Good morning and welcome to our first session here at the Goldman Sachs 32nd Annual Global Retailing Conference. My name is Brooke Roach, and I cover the soft line sector here at GS. I'm very pleased to introduce our first session today with Urban Outfitters. Here today is Frank Conforti, Co-President and COO, Melanie Marein-Efron, CFO, and Tricia Smith, Global CEO of Anthropologie Group. Welcome all. Thank you. Thank you. Thanks for having us. Frank, d o you want to kick it off with a few opening remarks? Sure. I'm happy to. If any of you listened in last week, you heard us announce our second quarter results. Another just very strong quarter for us. Double digit, greater than 11% top-line growth, hitting a Q2 record for us at $1.5 billion. Retail segment comp was 6%. All brands and geographies were comp positive. I'm just really proud of the efforts there. Nuuly continuing their robust growth, greater than 50% top-line growth, and wholesale also delivering double digit top-line growth. Gross profit margin expanded by greater than 100 basis points, driven largely by Urban Outfitters' lower markdown rate on a year-over-year basis, and then occupancy leverage due to the strong top-line growth. We're able to leverage off on that fixed expense. All that culminated in greater than 20% EPS growth, which also was a Q2 record for us. Very importantly, despite the tariff headwinds, which I'm sure we'll get one, maybe two questions on today, we reiterated that we still are planning for 100 basis points of gross profit margin expansion during the course of the year. Lastly, I just want to, and I know you'll touch on it too, for us, it also marked a nice and consistent improvement in the Urban Outfitters brand, which, as you know, we've been working on turning, and Urban Outfitters North America did get to positive comp and had a really nice start and continued, as we said, during the quarter, during the third quarter, a nice back to school season. That's great color. Thanks for those introductory remarks. Tricia, let's move to you, because we don't get to have you on stage very often. Let's start with Anthropologie. What gives you confidence that the momentum that you've seen recently at Anthro is sustainable? Yeah, thanks for the question. We are about four and a half years into what we consider our Anthropologie Group kind of turnaround story. Pretty consistently, the pillars of that strategy have been around introducing our brand and acquiring new, younger customers, really modernizing our product assortment, and then creating really exceptional experiences for our customers. Really happy to say that's going well. I think from a sustainability or resilience standpoint, I think we've really been focused on, oh, is that one? Yeah. Yeah. That better? Okay. We've really been working on, I can hear you just fine. Okay, good. On thinking about, I guess, diversification across product, marketing, and then a little bit about supply chain. I would say from a product perspective, we've launched three new brands that broaden the range of our product assortment. Celandine, which is our vacation lifestyle brand, LyreBird, which we just launched in July, it went into midst and sleepwear brand, and Daily Practice is an athleisure brand. In addition to that, it's allowed us to expand categories, right? If you think about the resiliency around customer preferences and categories, the addition and expansion of shoes, accessories, beauty, all of those types of categories are really working for us. I think as customer preferences change, we've just got a broader, broader offer to be able to leverage. From a marketing standpoint, I think the channels that we show up, the way we show up in terms of where our customers are, and the type of content that we put in each of those channels, I think has allowed us to diversify that and has allowed us to reach more customers. We have grown our customer base over the last five years by 50% by doing so. Feeling like the foundation of those new customers and re-engaging with them will be a really meaningful factor. From a supply chain and production standpoint, I think we've got several models in which we produce product in our own brand product, which can range from eight-week lead times for quick chase, up to more traditional lead times, as product makes sense. Over the course of the last four, four and a half years, we've been able to really think about some flexibility and some diversification and sustainability in our business. There's a lot to dig in there. Maybe we can start with some of the new sub-brands. When do you expect those to materially contribute to financial performance of the Anthro brand? How big do you think that they can get? Yeah, so Daily Practice and Celandine are already pretty meaningful to our business, I would say. LyreBird, being newer, they represent a smaller part of our core overall own-brand business. I would say, as we think about the next few years for those brands, we expect to continue the trend of double-digit increases in those, against our core own-brand business, with the exception of Maeve, which we just announced we're launching as a standalone brand. I would say they will become a bigger part of the business over time because we expect them to grow at about double the rate of just the core own-brand business and become more meaningful over time. You also talked about the new customers that you've brought into the brand. Given the success that you've had, as you look ahead, where are the biggest incremental