of the advanced technologies.

Speaker Change: To shorten that time period.

Shea Jensen: And Shea, I think Adrienne wanted to know about the smaller format. Yeah. Hi, Adrienne. We have not, per se, made any adjustments yet, but we have a ton of flexibility over the next couple of years with our fleet as leases become available. And so, even as soon as a couple of this year. And so, as we look at leases, we'll be looking either to relocate and downsize where we think we're over-spaced or potentially downsize in place. Our goal is to make sure that we are positioned close to our customers. And so, as we have this flexibility, I think we'll be looking to do that where, again, we feel like we're over-spaced.

Speaker Change: And Jay I think Adrian wanted to know about smaller, Florida, Yeah, Hi, Adrian we have not.

Speaker Change: Fay made any adjustments yet, but we have a ton of flexibility over the next couple of years with our fleet as leases become available and so.

Speaker Change: Even as soon as a couple of this year and so as we look at leases will be looking either to relocate and downsize, where we think we're overstay.

Speaker Change: Potentially downsize.

Speaker Change: You know our goal is to make sure that we are positioned close to our customer and so as we have this flexibility I think we'll be looking to do that where we're again, we feel like we're over space you may want to talk a little bit about the Houston store.

Shea Jensen: You may want to talk a little bit about the Houston store and the size of that. Yeah. One of those examples is one of our Houston stores where we'll be downsizing a couple thousand square feet and also applying our new store concept. We're really excited about that. And that'll open later this fall.

Speaker Change: Size of that yes, one of those examples.

Speaker Change: One of our Houston stores, where we'll be downsizing a couple of thousand square feet and also applying our new store concept, we're really excited about that and that'll open later this fall.

Speaker Change: Thank you and our next question comes from the line.

Matthew Boss: And our next question comes from the line. of Matthew Boss from J.P. Morgan. Your question, please. Thanks, and congrats on a nice quarter. Thank you.

Matthew Boss: Matthew boss from Jpmorgan Your question. Please.

Matthew Boss: Thanks, and congrats on a nice quarter.

Matthew Boss: Thank you.

Richard Hayne: So Dick, could you elaborate on performance by brand, what you've seen in May, maybe your larger picture view on consumer spending on apparel in the back half of the year, just all of the moving parts right now.

Speaker Change: So <expletive> could you elaborate on performance by brand what you've seen in May maybe your larger picture view on consumer spending on apparel in the back half of the year just all of the moving parts right now and then Melanie on sustainable topline growth at the urban brand.

Melanie Marein: And then Melanie, on sustainable top line growth at the urban brand, what's a reasonable operating margin, you think for the urban brands?

Speaker Change: What's a reasonable operating margin you think for the urban brands multiyear.

Richard Hayne: I'll take your first question. May to date, we see the comp sales being very similar to the Q1 print. When we look at Comparisons against same period last year, we believe total retail segment comp. could register in the mid-single digit. for Q2.

Matthew Boss: I'll take your first question.

Matthew Boss: May to date, we see their comp sales being very similar to the Q1 print.

Matthew Boss: When we look at.

Matthew Boss: Comparisons against the same period last year, we believe total retail segment comps.

Matthew Boss: Register in the mid single digits.

Matthew Boss: Q2.

Richard Hayne: I think that Melanie went over that, but I'll read it. Reiterate it, we think it might include a mid single digit comps for both anthropology and free people free people brands. A low single-digit positive call for the Urban brand. and Strong Double-Digit Growth in Average Active Subscribers and Revenues for New. and double-digit sales growth for the wholesale segment. When you combine all of those, we believe that total URBN Q2 sales could increase in the high single-digit.

Matthew Boss: I think not only went over that.

Matthew Boss: Reiterated we think it might include a mid single digit comps for both Anthropologie and free people.

Matthew Boss: Free people brands.

Matthew Boss: And low single digit positive comp for the urban brand.

Matthew Boss: Strong double digit growth in average active subscribers and revenues for newly.

Matthew Boss: And double digit sales for the wholesale segment. When you combined all of those we believe that total you RFP in Q2 sales.

Matthew Boss: The increase in the high single digit range.

Richard Hayne: And then, Matt, I'll take your question on UO's return to profit. And first, I just want to give Irwin some more congratulations on airtime here. We're just really excited to see the continued progress that the team is making. Your first positive comp in some time, first positive store comp in North America in some time, you know, continued reduction in their markdown rate, you know, based on improved product performance, marketing, and inventory management. You know, the creative execution and marketing continues to improve, which has seen a new customer acquisition. Just, you know, just a ton of boxes being checked there, which is great to see.

Matthew Boss: And then.

Matthew Boss: I'll take your question on Europe returned to profit.

Matthew Boss: I just want to give a urban.

Speaker Change: Mark Congratulations and airtime here, we're just really excited to see the continued progress the team is making.

Matthew Boss: Your first.

Speaker Change: Your comp in some time.

Speaker Change: Positive store comp in North America, and some time continued reduction in their markdown rate.

Matthew Boss: Based on improved product performance marketing and inventory management.

Matthew Boss: The creative execution and market continues to improve which has seen a new customer acquisition.

