Next up, we have Urban Outfitters. We have Melanie, CFO of URBN, for a fireside chat. Thank you so much for joining us in lovely Miami. Thank you so much for having me, Oona. I wanted to just start off with a really strong Q4, some continued acceleration into Q1. Can you just give us an overview of some of the brand highlights in the quarter? Absolutely. We are so excited by the end of Q4. Actually, the fiscal year 2025, our calendar year 2024, was a pretty spectacular year with record sales and profits and finishing the year above $4 in EPS, which was 25% growth. We are super excited. I think all brands are contributing to that growth. I'll try to describe them briefly and then get to Q4 highlights. We have two consistent growing brands, Anthropologie and Free People, that have mid-teens operating profits, and we continue to see opportunity there. We have two high-growth concepts that are newer, Nuuly and FP Movement, that have continued to deliver significant growth, and we still think there's quite a runway for those brands, and they're profitable brands as well. Our fifth brand is the Urban Outfitters brand, which is starting to turn the corner. In Q4, we're super excited by the return of positive reg price comps and starting to improve our product margins year on year. We saw that both in the Q3 and Q4. We're super excited by the opportunities for improving sales and profit in all those areas. In Q4 some of the highlights: we grew 9% top line, led by 5% retail segment comps with Free People and Anthropologie, both growing 8%, and Urban Outfitters going low single digit. That was a significant improvement over the—sorry, declining low single digit, but a lot of improvement versus the prior quarter. We saw 200 basis points of gross margin improvement, largely driven by improvements at Markdown at the Urban Outfitters brand. SG&A, while we did invest significantly in marketing and creative to drive product acquisition and sales, we were able to see some leverage in SG&A related to some great management of store payroll in our retail stores. Net-net a terrific quarter. We've heard—we're mostly through earnings season now, and we've heard a lot of really rough Q1 guides, but not yours. Can you talk a little bit about your expectations for the Q1? Absolutely. In the Q1, we continue to confirm our Q1 guidance of mid-single digit sales growth, and that's driven by low single digit retail segment comp growth, with Anthropologie brand planning to deliver a low to mid—excuse me—low to mid comp, Free People at low single digit comp, and flattish for the Urban Outfitters brand. That's on top of double digit continued growth at the wholesale business and Nuuly's businesses. Maybe let's start with Anthropologie. Any category callouts that outperformed in Q4 that you're excited about for the year? I mean, Anthropologie execution in the Q4 was terrific. They had, as I mentioned, 8% retail segment comp growth. They had lower markdowns in a highly promotional quarter, which was what they're super excited about. They had lots of callouts in the apparel business. I would call out the '90s wide pant trend. Also, they had strength in accessories and some of the home decorating and gifting areas. Anthropologie changed its holiday delivery strategy a little bit to bring in some spring product earlier. It seems counterintuitive with the weather being so cold, but it was successful. Can you talk a little bit about what? Yes. They talk about their fifth season, and I think they call it the fifth season or the Q5, which is kind of continuing to keep the consumer momentum and bringing excitement to her. I think she is interested in seeing what's next. I think it was a super successful strategy when it comes to product. That's great. Home had its first regular price comp and total sales comp. I guess what in particular performed well, and how's the momentum looking into fiscal 2026? Absolutely. We're super encouraged by the reg price. Finally, in fiscal year 2025, we had a positive home comp for the quarter. What really drove it in the Q4 was gift accessories or gift and entertaining ideas. Think about tabletop glasses, gifting items. Those sold very well during the holiday season. What encourages us is the improving trends at the decor and furniture businesses. While furniture was still negative in the Q4, I think it was less negative. We're encouraged that the stabilization of those businesses, along with the continued strength of the home accessories business, bodes well for continued positive comps into this year. Okay. Just touching on owned brand penetration, it's around 70% at Anthropologie. A lot of your existing brands are growing. Is that in your expectations go forward? Do you think that mix will shift back toward third-party brands? How are you thinking about the outlook? I think a big focus area for the team has really been about modernizing the product at Anthropologie over the past few years. And owned brand products are certainly a big part of that equation. Maeve has had some great growth, and we continue to believe that they have lots more runway there. The Pilcrow Denim brand has outperformed the category. And then more recently, the Daily Practice brand has really met her full lifestyle, continued to meet that full lifestyle. So we continue to believe that there's opportunity for growth in owned brand. Now, they did not plan for it to get to 70%. I do not think they are planning for it to go down either. It really is a great thing on the top line. It also helps margins. I think it plays well with the market product that it sits along with. It helps drive sales of both of them, and it really drives credibility in our own brand. We continue to believe in the owned brand opportunity for Anthropologie. We hear a lot of brands trying to bring their target age range down, and most are unsuccessful in it. They either alienate their older customer, they don't attract the younger