opportunities for new customer acquisition? I think it goes back again to just thinking about product that our customers are looking for particularly. We target a millennial generation. If you think about that generation and their needs across potentially buying their first house or starting in a new career, I think we believe that we can show up in a really meaningful way. The opportunity, I think, for us to be able to think about where they are and the product that we show up, I think we feel confident that not only can we continue to acquire new customers at the rates that we have in the last few years, but now it's a meaningful opportunity for us to be able to engage more deliberately with them. Really proud of our teams that while we've seen that double-digit customer growth, we've been able to also grow retained customers. It's been very important for us as we introduce our brand to a new generation that we think about protecting the relationships that we have with very loyal customers and proud of the fact that that's going well. The other business that has been improving and is now going very well is Home. What are you expecting for fall and holiday in that business? Can you maintain that momentum that you've recently driven? Yeah, that's been nice as we're on our third quarter of delivering a comp increase in the home category. That was not the case last year. I think that's really coming from just the customer's appetite to small refreshes for their home, decorating, entertaining. It's so surprising to me the appetite and the timing in which people are already thinking about decorating for the holidays or shopping for kind of a plethora of occasions. We've had incredible results with some of our dining and more like gifting categories. That category has been growing at a double-digit rate. I'd say that the difference in the last couple of quarters is we've seen some improvement in our furniture business. While our furniture business had kind of taken away from our ability to deliver comps in the total, while that's not comp positive yet, it's getting better and driving some full-price comps. Overall, now our home business is driving comp increases for the last three quarters, which is nice to see. That's great to hear. I'm not sure if you want to take this or if Frank wants to take this, maybe a little bit of a jump ball, but the margins of the brand have been very strong. What do you see as the largest incremental profit drivers from here? Are there any considerations that we should be thinking about into 2026? I guess Mel could take it as well. Sure. The margin in general, the answer is kind of just Anthropologie. I would say, you know, Frank wi ll cover tariffs in more detail probably later, but beyond tariffs, so far freight seems to be in a good place. Absolutely, that will continue. We still have labor as a constant source of inflation. We have made investments in the past and will continue to look for ways to improve our efficiency when it comes to logistics, but that is something that we have beyond. I think from a margin improvement, obviously we have Anthropologie and Free People that are in their mid-teens and there's still improvements to come for Nuuly as we find efficiencies. The Urban turnaround will continue to contribute to improvement for URBN both this year and probably the years to come. You mentioned the Urban brand, so maybe we should move to Urban. Comps have recently become stronger, which is great to see as you think about that five-pillar growth strategy that you outlined about a year ago now. What do you see as the most important driver of UO performance from here? What will drive more consistency in those positive results? Yeah, listen, I think the most important thing always starts with the team and alignment. You know, we had some struggles for a period of time because we didn't have a leader of the business. While I think we have a very strong operating model across all of our brands as to how we operate, it's a difficult model, right? You've got multiple categories, own brand, market, digital, stores. It's a complicated model. I think, you know, having Shea, having her build and align her team on those five pillars and focused on consistently delivering the product with the marketing strategy, with the store execution, with the website execution, you're really starting to see those results and focusing on who their core customer is. In our early part of the journey, we talked about reg price. I think, you know, at times you can get impatient and our comps are still negative. We would say, but reg price is positive. You kind of got an anniversary and we're recapturing margin. Understanding that there can be some skepticism. Honestly, Tricia encountered this when she took over at Anthropologie years ago. Now reg price has remained positive. We've started the anniversary walking away from those promotions. You've seen the brand turn into comp positive territory. Knock on wood, things continue to trend in that direction. We talked about Urban being able to, North America being able to deliver mid-single digit here in the third quarter, being driven by reg price with lower markdowns. You're seeing the health of that business, the alignment of that business and the top line sales now starting to drive improvement. We talked about sort of two legs of profit improvement for Urban Outfitters. First being about maintained margin, driving reg price sales, walking away from the promotions and how we've driven the business for the last