Matthew Boss: Just a ton.

Matthew Boss: Box is being checked there which is great to see.

Richard Hayne: You know, I don't know that we've landed exactly on a number as to where Urban should, you know, should operate from an operating profit just yet. I think we're uber-focused on turning the business back to profitability. We know that that won't happen this year. I think in order to do it right, it's about slow and steady progress, you know, capturing that right customer, you know, and really improving, you know, all those different metrics that I talked about. I think when you think about, you know, mid to high singles being a reasonable opportunity for the brand, you know, but again, that's going to take some time, and it's not going to happen this year.

Matthew Boss: I don't know that we've landed exactly on a number as to where urban.

Speaker Change: <unk> operate from an operating profit just yet I think we are Uber focused on turning the business back to profitability, we know that that won't happen. This year I think in order to do it right, it's about slow and steady progress.

Matthew Boss: Capturing that right customer.

Matthew Boss: And really improving all of those different metrics that I talked about I think when you think about mid to high singles being a reasonable.

Matthew Boss: <unk> for the brand.

Matthew Boss: But again, that's going to take some time and it's not going to happen. This year. We're just focused on continuing to make the progress continuing to fall back on that loss and doing it right.

Richard Hayne: We're just focused on continuing to make the progress, continue to fall back on that loss and doing it.

Matthew Boss: Okay.

Paul Lejuez: And our next question comes from the line of Paul Lejuez from Citi. Your question, please. Hey, thanks, guys. Maybe just to go back to UO margins for a second.

Speaker Change: Thank you and our next question comes from the line of Paul Lajoie from Citi. Your question. Please.

Paul Lajoie: Hey, Thanks, guys, maybe just to go back to margins for a second.

Francis Conforti: Frank, maybe reframe for us where rent and occupancy is today for the UO brand versus where it was, let's say, pre pandemic, 18, 19, whatever's a good year you think to use. And same question for SG&A and that UO brand. Just let me get an idea of how much recapture opportunity there is on the margin as sales increase. Yeah, and you know, those specific rates Paul, change a lot as it relates to the mix of the business between stores and digital. As you know, we're going to follow the customer wherever they are, you know, as Shea talked about, store formats are going to be shrinking from a square footage perspective, that's going to affect your occupancy leverage.

Speaker Change: Greg maybe can you frame for us where rent and occupancy is today for the UO brand versus where it was let's say pre pandemic 18 19, whatever the good year, you think to use and same question for the SG&A in that net you or Brian just wanted to get an idea of how.

Paul Lajoie: Much.

Paul Lajoie: Recapture opportunity there is on the margin.

Paul Lajoie: Sales increased.

Paul Lajoie: Yeah.

Paul Lajoie: Yes.

Speaker Change: Specific rates Paul changed a lot as it relates to the mix of the business between stores and digital.

Paul Lajoie: As you know we're going to follow the customer wherever they are.

Speaker Change: As Jay talked about store formats are going to be shrinking from a square footage perspective, that's going to affect your occupancy leverage. So I don't think those rates are.

Francis Conforti: So I don't think those rates are as important from a focus right now. I think the important focus is on maintained margin improvement, which the brand is seeing, driven by lower markdowns. And, you know, where we are is we've made a ton of progress, but we're not at historical averages just yet. You know, we've fought back a lot, but there is still remaining opportunity this year, and there will still be opportunity next year. I think the next leg after maintained is that they've now started to, as a total brand, hit positive comps, and Urban North America is at positive store comps and is inching even closer to positive total comps.

Speaker Change: As important from a focus right now I think the important focus is on maintained margin improvement, which the brand is seeing.

Speaker Change: Driven by lower markdowns and where we are is we've made a ton of progress, but we're not at historical averages just yet.

Speaker Change: Add back a lot, but there is still remaining opportunity this year and there will still be opportunity next year.

Speaker Change: The next leg. After maintained is that they've now started to as a total brand had positive comps and urban North America positive store comps and as engine even closer to positive total comps is the leveraging that occupancy in those fixed expenses.

Francis Conforti: And so leveraging that occupancy and those fixed expenses, you know, I think we think we have opportunity to do that in the back half of this year, and then continue that progress next year, which would be the next leg in clawing back that operating profit loss and turning the brand back into a store.

Speaker Change: I think we think we have opportunity to do that in the back half of this year and then continue that progress next year.

Speaker Change: Which would be the next leg and claw back that operating profit loss and turning the brand back into back into profit.

Alex Stratton: Thank you, and our next question comes from the line of Alex Stratton from Morgan Stanley. Your question please. Perfect. Thanks so much for taking the question. Just a couple from me.

Speaker Change: Thank you and our next question comes from the line of Alex <unk> from Morgan Stanley. Your question. Please.

Speaker Change: Perfect. Thanks, so much for taking the question just a couple from me one on guidance.

Melanie Marein: One just on guidance, you know, you outperformed on gross margin quite a bit, but maintaining the full year guidance. So just curious kind of what's holding you back from flowing that through and the puts and takes as you see it on that line item for the rest of the year.

Speaker Change: One on gross margin and quite a bit but maintaining the full year guidance. So just curious kind of what's holding you back from flowing that through and the puts and takes as you see it on that line item for the rest of the year.