customer. I mean, Anthropologie's had a lot of success in that. What would you attribute that to? I think it's the way they've gone about it, right? When Trisha came here four years ago, the team and Trisha were very focused that they needed to make sure that they didn't continue to age with the customer because they had been aging with the customer. They did it in a really smart way. To your point, they didn't kind of offend or do something that would make their existing customers want to go elsewhere. They've really been able to create marketing and product that I think speaks to their existing maybe 35 to 45 and 50-year-old customers, but then can bring in customers closer to their original Anthropologie brand target, which is more like the 40. I should preface, when we say younger customers, we don't mean 20-year-old customers. They are just younger than what the average had been becoming at Anthropologie. It is very deliberate and very controlled so that it does not force anyone to want to leave the brand. Okay. In January, you launched a new resort wear label, Celandine. Any comments on the early response to that? I mean, the customer has really been excited by the product, and that gives us a lot of excitement as well. It launched in, I believe, over 100 stores and online, and it really provides a new perspective on resort wear. Some of the products are cover-ups, shoes, accessories, beauty. What excites us is, while we love to see sales of new concepts that come up, we want to make sure that they're additive to the business, and that is additive so far. We are super excited to see what Celandine can provide in the future as well. Are there any other launches planned for this year? Oh, the Anthro team, Trisha, they're always thinking of new stuff. I think having 16 quarters of comp growth and nine of them double digit, you know that they're thinking about the next thing. I have to tell you, Trisha would kill me if I let the cat out of the bag. All I can say is stay tuned. Okay. And then just wrapping up Anthropologie, you did decide to re-accelerate store growth in fiscal 2026. What does that look like? And maybe just give us some reasons behind the decision to do so. The Anthropologie team, over the past four years, has been super focused on strengthening the reg price business. The result of strengthening the reg price business leads to better four-wall profit in their stores. When they've improved the product and improved the selling environment, it has kind of raised the profitability of stores, and they deserve to have more stores to invest in. That is some of our reasoning for slightly, and I would say it's slightly, increasing the number of new store openings this year. Okay. Moving on to Free People, maybe just talk through some categories that are driving performance in both Free People and also FP Movement. Absolutely. FP Movement had a phenomenal quarter with, I think it was like 25%. Actually, no, very high growth driven by significant growth in wholesale, more Dick's distribution coming this year. Stay tuned. Also, growth in retail segment, 25% is phenomenal. The 34% growth in FP Movement was driven by a lot of areas, tops, bottoms, accessories. That brand really resonates and has a point of difference amongst a very crowded athleisure business, and I think consumers are responding well to it. The FP, or sorry, Free People brand also had a great Q4, up 8%. That was really driven by bottoms. We'll talk in other brands. It's definitely a bottom cycle, and folks are very interested in bottoms. The wider, the better, as well as accessories and shoes were some of their callout areas. Okay. The Free People, the FP Movement store rollout has been really exciting. Can you tell us where you are and what the productivity of those stores looks like versus Free People? Absolutely. I think we're in the early innings of the FP Movement store rollout. We have 62 stores as of the end of the Q4. We opened up 25 this past year, many of them in the Q4. There is lots of sales and customer awareness to come from those new store openings. We've announced that we're going to open at least 20 stores in the coming year. We think easily we could open 25 stores a year for the foreseeable future. That gives us great opportunity there. Some of the productivity of those stores on a sales per sq ft is slightly better than our Free People brand stores. Overall, the four-wall economics are quite similar between the two. Lots of runway there. This year's store openings, will they be a little more evenly spread through the year? Absolutely. Absolutely. Yes. The goal is to have them more evenly spread and obviously to have them before the Q4 when it's harder to open stores. Yep. You have talked about FP Movement as being a billion-dollar brand. How much of that is new stores? Is there a sort of longer-term fleet goal? How much is marketing, other same-store sales growth drivers to get to that billion? We are confident that FP Movement should be a billion-dollar brand. We think it's really about increasing the consumer awareness of the brand. That's been our experience with the Free People brand and the success that they've seen. We think we'll get there through opening 25 stores a year for the foreseeable future, marketing investment, and getting the word out there about the brand. Also, partnerships with great wholesale customers like Dick's Sporting Goods and some of our department store customers, I think also helps build the brand and drive the awareness. We don't see a limit. We think all of those things. I ran into FP Movement at the running event in Austin in November. Wonderful. Such a differentiated look versus the rest of it. I mean, how do you think about wholesale? It seems like a great marketing tool from a brand awareness perspective. It's a terrific marketing lever for the FP Movement team. I think the awareness it provides where the customer is, to your point, if