few years when product execution and alignment hadn't been there. You've seen that this year. We're not done. As Melanie mentioned, there's still margin and then new margin improvement opportunity, markdown improvement next year and as we enter into the back half of the year for Urban Outfitters. The second leg is going to be driving positive sales and positive comp sales. That's where you'll start to see them recapture some of that occupancy deleverage and some of the other fixed costs, fixed costs that have deleveraged over the last couple of years. We feel really good about the progress and we feel really good about the pace of progress. We're just excited to continue to see it and continue to deliver. You're about to get into a period of tougher compares for that markdown improvement at the UO brand. Can you contextualize that opportunity that you continue to see ahead for markdowns into next year, given that you have had some success with that to date? Can that continue even if the rest of the marketplace becomes more promotional? Yeah, yeah. We're still not at, you know, historical bests at Urban Outfitters in any one given quarter. There are some discrepancies from one quarter to the next as to how much improvement that, you know, there is, whether it be we're thinking about Q3 and Q4 of this year or even into next year. There still is markdown rate opportunity. What I would say is next year obviously will be far less than this year, and next year will be more about recapturing some of the deleverage that they saw in fixed expenses and having to drive a positive comp business. There still is, there still is margin recapture from a markdown perspective for Urban Outfitters even into next year. The way we see sort of the back half of the year is Q4 is a bigger opportunity than Q3. For those of you that follow us closely, or Urban Outfitters, you'll remember last year entered into the third quarter with very lean inventory. They did mark down that they knew their product wasn't performing well in Q2 last year. They marked down, you know, a heavy amount of product and entered a third quarter lean. They're anniversaring, not historical best, but a lower markdown rate in Q3 than they are in Q4. We do think they can drive markdown improvement in Q3, but it's probably not enough to offset some of the tariff headwinds. When you get into the fourth quarter, their opportunity expands, and, you know, we think they analyze the opportunity to more than offset the tariff headwinds in the fourth quarter. There'll be a little bit of that choppiness again next year, but on an annual basis next year, there's still markdown rate opportunity for sure. Are the other drivers that we should be thinking about for UO i mprovement to get to more normalized margin levels, should we be thinking about a specific leverage point or any other drivers into 2026 and beyond? Yeah, it's not a one-point comp that there's leverage point, but it's low. The brand certainly had its challenges for several years. At a low single-digit comp, we should be able to see leverage off of occupancy, off of direct store controllable, off of some of the other teams, home office, corporate expenses, things of that nature. I do think their leverage opportunity next year is in that low. Certainly, if it's higher, if it's mid or high singles next year, which would be fantastic, you'll just see a greater level of flow through. Let's turn to the Free People brand, which has had some really nice success over the course of the last couple of years. As you continue to see toughening comps with this business, how do you think about the next chapter of growth for Free People? Yeah, you know, I'll say that Free People has been one of the most dynamic brands out there and most consistently performing brands for, you know, well over a decade. Facing tougher comparisons is something that they're not, you know, foreign to. It's honestly something they're used to. I think they're one of the most, if not the most, consistently performing brand out there, followed now closely by Anthropologie. This is not new to them. I think, you know, similar to Anthropologie, there's a lot of growth levers that exist within Free People. I'll exclude Movement for a second because Movement, it's its own just really meaningful opportunity. The Free People brand, similar to Anthropologie, has their sub-labels like We The Free, like Freelist, where they are also, in addition to adding new customers, which they're doing, they're expanding that share of wallet. It started as a smaller, narrower brand from a product perspective and the different categories that they serve. Now we're moving into bigger stores. When the brand started, it was an average of 700 sq ft- 900 sq ft selling. We're now closer to 3,000 sq ft selling. We're expanding the wallet and the market share of the brand here domestically. There's still store growth that the brand has here domestically as well. I think if Sheila was here, she would also tell you she's extremely excited about international and Europe. We've opened several stores now in the U.K. and EU market. I think Free People is very uniquely positioned here just from a product and an experience perspective. I think it's even more so in Europe. When you walk the high streets, it's hard to find anything that looks and feels like a Free People collection store. With really, really low awareness, obviously the brand is new into those markets. We've seen exceptional performance out of our stores and out of our digital business. I