Francis Conforti: And then just on the tariff mitigation tactic of very selectively taking price, I'm just curious what types of categories you see as having the biggest opportunity and also how quickly you can implement that. I can take those, Alex. I just want to stress on price. You're right, it is different from one category to the next, but I want to stress that we're being extremely thoughtful and careful about protecting things like opening price points, targeting areas where we believe we could gently and sparingly raise some price points, but we're extremely focused on protecting that consumer experience.

Speaker Change: And then just on the tariff mitigation tactics very selectively taking price.

Speaker Change: Just curious what types of categories, you see as having the biggest opportunity and also how quickly you can implement that.

Speaker Change: I can take those Alex I, just want to stress on on price.

Speaker Change: Youre right. It is different from one category to the next.

Speaker Change: But I want to stress that we're being extremely thoughtful and careful about protecting things like opening price points targeting areas, where we believe we can gently in sparingly were raised some price points, but we're extremely focused on protecting that consumer experience youre right. Its different from one category to the next.

Francis Conforti: You're right, it's different from one category to the next, but it is not the biggest piece of our mitigation strategies by any means, and I just want to stress that with a high level of importance.

Speaker Change: But.

Speaker Change: It is not the biggest piece of our mitigation strategies by any means and I just I just want to stress that with a high level of importance and let me add to that.

Francis Conforti: And let me add to that, Frank, before you go to the rest of it. We are definitely considering this raising of prices as the last Item that we will try in our portfolio of tricks to try to offset this tax. I think that what you'll see, Alex, is that a product that has a little bit more make in it, has a little bit more embellishment, and is a little bit, probably a little bit higher priced, would be where we would try to get a little bit extra if we need to. If we don't need to, we won't make the change.

Speaker Change: The rest of it.

Speaker Change: We are definitely considered raising our prices as the last.

Speaker Change: Item that we will try and our.

Speaker Change: Portfolio metrics.

Speaker Change: To try to offset this tax.

Speaker Change: I think what you'll see.

Speaker Change: Is that.

Speaker Change: Product that has a little bit more making it has a little bit more embellishment and is a little bit probably a little bit higher priced would be where we would try it again.

Speaker Change: A little bit of extra if we need to if we don't need to we won't make the change.

Melanie Marein: And Alex, as to your first part of your question, as it relates to the plans for the year, you know, certainly we're really proud of the Q1 execution and how the business continues to perform. It seems like the customer has held up and certainly our brands are likely gaining some market share and performing at a high level. I think planning the business right now, you know, in total at a high single digit, given the, you know, the continued uncertainty all over the news and all over the media. Feels like an appropriate place to be and a conservative, hopefully a conservative place to, you know, place to be.

Alex: And Alex and to your first part of your question as it relates to the plans for the year.

Speaker Change: Certainly we're really proud of the Q1 execution and how the business continues to perform it seems like that customer has held up.

Speaker Change: And certainly our brands are likely gaining some market share and performing at a high level.

Speaker Change: I think planning the business right now in total at a high single digit given the continued uncertainty all over the news and all over the media feels like an appropriate place to be in a conservative hopefully.

Speaker Change: Our conservative place.

Melanie Marein: The lion's share of the beat in Q1 was because we did exceed our top line performance and deliver them up 11% top line growth. I hope that opportunity continues to persist, but, you know, I think just given the constant news, you know, around the uncertainty on the consumer, we feel like it makes sense to plan conservative and I hope that our plans are conservative. Thank you.

Speaker Change: To be the lion's share of the beat in Q1 because.

Speaker Change: Because we did.

Speaker Change: Our topline performance and deliver almost 11% top line growth I hope that opportunity continues to persist, but I think just given the constant news.

Speaker Change: Around the uncertainty on the consumer we feel like it makes sense to play and conservative and I hope that our plans are conservative.

Speaker Change: Okay.

Speaker Change: Okay. Thank you and our next question comes from the line of Dana Telsey.

Dana Telsey: And our next question comes from the line of Dana Telsey from Telsey Advisory Group. Your question, please. Good afternoon, and I echo the fact that seeing all three brands do such positive results, so nice to see with the past.

Speaker Change: Until the advisor group your question please.

Dana Telsey: Good afternoon, and I Echo the fact that seeing all three brands do such positive results. So nice to see what the path newly is very exciting and would love to hear how you're thinking about the profitability profile of newly compared to the base business and how you're thinking of pricing on newly in regard to task.

David Hayne: Nuuly is very exciting and would love to hear how you're thinking about the profitability profile of Nuuly compared to the base business and how you're thinking of pricing on Nuuly in regard to tariffs versus the other brands' business. Is there a difference, and are you seeing anything different in the customer in this environment with Nuuly and attracting new customers? And also, is there any carryovers, any cannibalization, or are they the same customers in the brand?

Speaker Change: Versus the other brands business is there a difference.

Speaker Change: Are you seeing anything different in the customer in this environment with newly and attracting new customers and also is there any is there any.

Speaker Change: Carryover is any cannibalization or are there the same customers and the brands. Thank you.