you're in a running store or if you're in a Dick's Sporting Goods and you see the product that you might not have come across when there's only 62 stores out there right now. I also think that it provides a certain amount of credibility, particularly when you're talking about performance sportswear. People want it to sit next to other sportswear companies. At the same time, we provide a point of difference and a handwriting that those products just don't have when it comes to fashion, color, and style. A lot more fashion content. Yes. Yes. Performance groups that we saw. Okay. Let's move to Urban Outfitters, the UO brand, positive regular price comps in North America in the Q4. I guess what drove that trend? What were the big changes year on year that got you there? Absolutely. I think Shea arrived here a little over a year ago and really focused on stabilizing the business, prioritizing what needed to get in and creating the strategies for the go-forward plan. What drove the and really improving the profitability and getting the business in a better place. I think what drove the trends in the Q4, which were reg price positive for the first time in a while, were we saw accessories. We saw some novelty in gifting, it was exciting to see a few areas of women's, which were denim and lounge. More to come on that, but it's super exciting to start to see that business strengthen. We're in a great bottom cycle, and UO has kind of led to the others in that. Why do you think that is? I just think that prior to Shea arriving, the brand wasn't in a place to take advantage of the trends that that consumer had. Now that she has arrived, I think they're better able to respond and kind of be ahead and provide customer with the products that she's used to receiving from Urban Outfitters. I think the ability to take the learnings and distort the product and really stand for product is the opportunity for the women's team at the Urban Outfitters brand. You did guide to minus low single digit to flatten the Q1 but then with some gradual improvement as the year goes on. What are the key drivers behind that? I mentioned some of the recovery in parts of women's and the gift and novelty areas and accessories. I think taking those successes when it comes to standing for product and distorting the product to where the trends are going. I also think the marketing and creative execution was not where. In addition to product being better, I also think marketing and creative execution will get better as we go through the year. The last thing I would say is in the first half of the year, we will still be lapping some significant promotional activity. While the reg price trends will continue, it will take some time for the promotional headwind to abate. Lastly, I think we probably do not talk about it enough, but Urban Europe has been a terrific performer in the back half of last year, and that will contribute to some of that improving trend, kind of offsetting some of the weakness you will still see in Urban North America numbers in the first part of the year. Urban Europe's now about a third of UO sales. What's the customer seeing there that she's not seeing here in the US? I think a few things. I don't want to—the team has done a wonderful job executing, and I am excited by what they were able to do in the last calendar year and this current year. The team is a lot more seasoned and been working together better, and they can better kind of respond and just merchandise product that customers are excited about. For them, I really think it's about knowing your customer and providing the product and experiences that they want. Opportunity for North America, but great performance for Urban Europe. Digital has really outperformed in Europe as well. What do you think's driving that versus stores? Is that what you'd expect to drive the growth go forward? I think similar to North America, Urban Europe is significantly penetrated in stores. Digital is pretty small, both as a penetration. It's our lowest penetration brand in North America. I mean, at URBN, it's less than 50% digital in North America and Europe. I think that's just an opportunity as they have the right product to grow that channel significantly in both the UK as well as mainland Europe. That's interesting. Can you talk a little bit about inventory levels, specifically for UO? How do you think about planning that as you're up against all of this clearance activity from last year? Absolutely. I just wanted to start by explaining kind of as we closed Q4, all of the brands brought in spring merchandise a little bit early to avoid any disturbance from the potential port strike in January. Urban, Anthro, Free People, I think it was the right thing to do. Now, fortunately, the strike was averted before the deadline. We did have slightly higher inventory than our comp guidance would support. We think that inventory will be more in line by the end of the Q1. As it's specific to the Urban North America branded inventory, I think we're in a different place in the makeup of that inventory. I think what started to begin the improvements in reg price comps in the Q4 is really more distortion into where the trends are in supporting reg price trends. I think you'll see that distortion will also help us in our inventory situation as well. One of the levers that you talked about for improving the UO business was marketing. Is this an increase in marketing spending? Is it a different way of marketing? How are you thinking about transforming that? I would really say it's executing differently. The Urban team is focused on reaching their target customer and acquiring and engaging with their customer in a way they haven't in the last few years. They've started to use several levers through paid and unpaid mediums to achieve that goal. In social media, different sites require different types of content, but they really are focused on engaging and getting their