think we're also continuing to be excited. I know Sheila is excited about international expansion for Free People as well. You mentioned movement at the beginning of those comments. Maybe we can dive in a little deeper there. One thing that has been a big debate in the industry is the health of the activewear category, yet you're growing quite strongly. What's your view of the category? Do you think that the category can improve? Do you think that the outlook for Free People’s M ovement is driven by market share gains? Yeah, I don't, we don't worry too much about the category. It's big already. There is market share opportunity. I think the general sort of casualization of, you know, the United States, you know, is not going to be a theme that goes away. I think the category will remain strong. Maybe you won't see the outsized categorical growth that we saw five, six, seven years ago, but I think it still continues to grow. There's a lot of, you know, food on the plate for players that are out there. I think what we focus on the most and see is the opportunity. It's hard to walk into an FP Movement store. Myself, right, I'm a finance guy and now they let me dabble in operations. I'm certainly not a merchant, but it's hard to walk into that store and not feel the difference from a product and a fashion execution from any of the other brands that are out there. I think their to and from is very unique and very differentiated. Just the types of, you know, sort of silhouettes and shapes and embellishments that they have on the product, the colorways that they put on the product, the amount of newness that they consistently deliver to the website and the stores is, you know, we think is, you know, certainly a differentiator for us. That's our brand that speaks to the broadest age and income demographic of any of our brands on campus. When Sheila and team and we talk about the size of movements, we don't exactly know what the ceiling is because if you think about Urban or Anthro or Free People, while I wouldn't call them narrow in their customer focus, they're narrower than what the FP Movement brand serves. The opportunity there is very different from a price point and from a range perspective. We're really excited about the future. The stores continue to perform exceptionally well. You see us open in the mid-20s percent on an annual basis, and the stores perform at a level as the Free People collection stores from a sales per square foot basis for a brand that's still, you know, that's still growing and building awareness and figuring some things out. We couldn't be, we couldn't be more excited about where FP Movement's going. That's really great. Let's shift to Nuuly. You've had incredible subscriber growth this year, and you've targeted $500 million in sales for this brand. How are you viewing Nuuly's relative market share position today? Where do you see the largest source of incremental new subscriber growth from here? Thanks, Brooke. Yes, we are, we still believe in the opportunity to get to $500 million in sales for the Nuuly brand. It's just six years old, and we still believe that it can be a billion-dollar brand. When asking how big can it be, we are constantly updating our model of the addressable market, and we're amazed that that number just keeps growing. The reason it keeps growing is there's still a relatively low brand awareness, with respect or even awareness of rental market in general. When we look at our new customers, just over 60% of our new customers are new to rental. That number is even greater. It's actually 80% for customers under 30 years old. We think there's lots of opportunity still for the growth of Nuuly. You've talked about profitability targets for the Nuuly brand, and you've said that it could be in line or better than the total business at a 10% target. How should we be thinking about the path to incremental profitability from here? Are there any additional investments that we need to think about? How should we be thinking about the pace of achievement? Right. This brand, a few years ago, there were some skeptics about whether it could be a profitable business when we said that it would ultimately be accretive to URBN. We had our first profitable quarter two years ago, and then our first profitable year last year. In the most recent quarter, which was our highest quarter ever, we still think there's opportunity for additional improvement in that profitability. It'll largely come from logistics. There's some automation opportunities that we're looking at that we think can help further improve that and reduce our rate as a% of sales. Honestly, even in the last quarter, you saw leverage across all of our lines of the P&L. We still think there's more opportunity there. You talked a little bit about logistics opportunities there. You're in the midst of doing an expansion of your distribution center out near KC. With that expansion planned soon, how much of that improvement in margin should we expect to see from the distribution and logistics within that? Is that a 2026 opportunity? That is the improvement in the capacity that's coming. First of all, I want to say we're starting to increase capacity. That's a beyond 2026 opportunity, 2026 being our current fiscal year. We think it's a great thing to be investing in additional capacity. It's a growing business, and we've been very fortunate in that when we've built capacity, the negative impact on our profitability has been fairly short-lived, and we've been able to leverage that