Urban Outfitters, Inc.

Good day, ladies and gentlemen, and welcome to the Urban Outfitters first quarter fiscal 24 earnings call. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would like to introduce Ona McCullough, Executive Director of Investor Relations. Ms. McCullough, you may begin.

Good afternoon. Good afternoon. and welcome to the URBN first quarter fiscal 2024 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, 2023. 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 Commission. On today's call, you will hear Richard Haynes, Chief Executive Officer, Frank Conforti, Co-President and COO, and Melanie Moraine-Effron, Chief Financial Officer. Following that, we will be pleased to address your questions. 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. I will now turn the call over to Dick.

Thank you, Ona, and good afternoon, everyone. As usual, I'll begin the call with some brief remarks regarding our first quarter results and then make a few observations concerning the consumer and the macro environment. After that, I'll turn the call over to Frank and Melanie, who provide more details about our Q1 results, along with thoughts about the future. A quick note, starting this quarter, we're breaking out FT Movement retail segment sales and comps to provide you with better insight into our rapidly growing athletic brand. Now on to a review of Q1. We are delighted to report an excellent start to fiscal 2024. First quarter results topped our expectations discussed on the February call. Four of our five brands posted record first quarter revenues, and total URBN delivered 6% revenue growth against a strong first quarter last year. Double-digit comp sales growth in both the store and digital channels at the Anthropologie, Free People, and FP Movement brands. More than offset a negative comp at the Urban Outfitters brand, and drove total retail segment comp sales up by 5%. Newly, our apparel rental service, continued to enjoy strong positive response to its business concept and product offering. Newly's year-over-year revenues grew by 125%, driven by a triple-digit gain in active subscribers, which totaled $167,000 at quarter's end. newly contributed $29 million in additional revenue versus last year's first quarter. Wholesale revenue in the quarter declined by 11% as some of our larger partners sought to operate with leaner inventory levels and wrote smaller orders. Customer demand for fashion at the Anthropologie Free People and FP movement brands accelerated in Q1 versus last year and remained elevated throughout the quarter. This strength was driven by better fashion execution and stronger marketing, which created more customer traffic, including a double-digit increase in new customers in North America. Clearly, these brands are pleasing existing customers and capturing additional market share. We currently see no signs of change in customer behavior, no indication that customers are shopping less frequently, buying fewer items, or trading down. Indeed, so far in May, total retail segment comps are in line with the first quarter results. And we believe that total retail segment comps in Q2 could look very similar to Q1 print. Sales comps at the Urban Outfitters brand remain disappointed in Q1. That weakness has largely continued into May. We are planning for better women's apparel comps during the back to school selling season beginning in July. Our recently reestablished speed-to-market capabilities that allow us to react faster to customer preferences, plus an adjustment in our pricing architecture that offers more opening price point items, could help drive and maintain this improvement. Let me now turn your attention away from top-line performance and focus on profitability. Here, the URBN achievement in Q1 was dramatic. The hostile operating environment of the last few years has finally abated. Freight rates have normalized. Supply chain speed and reliability have returned. Our IMU improvement initiatives have begun to bear fruit and total inventories are down to last year and are once again growing at a slower rate than sales. All this resulted in a 260 basis points improvement in gross margins in Q1. In addition, newly came within a whisker of reaching profitability in the quarter, and we remain confident it will achieve that milestone in a future FY24 quarter. In all, first quarter operating income soared 54% versus the prior year to $71.4 million, and earnings per share jumped 70% to a record 56 cents. With that, I will now turn the call over to Frank. to provide more details on our performance.