David Hayne: Thank you. Great, thanks Dana. I will try and hit each of those if I can recall them. The, yeah, the business has been very exciting. We've been very, very encouraged with the first quarter, you know, to grow active subscribers almost 23% within the quarter. It was just a really amazing feat for the team. We're feeling very good about it. From a pricing standpoint, we are aware, obviously, of all the tariff commotion that is occurring. We have not seen any sort of impact at this moment yet. In terms of taking price, it's a different proposition, obviously, for a subscription business to take price versus...

Speaker Change: Great. Thanks, Dana I will try and hit each of those if I can I'll call them.

Speaker Change: The.

Speaker Change: Yes, the business has been very exciting we've been very very encouraged with the first quarter to grow active subscribers almost 23% within the quarter. It was just a really amazing feat for the team we're feeling very good about it.

Speaker Change: From a pricing standpoint, we are aware obviously of all the tariff.

Speaker Change: That is occurring.

Speaker Change: We have not seen any sort of impact at <unk>.

Speaker Change: This moment yet.

Speaker Change: In terms of taking price, it's a different proposition, obviously for a subscription business to take price versus.

David Hayne: retail brands. We don't have any intentions to take price at the moment and we're going to be navigating the cost pressures and the cost prices that would may occur the same way the other brands are here at the business.

Speaker Change: Retail brands, we don't have any intentions to take price at the moment.

Speaker Change: And we're gonna be navigating the cost pressures and the cost prices that we may incur the same way or the other brands are here at the business.

Speaker Change:

Richard Hayne: Dana, I just wanted to jump in on the newly profitability. Dave took, I think, three of your four. Great job, Dave. We've said from the start, you know, obviously we felt like we could get this business to profitability, and congratulations to Dave and team doing it so quickly, hitting their first full year of profitability last year, hitting above 5% in Q1 this year. We've also said that we didn't feel like it would be dilutive to our 10% URBN goal. And what that implies is that we think that business can run at 10% operating profit.

Speaker Change: Okay.

Speaker Change: I just wanted to jump in on that.

Speaker Change: The ability as they took I think three of your four three.

Speaker Change: Great job.

Speaker Change: We said from the start obviously, we felt like we can get this business to profitability and congratulations to Dave and team doing it so quickly hitting their first full year of profitability last year hitting above 5% in Q1. This year. We've also said that we didn't feel like it would be dilutive to our 10% goal.

Speaker Change: And what that implies is that we think that business can run at 10% operating profit I don't think we set a goal beyond that but I don't think thats appropriate for a brand that's still so young and.

Richard Hayne: I don't think we've set a goal beyond that, but I also don't think that's appropriate for a brand that's still so young and still has so much growth opportunity ahead of it and so much for us to learn. But, you know, we don't think that newly would be dilutive to URBN going forward. And, you know, we feel like 10% is an achievable target for us down the road. And just, you know, continued congratulations to Dave and team on 60% growth. It's pretty damn impressive. Thank you.

Speaker Change: Still have so much growth opportunity ahead of it and so much for us to learn but we don't think that we would be dilutive to <unk> going forward and we feel like 10% is an achievable target for it down that far down the road and just continued congratulations Dave and team of 60% growth, it's pretty damn impressive.

Speaker Change: Yeah.

Speaker Change: Thank you.

Mark Altschwager: And our next question comes from the line of Mark Altschwager from Baird. Your question, please. Good afternoon. Thanks for taking my question and congrats on the great results here.

Speaker Change: Our next question comes from the line of Mark <unk> from Baird. Your question. Please.

Speaker Change: Good afternoon. Thanks for taking my question and congrats on the great results here.

Melanie Marein: For Melanie and or Frank, I guess, first, could you quantify the markdown benefit in Q1, just of the 200 basis point kind of core gross margin improvement, you know, more than half, roughly half, any help there and how to think about that for the rest of the year? And then just bigger picture, you know, Q1, as you mentioned, you're nearing the 10% operating margin goal. I think it would be unusual for the fiscal year to not exceed the Q1 rate, just looking at historical trends. And yet it seems like there are some big levers ahead still on margin with UO profitability increasing over time, newly scaling.

Speaker Change: Melanie.

Speaker Change: Frank I guess first could you quantify the markdown benefit in Q1 of the 200 basis point kind of core gross margin improvement.

Speaker Change: More than half.

Speaker Change: We have seen any help there and how to think about that for the rest of the year and then just bigger picture Q1, as you mentioned youre nearing the 10% operating margin goal.

Speaker Change: I think it would be unusual for the fiscal year to not exceed the Q1 rate just looking at historical trends and yet it seems like there are some big levers ahead still on margin with you or profitability increasing overtime newly scaling. So maybe if you could just speak bigger picture, how youre thinking about the long term algo.

Melanie Marein: So maybe if you could just bigger picture to how you're thinking about the long term algo, do you think you can take even margins higher than the 10% rate? Or do you choose to reinvest the upside and drive a faster top line through increased marketing spend as you as you approach that 10% goal?

Speaker Change: You can take EBIT margins higher than the 10% rate or do you choose to reinvest the upside and drive a faster top line through increased marketing spend as you as you approach that 10% goal.