investment fairly quickly. I think that capacity, that expanded capacity comes on sort of late summer or early fall next year, in that ballpark, if not even a little bit later. There's some automation that I think we're targeting in a similar timeframe, midsummer. The stock holding capacity, just as we get full, you lose efficiency, so there's a little bit of that benefit. The sortation is something that we're extremely excited about right now. One of the things that we found with the Nuuly business, and we're still figuring a lot of things out and we're still learning things on the fly, which leaves us excited just from an execution perspective, is in facilities, it is labor intensive. The best way you can save money is to reduce footsteps. We're going to be implementing a sortation system that removes some of those footsteps, that takes product out of the carousels and then brings them to the box to be folded and to be packaged. There'll be a sortation system that we're hopeful to launch by the fall of next year that we think will have meaningful opportunity for Nuuly from leveraging off on logistics expense going forward. Great. That's very clear. Let's switch gears and go to a couple of questions that we're asking all companies that are presenting at our conference. First off, what are your expectations for the second half of 2025 relative to your recent results? Do you expect things to be the same, better, or worse? I think we expect them to be very similar, which means that they're good, right? You know, we just set a record. We had all brands comp positive and all geographies comp positive. We had double-digit top-line growth. You know, we just have not really seen any weakening in the consumer right now. We feel good about the macro environment and the consumer, despite the headwinds of tariffs and sort of the headlines that are out there. We feel really good about our brands' positioning and the alignment from their strategies and their execution. There will be a little bit of differences from the third quarter to the fourth quarter. Like I said, we sort of reiterated what we thought we could deliver from a gross margin expansion, and that will include gains in the second half of the year. We feel very comfortable with our performance right now based on what we see in the business from our own execution as well as from a macro perspective. As you look ahead into 2026, do you see any change? Do you think that the consumer could be the same, better, or worse? Yeah, I mean, I always like to get through holiday before I think about the next year. Right now, no. The answer is, you know, I don't think we believe that there will be much of a change. I think the beautiful thing about URBN and our portfolio of brands is the model. You know, if you think about our business model, we've got several channels of distribution: stores, digital, wholesale, subscription. They all complement each other. We've got several brands that speak to several different consumer demographics from an age and from an income perspective. Again, diversification. We have that benefit in the model. We've got a very diverse and efficient supply chain with different countries of origin. We utilize different product categories. We utilize own brand and we utilize market. I think for us, we try and stay as most focused on what we can execute and what we can deliver. As the markets give you, whether it be fashion shifts, a hundred-year pandemic, an economic slowdown, now tariff headwinds, I do think how our model is built and the nimbleness that we have, the diversification from a channel perspective, from a brand perspective, from a category perspective, really is what makes URBN pretty special to be able to handle changes in the market. If things were to change next year, we'll adjust. You mentioned tariffs in that last comment, and that's been one of the hottest topics in retail. You talked about tariff mitigation strategy on your last call, and you talked about vendor negotiations, sourcing diversification, cost savings on freight, and pricing increases as your drivers. How important are each of those levers? Should we be thinking about the 75 basis points of gross profit pressure from tariffs as a good starting point for the first half of 2026 next year? What further mitigation efforts do you have? Let me start at the back and I'll work forward. I totally get, and it makes total logical sense to think about the 75 basis points and think about our 75 basis points as actually the back half of the year. Q4 is actually a little worse, not by a meaningful number, but because we churn so fast, Q4 is actually a little worse than Q3. I think it's a logical place to start. I'm not ready to commit to a number yet because there are multiple strategies that are in place that we're working on. I'm not ready to commit to a number because we're not done. I head to India on Saturday with the team, one from a negotiations perspective, two from a country of origin perspective. We're going to be overseas a lot this fall and this winter. All of those things can have a meaningful impact. Pricing, which I know Tricia will talk about here in a little bit, is a fluid situation. It's not like we're just taking, okay, so X country went to 50% tariff, we have to take pricing there. We're not doing that. We're protecting the customer experience, protecting opening price points, and looking where we think we have the value and can take pricing versus just reacting to where there are tariffs. I'm not exactly sure what next