target customer to retarget and speaking back to them. It's really exciting to watch. I would say when it comes to influencers, it's about targeting the right influencers that can then bring their products to new customers. Some of the partnerships which Urban Outfitters used to be known for reengaging some of those product placements. The most recent one I can think of was this past weekend with Hailey Bieber and the Fila partnership, I think, is super exciting. It is not really about spending more per se, but it is about doing things differently. I am excited to see the creative content that is going with that marketing. It is much more welcoming and upbeat. I think the customer is feeling the difference. Great. You have talked about repricing initiatives at UO, reestablishing a strong opening price point business. To what extent has that been rolled out? Should we expect any further action on pricing there? Absolutely. The Urban team has really been focused on pricing product at the right point, whether it's low, medium, or high price points. Over the past few years, I think they had lost sight a little bit with, and I don't blame the team. I think there was a lot going on with supply chain disturbance and higher freight costs. We had lost our way a little bit, particularly in the open price point area. Now we're at about 12% in that open price point bucket. That's actually more like historic levels. It's not that much different, but it's just a return to a more disciplined view of pricing. The UO brand is still losing money. What are the best strategies to get that back into positive territory? We think of the Urban brand profit recovery that there's two legs of that recovery. The first leg is the recovery of merchandise margins and reducing markdowns. That comes through buying inventory closer to sales trends. That is what the team was focused on beginning in the second half of last year. You saw the benefit of those activities through improved product margins in both Q3 and Q4. That will continue. The second leg is really about returning to sales growth. Sales growth will allow them to leverage their expenses and will be another means of returning to profitability. With the improved having regular price comp trends will ultimately lead to positive sales trends. They will leverage both, if you think about it, expenses like SG&A and fixed costs, but they'll also be able to leverage occupancy with it, which is within gross margin. Those are the two levers we'll use to improve their profitability. I wanted to move on to Nuuly. Maybe first, can you tell the audience what is Nuuly? Absolutely. Nuuly is URBN's rental platform that was launched five and a half years ago. It is a terrific platform, which I'm wearing the product right now. It allows customers to rent six items for $98 for one month, and they can hold it longer, or they can return their new, we call it a Nuuly box, and then get another six items. We're super excited by the performance of that business. We had over 300,000 active subscribers at the end of the Q4, which is amazing for a five and a half year old business. It had its first year of profitability in fiscal year 2025, and Q4 was also profitable. We're excited about the opportunities there to continue to grow the business. We really don't see a limit in that consumer group. First year of profitability growth, I think that was a big milestone. What are some of the factors that drove this? Should we expect a similar level of profitability this year? Absolutely. What drove the Nuuly brand to go from a loss to profit are really two things. One of the things is leveraging their fixed costs. When you grow 50%, you can leverage certainly a lot of the fixed costs that you have in the business. In addition to the leveraging of fixed costs, the team really sought out and achieved efficiencies in their business, which led to that profit level. We think that we'll continue to grow the rate of profit in the fiscal year to be mid-single digit operating profit, but we see the opportunity to get to double- digit operating profit. Super exciting. The one balance that we have is, while we see the ability to leverage our fixed costs and find further efficiencies, we also want to grow the top line. We want to continue to invest in marketing and support new customer acquisition. That'll be the balance as we continue to improve the operating profit rate. Do you have a subscriber growth rate or an active customer forecast that you're using? We have not given a forecast out for the current year for active subscribers, although Dave Hayne on the earnings call did let the cat out of the bag with his internal target of $500,000,000 in sales for Nuuly in the coming year in FY2026. We are very excited by that target. That was not in your script. Oh, you never know. Yeah, exactly. How are retention trends? I guess how long are average customers staying on the platform? To what extent is growth being driven by new customers versus re-engagement of existing? The Nuuly customers love the flexibility of the subscription plan that we provide. There are some customers that sign up and never stop subscribing. I would be one of those people. Other people will do it one month, go on a beach vacation, and then six weeks later might need a different set of clothing to go on a business trip. We love either kind because we make it super easy for customers to pause and resume. That leads to a really nice retention rate. After one year, about 50% of our customers are still active, and after two years, 40%. We think that flexibility really drives higher retention levels. We want to meet her whatever works best for her. What percentage of rentals are your branded apparel, Anthro, or Free People or FP Movement? Have you seen any cannibalization from that? About 50% of the product that's available on Nuuly is own brand product. We think that our own brand product obviously is differentiated