Melanie Marein: Just be great to hear how you're thinking about that. Thank you.

Speaker Change: Good to hear how you're thinking about that thank you.

Melanie Marein: So, Mark, Dick and I are here giggling a little bit, because, you know, we know once we get near a target, we know the expectations, always the bar gets raised and the street wants more. So, you know, certainly we are still targeting a 10% operating profit rate and confident we can achieve it. We delivered 100 basic points of improvement last year, reaching 8.6% in fiscal 25, based on our plans of 50 to 100 this year. That would put us at 9.6% and certainly we have the opportunity to beat that.

Speaker Change: So mark I think and I are here gave us a little bit.

Speaker Change: Once we get near a target we know the expectation, though is the barghest raised an industry once more.

Speaker Change: Certainly we are still targeting a 10% operating profit rate and confident we can achieve it we will.

Speaker Change: <unk> delivered 100 basis points of improvement last year, reaching eight 6% in fiscal 'twenty five based on our plans of 50 to 100. This year that would put us at 96, and certainly we have the opportunity to beat that what I would say is before we set a new goal is it the first one.

Melanie Marein: What I would say is before we set a new goal, let's hit the first one. And let's prove we can operate at that. You know, I think you're absolutely correct in that with Urban's turnaround, and then once that business turns into profitability with newly, you know, having opportunity to continue to grow that rate. Yes, there is upside, but for us right now, before we set any new targets, I'd like to hit the 1st target and and then we can get back to you back to you with what we think the upside is as it relates to markdowns for the 1st quarter.

Speaker Change: And then let's prove we can operate at that.

Speaker Change: I think youre, absolutely correct in that with urban turnaround and then once that business turns into profitability.

Speaker Change: With newly having opportunity to continue to grow grow that rate, yes, there is upside.

Speaker Change: For US right now before we set any new targets.

Speaker Change: The first target.

Speaker Change: And then we can get back yes back to you with what we think the upside is.

Speaker Change: As it relates to the marked down for the first quarter it was about half.

Melanie Marein: It was about half of the of the 200, 204 basis points. Thank you.

Speaker Change: The 200 204 basis points that you mentioned.

Speaker Change: Yes.

Marni Shapiro: And our next question comes to the line of Marni Shapiro from the Retail Tracker. Your question please. Hey guys, congrats to all the teams and Shea, congrats to you on the urban improvements. The site looks amazing, that Beck's Court, that Georgene, like everyone looks like they want to hook up, it's amazing.

Speaker Change: Thank you and our next question comes from the line of Marni Shapiro from the retail tracker. Your question. Please.

Speaker Change: Hey, guys congrats to all the teams and say congrats to you on the urban improvements at the site looks amazing that Beck score that GA ing like everyone. It looks like they want to hook up it's amazing.

Speaker Change: I Wonder if you can touch on the changes you've made in marketing specifically social media because the brand has suddenly been in my seat very regularly with halls and in a very positive light.

Shea Jensen: I wonder if you can touch on the changes you've made in marketing, specifically social media, because the brand has suddenly been in my feed very regularly with hauls and in a very positive light, which is fantastic to see. If you could also just talk a little bit about On Rotation, I guess like what was the thinking behind this, you know, why Nike is a partner, though I love it, I'm just kind of curious what you're thinking was behind all of that. Yeah. First of all, thank you for the compliment. Great to hear. To your first question on social, it's a very keen observation, and I'll answer that really in two parts.

Speaker Change: It is fantastic to see and then if you could also just talk a little bit about on rotation I guess like what was the thinking behind this why Nike as a partner, though I love. It I am just kind of curious what your thinking was behind all of that.

Speaker Change: Yeah first of all thank you for the compliment great to hear.

Speaker Change: So your first question on social it's very keen observation and I'll.

Speaker Change: I'll answer that really into part of our team has been really working hard and I would describe it as.

Shea Jensen: Our team has been really working hard, and I would describe it as, you know, it's not really enough to just post on social anymore, and we've really taken a multi-platform approach. You know, it's not about Instagram. It's not just about Pinterest, and the team is really trying to get the right content, the right platform, the right product, and showing up in a truly authentic way and really optimizing for the algorithm, and that really means trying to get into the feed. So, in your case, it sounds like we're being successful. That's great to hear, and secondly, I think, you know, we're really trying to engage with customers, be an authentic part of the conversation, and sometimes that means jumping into the conversation.

Speaker Change: It's not really enough to just post on social anymore, and we've really taken a multi platform approach.

Speaker Change: It's not just about Instagram, it's not just about Penn Trust and the team is really trying to get the right content the right platform the right.

Speaker Change: <unk> brought us and showing up in a truly authentic way and really optimizing for the algorithm and not really means trying to get into the fee. So in your case it sounds like we're being successful.

Speaker Change: And secondly, I think you know, we're really trying to engage with customers being authentic part of the conversation.

Speaker Change: Sometimes that means jumping into conversation, sometimes that means lapping back really talking about a lot of user generated content and allowing our customers voice to be amplified and so I think it's great to hear that that seems to be working we're really proud of the creative.

