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Urban Outfitters (URBN +21%) is surging to a new all-time high on Q1 (Apr) results. Its Anthropologie and Free People segments have been driving growth in recent quarters while its namesake Urban Outfitters segment has been struggling but showing improvement lately. A key takeaway is that the UO segment comps returned to growth for the first time in three years. This meant all three brands had positive retail comps for the first time in a long time.

• Total Retail segment sales increased 6.4% yr/yr to $1.13 bln, with comparable Retail segment sales increasing +4.8%. The increase in Retail segment comps was driven by mid single-digit growth in both retail store sales and digital channel sales. Anthropologie, its largest segment by far, posted huge retail comps of +6.9% while Free People came in at +3.1% and UO came in at +2.1%. URBN also has a sizeable Subscription segment, where sales jumped 59.5% to $124.4 mln.
• Anthropologie has now posted positive comps every quarter for the past four years. The brand saw strong performance across all apparel categories in addition to shoes, accessories, beauty and home accessories. Anthropologie has done an excellent job of expanding its product offering to fit their customers' full lifestyle. The brand recently launched Celandine, an exclusive in-house resort wear label that offers year-round vacation-ready styles. Celandine has exceeded expectations.
• Free People, a women's clothing brand known for its bohemian-inspired fashion, saw positive comps across all major categories, while also boasting robust total Retail and Wholesale segment sales growth of 29%, including explosive 78% growth in FP Movement Wholesale segment revenue. The company believes Free People could post a mid-single-digit positive comp in Q2 (Jul), up from +3.1% in Q1.
• Investors are celebrating the long-awaited return to positive comps for its Urban Outfitters brand. North America recorded a negative -4% Retail segment comp, but Europe had an exceptionally strong +14% Retail segment comp. The digital business in North America continues to lap heavy promotional activity from the prior year, which will begin to abate after Q2. UO has been evolving its product assortment which has led to a significant reduction in markdowns. Denim, lounge, accessories and home sales all comped positive in Q1. Notable market brands have been added to the assortment, including a successful BAGGU collaboration and the recent addition of the Nike brand.

Urban Outfitters deserves a lot of credit for turning around its business. Anthropologie and Free People have been doing well for a while. These brands have been on trend and branching into new areas. It was great to see UO finally turn the corner and get back into positive comp territory. It has done so by improving its assortment and expanding its name brand offerings. What is really impressive is that URBN is doing all of this despite macro headwinds and investors are rewarding them for that.