year will look like. Plus, wow, it's just, every day the rules of the game change. The thing I most constantly tell people is we're not going to overreact in order to protect our product execution and our customer experience. We have flexibility in the model, but I don't want to start moving and juggling too many things around at once because the rules of the game continue to change. As soon as I know the rules of the game, I can put a play in. I feel like the play's been called, the ball is snapped, and sorry for the football reference, but I feel like that's apropos today, right? Kickoff, I think it kicks off the NFL season tonight. The rules literally change as we're on the field. As soon as the rules stabilize, again, I talked about the beauty of the URBN model. We'll be able to adjust and we'll be able to operate. I don't want to commit to a number next year yet because there are just active, day in and day out work going on to mitigate the impacts of tariffs without sacrificing customer experience right now. Sorry, go on. I was just going to say, one follow-up question on tariffs is just the India impact. That one's been very front and center. Can you quantify the India impact of tariffs that's embedded in your guide? I can tell you that the 50% is in there, and they're one of our more meaningful countries of origin right now. We've got great partners there. They do a fantastic job for Anthropologie, Free People, Urban, you know, from a product execution perspective. We haven't given out the exact number, but if that were to change, I'm not sure that the plan was always to have, or was to have India, who knows what the plan was at 50%. That would be a nice improvement for us. The India at 50% is baked into the numbers. As I said, the reason why I don't want to necessarily commit to next year is there are adjustments that could happen, whether they be short-term or long-term from a country of origin perspective, whereas we may have to move from one country to another relative to the size of the tariffs that are out there. Pricing is a big lever of opportunity. Can you quantify what pricing actions you're taking and how that contextualizes by brand? As a result of any pricing actions you may have taken so far, are you seeing any price elasticity of demand? I can speak to Anthropologie, which I think is a similar strategy across all of our brands. When we think about pricing, I think Frank's right. First and foremost, our goal is to protect our customer experience. We've built trust with our customers over many years in that we run a primarily full-price business. I think all of the brands now walking primarily away from promotions, we think there's a value there in terms of the fact that the customer trusts, right? The prices that we put on our product, that the value is commensurate with that. I think that's first and foremost. The goal, I think, for us is to make sure that we think about categories and/or price points where the value is attached to that. There are categories, there are items, there are beloved items from each of our brands that our customer buys time and time again. We're not going to raise prices on those things. We're going to protect the prices in which there's a great entry point for our brands, for our customers to be able to participate. If there's an opportunity based on a category or based on kind of the flexibility in price, then we'll take that. We've not seen any impact to any pricing. I think we believe that the pricing adjustments that we've made through Q3 and Q4 will not have an impact on our sales. I think we're very strategic and thoughtful around where we're leveraging price. They've been gentle, I think, as Dick likes to say. I think they'll continue to be very strategic in the way we think about that. On inventory, can you talk a little bit about your expectations into the back half? Do you expect any disruption at all, either in shipments or any changes in the way that we should be thinking about growth given some of the adjustments in the business? Yes. Right now, we would expect that inventory should be in line with sales as our teams are focused on improving our product turns. In the second quarter, inventory growth was a bit ahead of sales as we brought in product a little bit early that we thought was less fashion sensitive to avoid some of the tariffs. Right now, we're not seeing those interruptions. Okay, great. Yeah, from a supply chain perspective, things look good right now. Excellent. With that, we're about out of time. Any closing comments that you'd like to make, Frank? Anytime you prepare for these meetings, you always think like, I got to get the numbers right. You sit here and you say, did I get anything wrong? The only thing I think I got wrong is the NFL starts tomorrow, not tonight. I wasn't going to correct you on that. I just want to stress on, you know, and I touched on it earlier, we feel really good about, you know, the positioning of where our brands are right now. I think about our growth prospects and the strategies that we have in place. We're acquiring new customers, we're expanding wallet, we've got different channels of distribution, and we've got a ton of diversification and flexibility in our model. Yes, there'll be these temporary headwinds of tariffs, but we've navigated through a lot of headwinds in the past, and we feel really good about the positioning of the company and where we're going. Great. Thank you, Frank. Thank you, everyone, for coming too. Thank you. Thanks for having us.