Shea Jensen: Sometimes that means clapping back, really talking about a lot of user-generating content and allowing our customer voice to be amplified, and so I think it's great to hear that it seems to be working. We're really proud of the creative assets that are showing up out there. You mentioned the site. That's great to hear as well.

Speaker Change: Assets that are showing up out there you mentioned the site that's great to hear as well.

Shea Jensen: Secondly, you talked about on rotation. Obviously, the Nike launch that happened last week. We're excited to have launched with Nike. Of course, a big brand out there, one of the most popular brands with our customer. I would take this concept really back to our strategy. You know, and a great example of our teams really focusing on the customer. We know that brands matter a lot to our customer. And, you know, essentially, brands are really how they identify themselves. It's also how they sort of create community. And so, you know, the idea that brands are important is really what led to, what drives us to partner with great brands.

Speaker Change: Secondly, you talked about on rotation, obviously, the Nike launch that happened last week and we're excited to have lots of Nike of course, a big brand out there one of the most popular brands with our customer.

Speaker Change: I would take this concept really back to our strategy.

Speaker Change: And a great example of our teams really focusing on the customer.

Speaker Change: Now that brands matter, a lot to our customer and you know essentially brands are really how they identify themselves. It's also how they sort of create community and so.

Speaker Change: The idea that.

Speaker Change: That that brands are important is really what led to.

Speaker Change: What drives us to.

Speaker Change: <unk> partnered with Great brands Secondly, we've talked about this before these customers did not grow up as mall rats, they didn't grow up discovering retail retailers in the mall.

Shea Jensen: Secondly, we've talked about this before. These customers did not grow up as mall reps. They didn't grow up discovering retailers in the mall. They grew up quarantined in their house. And in many cases, brands found them on their phone and they were targeted. And so they really value in real life discovery. And so on rotation is really about taking those two things and bringing it to life in the platform of our store. And so we're really excited to have launched on rotation with Nike. I think you can expect other brands to show up and on rotation in different stores and different ways.

Speaker Change: They grew up quarantined in their house and in many cases brands found them on their phone and they were targeted and so they really value in real life discovery and so on rotation is really about taking those two things and bringing it to life in the platform far store and so we're really.

Speaker Change: Slated to have launched on rotation with Nike. Thank you can expect other brand.

Speaker Change: Other brands to show up in on rotation in different stores and different ways and just a great example of our team really focusing on giving the customer what they want.

Shea Jensen: And just a great example of our team really focusing on giving the customer what they want. Thank you.

Speaker Change: Okay.

Ike Boruchow: And our next question comes from the line of Ike Boruchow from Wells Fargo.

Speaker Change: Thank you and our next question comes from the line of like Boy Chow from Wells Fargo. Your question. Please.

Melanie Marein: Your question, please. Hey, good afternoon. Let me add my congrats. Two from me. First, maybe Frank or Melanie, on the SG&A rate, I believe three months ago, you said you expect it flat for the year. Is that reiterated? Because you're going to reinvest more? Or should you expect a little scale given the momentum on the top line?

Speaker Change: Hey, Good afternoon, let me add my congrats too for me.

Speaker Change: May.

Speaker Change: Frank or Melanie on the SG&A rate I believe three months ago. You said you expected flat for the year is that.

Speaker Change: Is that reiterated because you're going to reinvest more or should you expect that will scale given the momentum on the top line and then just on UO.

Shea Jensen: And then just on UO, you know, the turnaround's working. I guess the question is, do you expect this to be linear? Would you expect the comp to take a step back because you battle for margin in a certain quarter? Just kind of curious how you kind of envision this term playing out over the next 12 months.

Speaker Change: The turnaround is working I guess the question is do you expect this to be linear.

Speaker Change: Would you expect to comp to take a step back because you battle for margin in a certain quarter just kind of curious how you kind of envision this term playing out over the next 12 months. Thanks.

Melanie Marein: So I'll take the first part of your question. As it relates to SG&A for the full year, I would say I'm reiterating our guidance that we believe that full year rate of sales could be in line with sales. SG&A rate of sales, you know, would grow in line with sales growth. Now, by quarter, the relationship between sales and expense growth could be uneven as a result of marketing campaigns and other SG&A expenses.

Speaker Change: So I'll take the first part of your question as it relates to SG&A for the full year.

Speaker Change: I would say I am reiterating our guidance that we believe that full year rate of sales to be in line with sales SG&A rate of sales.

Speaker Change: <unk> would grow in line with sales growth now by quarter and then the relationship between sales and expense growth could be uneven as a result of marketing campaigns and other SG&A expense timing shifts.

Shea Jensen: And it's Shea, I can take that answer. You know, I would say that we certainly hope that this is a sequential build. I think what you see in retail is, you know, is an example of the inflection point coming a bit sooner because of the nature of the price type in that business. In retail, it's a much larger penetration of regular full price. And so, as the full price business and the health of that business returned a bit sooner because there's a larger penetration of full price. In the digital channel, we have had a larger penetration of discounting and promotional business.

Shay: Yeah, and it's it's Shay I can take that answer.

Speaker Change: I would say that we certainly hope that this is a sequential build I think what you see in retail is you know.

