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Dive Brief: - Urban Outfitters Inc. reported record second-quarter net sales of $1.7 billion, an increase of 10.4% year over year. The company operates Urban Outfitters, Nuuly, Anthropologie and Free People, and attributed Q2 growth in part to 28.6% net sales increase at its Nuuly rental business, plus 18.6% growth in wholesale, according to a Wednesday press release. - Sales at Nuuly reached $179 million in the second quarter, driven by the addition of nearly 113,000 new average active subscribers, a 30.4% year-over-year increase. “We actually crested over 500,000 active subscribers in early June before easing back into our typical summer seasonality,” Nuuly President Dave Hayne said on a Wednesday call with analysts. - Meanwhile, overall retail net sales grew 8%. Comparable retail sales were up 6.2%, led by high single-digit digital channel growth and mid single-digit retail store sales growth. Retail comps at FP Group grew 10%, with Urban Outfitters up 8.4% and Anthropologie up 3%. Dive Insight: Nuuly’s meteoric success in the clothing rental market helped parent company Urban Outfitters Inc. set a first-half record, with total company net sales increasing 10.9% to $3.14 billion. Nuuly rental subscription segment net sales were up 31.4% for the half. However, products from Urban Outfitters, Anthropologie and Free People are a large part of Nuuly’s success story, and comprised around 45% of Nuuly’s inventory in 2025, according to Wells Fargo analysts. “We remain thrilled to have our URBN sister brands at the heart of our assortment while continuing to broaden the selection of brands around them,” Hayne said on Wednesday. “Brand participation on Nuuly is truly a two-way street. Larger partners see meaningful follow-on sales across their own direct channels, while emerging brands appreciate the visibility, brand awareness, and new customer acquisition they derive from the platform.” Hayne added that second-quarter brand additions included Collina Strada, Faithfull, and Edikted, plus capsule collaborations with Simon Miller and Tyler McGillivary, and Revolve's private label brand. Nuuly’s Q2 brand choice count was up 35% to nearly 33,000, and Haynes said Nike is rolling out this month, with J.Crew launching in October. However, Hayne said that the company’s large brand assortment can be overwhelming for some customers. “To address this, we have looked beyond fashion and retail for models to emulate, and streaming platforms like Netflix and Disney+ serve vast catalogs of content to large subscriber bases, yet their experiences feel tailored to the user,” Hayne said. “Over the past year, we have improved our personalization engine to serve smarter recommendations based on style and brand affinities, resulting in big increases in satisfaction metrics.” Nuuly also added a custom fit guidance engine, and Hayne said the company was “focused on improving the checkout and delivery experience” for its customers. The brand also launched a fall 2026 campaign microdrama that focuses on customer experiences and sharability, and heavily targets Generation Z. In addition, Nuuly is streamlining its fulfillment capacity, with automated garment storage, order sortation and a picking solution all launching over the next 12 months. Nuuly is also expanding its East Coast operation from 300,000 to 1 million square feet with a new facility outside Philadelphia. “Once this project is complete, the full Nuuly network will support roughly 1.2 million subscribers with a significantly more efficient operation,” Hayne said. Meanwhile, rival service Rent the Runway has 155,692 active subscribers, according to the company’s Q1 2026 results posted June 3. The company said in April that it’s planning to launch more than 30 new brands this year as competition from Nuuly continues to nip at its overall growth. Looking ahead to the third quarter and full fiscal 2027, Urban Outfitters Inc. CFO Melanie Marein-Efron told analysts that total company sales were expected to grow in the high single-digit range. She added that retail segment comp sales are expected to rise mid-single digits, with single-digit retail segment comps growth across FP Group, the Urban Outfitters brand and at Anthropologie brand. Wholesale is expected to produce low teens growth. “At Nuuly, the brand could deliver high 20s revenue growth driven by continued subscriber momentum,” Marein-Efron said, adding, “We continue to believe we could deliver high single-digit total company sales growth for the full year fiscal 2027.”
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