because no other rental platform has that product, but also provides great brand awareness for our other brands. When we launched the Nuuly concept, we thought there might be some cannibalization as people rent, maybe they would buy less. What we found is that customers, while they say they buy less, and maybe they're buying less than other brands, our actual analysis shows that they don't buy any less when they're renting. It's a great driver of awareness for our other brands. I should add one last thing I meant to say when we were talking about the retention. Most of our rental customers have never rented before. When we ask customers, "What do you think of it? How did you learn about us? Have you ever rented before?" Only a third of our customers have rented before joining Nuuly. We think it's a huge growth opportunity for Nuuly. I also think it's a growth opportunity for brand awareness for the other brands. It's super exciting. It's interesting. Just hitting on a few financial topics before we open it up for questions. You had spoken about a 500 basis point IMU improvement goal by the end of this year that just ended. You just missed it. Can you talk a little bit about why? Where's the opportunity from here? Absolutely. I mean, the teams have made significant progress on our IMU over the past three years. They worked really closely with their sourcing and logistics team and made, honestly, tremendous progress. We still think there's more to be had. It will take us a few years to get that additional opportunity, but we think we can get there ultimately. Stay tuned. Okay. You have guided to 50 to 100 basis points of gross margin expansion in 2026. What are the key puts and takes behind that? Right. For FY26, we believe there is 50 to 100 basis points of gross margin improvement. We believe that that will likely largely come from markdown improvement at the Urban Outfitters brand. We also could see some benefit from leverage in occupancy and delivery expense, but we see the greatest opportunity in the Urban Outfitters brand. I should add that with Urban Outfitters improving their markdowns the way that we are planning, there is still further opportunity for improvement in their markdowns. This would not mean historic levels of markdown for them for us to get to 50 to 100 basis points of opportunity. We actually think the gross margin opportunity is probably a multi-year opportunity from the recovery of Urban Outfitters brand. We do not expect that brand to get to break even this year. We see significant improvement this year and the years to come from the improvement in profitability from that. Okay. Finally, you ended the year with over $1 billion of cash and marketable securities on the balance sheet. You've talked about buying back enough stock to offset dilution, but why not more than that? What are your other goals for returning cash to shareholders? Yes. We are at $1 billion in cash as of the end of the quarter. We will at least buy enough shares to offset dilution. I underlined at least. Right now, we feel comfortable with $1 billion in cash. Okay. All right. Let's see if there are any questions from the audience. Okay. Let me ask you about tariffs because I think that's on everybody's mind as it changes every day. Can you talk a little bit about your sourcing exposures and then how you're thinking about scenario planning around the tariff environment? We have been watching tariffs closely, as have everyone in this room and probably everyone in the world. We're very fortunate to have reduced our exposure to China and diversified our supply chain in the last few years. Based on our current plans, we think our penetration in China will be less than mid-single digit, which is significantly reduced versus a few years ago. In addition, as part of this diversification, we want to make sure that not one country or region has more than 25% of our own brand penetration. We're very focused on that diversification. As a result, we believe that our current exposure from the announced tariffs for Mexico, China, and Canada are about $3 million. That seems like a manageable number. The other part of our tariff discussion would be the market product that we buy. That really is negotiated with our vendors. It would be harder for me to quantify. Okay. What are you hearing from vendors? Will they plan to raise prices? Do you think you can pass that through to the customer? At this point, we've heard both sides. We've heard some vendors that are willing to kind of reduce their cost to offset the tariffs. We've also heard some vendors threatening to take price. I think it's still to be played out. Okay. I mean, maybe just stepping back and talking about the consumer environment, that's a question that's come up a lot. Obviously, you have a really positive Q1 outlook, but are you seeing any change in customer behavior under the covers here? I always like to quote Dick when he said, "The customer is excited, not exuberant." The context of that comment was he made that comment the first time about a year ago. In talking about comparing to this exuberant customer coming out of the pandemic, this excited customer, we haven't seen her less excited. I know there's a lot of uncertainty in the stock market right now, but she has not really changed her behavior as many of you have asked me today and yesterday when I spoke with people. We have not really seen a change in our customer behavior. Are you seeing anybody maybe trade down or trade out or truly? We really have not seen a change. I mean, I think February was a little with some of the weather, there were some strange trends in certain regions that then improved when weather was kind of less extreme. We haven't really seen any consumer trend changes yet. Okay. One last call for questions. Okay. We will say thank you so much for doing this fireside chat with us and joining us in Miami this week. My pleasure. Thanks. Thanks, Lorraine.