Speaker Change: <unk> is an example of the inflection point coming a bit sooner because of the nature of the price type in that business and retail it's a much larger penetration of regular full price and so as the full price business and the health of that business returned a bit sooner because there's a larger penetration of fault.

Speaker Change: And in the digital channel, we have had a larger penetration of discounting and promotional business and as we face those headwinds, it's going to take a bit longer for us to see that inflection point, we think as we get through the second quarter and through the back half of that this year.

Shea Jensen: And as we face those headwinds, it's going to take a bit longer for us to see that inflection point.

Shea Jensen: We think as we get through the second quarter and through the back half of that this year, we should see those trends play forward as we have seen in the retail channel. Thank you.

Speaker Change: We should see those trends play forward as we have seen in the retail channel.

Speaker Change: Okay.

Speaker Change: Thank you and our next question comes from the line of Janet Kloppenburg from J J K Research your question. Please.

Janet Kloppenburg: And our next question comes from the line of Janet Kloppenburg from JJK Research. Your question please. Hi, everybody, and congratulations.

Janet Kloppenburg: Hi, everybody and congratulations Mark.

Melanie Marein: That's a remarkable prank or dick. I think if you reach the high end of the gross margin guidance, you'll be at, you know, pretty much near historic levels on gross margin. So.

Speaker Change: Copel crank.

Speaker Change: Sure.

Speaker Change: I think if you reach.

Speaker Change: At the high end of the gross margin guidance.

Speaker Change: It'll be you know pretty much near historic levels on gross margin. So.

Tricia Smith: Maybe you could talk a little bit about the opportunity for the historical levels to move higher. And I also wanted to talk about the new occasion businesses at Anthropologie. Feels very much like what happened at MVMT, where the product performed well in the free people's stores, and then it was spun out. And I'm just wondering, is there an opportunity for that to happen at Anthropologie as well? Thanks.

Speaker Change: Maybe you could talk a little bit about the opportunity for the historical levels to move higher.

Speaker Change: And I also.

Speaker Change: Wanted to.

Speaker Change: Talk about the.

Speaker Change: The new occasion businesses at Anthropologie feels very much like what happened at movement, where the product performed well in the free people stores and then it was spun out.

Speaker Change: And I'm, just wondering is doing opportunity for that to happen at anthropologie as well.

Speaker Change: Thanks.

Francis Conforti: Janet, I think on the gross profit margin, the historical levels is probably not the right bar for us. I think we have had the Urban Outfitters brand sort of masking a little bit of what the great improvement and consistent improvement has been going on in anthropology and free people for some time now. We've done a great job as a company sort of lowering what our historical averages have been in markdown rates, and it's seen by the consistent mid to high teens operating profits that anthropology and free people have been running at for the last several years.

Janet Kloppenburg: Janet I think on the gross profit margin.

Speaker Change: The historical levels is probably not the right bar for us.

Speaker Change: I think we.

Speaker Change: I have had the urban outfitters brand.

Janet Kloppenburg: Sort of.

Speaker Change: Masking a little bit of what the great improvement and consistent improvement has been going on in Anthropologie and free people for some time now.

Speaker Change: We've done a great job is the company sort of lowering.

Speaker Change: Our historical averages have been and in markdown rates and as seen by the consistent mid to high teens operating profit that anthropologie and free people have been running at for the last several years.

Francis Conforti: So, I do think, yes, you're right. We're close to eclipsing that, but I do think that there's a new bar that is being set and it's been a little hard to see that over the last couple of years, which where Urban has been. And you're starting to see that come to fruition as that brand is starting to really, that turnaround is really starting to take hold.

Speaker Change: I do think yes youre right.

Speaker Change: The eclipsing that but I do think that there is a new bar that has been set and it's been a little hard to see that over the last couple of years, which.

Speaker Change: Urban has been.

Speaker Change: And you are starting to see that come to fruition is that brand is starting to really that turnaround is really starting to take hold.

Tricia Smith: Hi Janet, this is Tricia. Thanks. We're super excited about our new businesses, Cellendean and Daily Practice, as well as our lingerie and sleepwear businesses are all significantly outperforming the total.

Tricia: Hi, Janet this is tricia thanks Ware.

Tricia: Super excited about our new businesses, selling D&O daily practice as well as our laundry.

Speaker Change: Sleeper businesses are all significantly outperforming the total.

Tricia Smith: We don't really have any plans currently to spin off standalone stores, but I think as we continue to grow those brands over time, we'll continue to assess the opportunity. We've had tremendous success with some pop-up location experiences with our Cellendean brand, so we'll continue to monitor that over time. But no plans currently, but yes, I'm very pleased with the growth of those brands and what they're contributing to the overall growth of the college. Thank you.

Speaker Change: We don't really have any plans currently to spin off standalone stores, but I think as we continue to grow those brands over time, we will continue to assess the opportunity. We've had tremendous success with some pop up location experiences with our <unk> brand. So we'll continue to monitor that that over time, but no plans currently but yes, I'm very pleased with that.

Speaker Change: Those brands, what they're contributing to the overall grasp anthropologie.

Speaker Change: Thank you.

Simeon Siegel: And our final question comes from the line of. Simeon Siegel from BMO Capital Markets. Your question please. Thanks. Hey, good afternoon. Great job, everyone. So the wholesale EBIT margin looks more and more attractive each quarter.

Speaker Change: And our final question comes from the line of.

Speaker Change: Simeon Siegel from BMO capital markets. Your question. Please.

Simeon Siegel: Thanks, Hey, good afternoon, great job everyone.

Simeon Siegel: So the wholesale EBIT margin looks more and more attractive like each quarter any thoughts to how large the wholesale business can become and how high is high for the margins for the channel and then just two quick ones whats the right way to think about the impact from carrier costs and broader delivery expense going forward and then I think there was a comment about reduction in packages per order, helping gross margin could you just elaborate.

Melanie Marein: Any thoughts to how large the wholesale business can become and how high is high for the margins for the channel? And then just two quick ones. What's the right way to think about the impact from carrier costs and broader delivery expense going forward? And then I think there was a comment about reduction in packages per order helping gross margin. Can you just elaborate on what that was as well? Thanks, guys.

Simeon Siegel: And what that was as well thanks guys.

Francis Conforti: I'll take the last one first and then let Sheila talk about wholesale. Packages per order, yes, we've done a good job at reducing those. I think there's a lot that goes into planning inventory and having it in the right place. So, certainly thanks to the logistics team, thanks to Dave and the tech team for supporting that effort. There's a lot of moving pieces behind that and trying to get that right and can have a meaningful impact and improvement from a delivery expense perspective. So, we've seen some of those benefits and hope that they will continue and I think there's still opportunity to come there.

Speaker Change: Oh.

Speaker Change: I'll take the last one first and I'll, let Shelley talked about about wholesale.

Speaker Change: Packages per order, yes, we've done a good job at reducing those I think there's a lot that goes into planning inventory and having it in the right place so.

Speaker Change: Certainly thanks logistics team thanks for even the tech team for supporting that effort.

Speaker Change: A lot of moving pieces behind that and trying to trying to get that right and can have a meaningful impact and improvement from a delivery expense perspective. So we've seen some of those benefits and hope that they will continue and I think there's still opportunity to come there as it relates to carriers, we haven't seen.

Francis Conforti: As it relates to carriers, we haven't seen really any challenges right now. As Melanie mentioned, we've been faster. I think inbound has been faster than the brands anticipated, which you've seen in their inventory numbers and the cost has not been a challenge. What happens in the back half of the year, as it relates to congestion and maybe a lot of companies bringing stuff in earlier, your guess is as good as mine. It's something that we'll continue to monitor. But we're not experiencing any cost or speed pressures right now, but it's something we'll continue to continue to monitor closely.

Melanie Miranda: Really any challenges right now as Melanie mentioned.

Speaker Change: We've been faster.

Speaker Change: I think inbound has been faster than the brand's anticipated, which has seen in their in their inventory numbers and the costs have not been a challenge.

Speaker Change: What happens in the back half of the year, but as it relates to as it relates to congestion and maybe you know a lot of companies, bringing stuff in earlier Youre guess is as good as mine is something that we'll continue to monitor but were not experiencing any cost or Steve pressures right now, but it's something we'll continue to continue to monitor closely.

Sheila Harrington: Right, and I can jump in with wholesale. Yeah, we are very pleased with our wholesale, both sales as well as profit. And I think we're committed to our profit.

Speaker Change: Okay, and I can jump bandwidth wholesale yeah, we are very pleased with our wholesale sales.

Speaker Change: I think we're committed to our profit I think that was our goal coming out of the pandemic of how to get this channels to be consistently profitable.

Sheila Harrington: I think that was a goal coming out of the pandemic of how to get this channel to be consistently profitable with the right partners. And that continues to be our strategy in wholesale, is to work in a line with brands that have the same value proposition as us in terms of care of product and brand. And with that, we're seeing nice growth with those brands and continue to see a really good outlook.

Speaker Change: With the right partners and that is continues to be our strategy now is to work.

Speaker Change: Working online with brands with our sustained value proposition is off in terms of care products and brands.

Speaker Change: And with that we're seeing nice growth with those brands and continue to see a really good outlook, but I would also say is without saying how big the wholesale business a free feel free people on <unk> b.

Sheila Harrington: What I would also say is, without saying how big the wholesale business for free people and FP movement could be, is on top of that partnership, we've been able to seed some of our new labels with some wholesalers that we're really proud of, whether that's our freest label, or are we the free denim brand? And that's allowing us to grow into new account base, which we're quite excited about for the future.

Speaker Change: And on top of that partnership we've been able to seed some of our new labels with some wholesalers that we're really proud of whether that's our freest slaybaugh where are we the free denim brands and that's allowing us to grow into new account base, which we're quite excited about for the future.

Operator: Okay, well, I think that concludes the session for today. I thank you very much for joining, and I hope to see you in a few months. Thank you, ladies and gentlemen, for your participation in today's conference.

Speaker Change: Okay, well I think that concludes the session for today. Thank you very much for joining and I hope to see you in few months.

Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Operator: This does conclude the program. You may now disconnect.

Operator: Good day.

Speaker Change: Yes.

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