Urban Outfitters, Inc.

ladies and gentlemen, and welcome to the Urban Outfitters Inc third 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 now like to introduce Ona McCullough, Executive Director of Investor Relations. Ms. McCullough, you may begin.

Good afternoon, and welcome to the URBN third quarter fiscal 2024 conference call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the three- and nine-month period ending October 31, 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 from Frank Conforti, Co-President and COO, URBN, Dave Hain, Chief Technology Officer and President of Nuuly, Sheila Harrington, Global Chief Executive Officer of Free People and Urban Outfitters, Melanie Moraine-Effron, Chief Financial Officer, URBN, and Richard Hain, Chief Executive Officer, URBN. 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 Frank.

Thank you, Ona, and good afternoon, and thank you to everyone who joined our call today. I will begin my commentary with comments on our operating results for the third quarter and then discuss more detailed notes by brands. Overall, the third quarter performed largely in line with our expectations as discussed on the August call. URBN delivered strong sales growth of 9% to a record $1.3 billion for the third quarter. URBN sales growth was driven by a 6% retail segment comp and robust growth from Nuuly, which added $30 million in revenue during the quarter. Retail segment comp was driven by high single-digit comps in the DTC channel and mid-single-digit comps in stores. Sales comps in both channels were the result of higher traffic and increased AUR. The Anthropologie, Free People, and FT Movement brands all produced double-digit sales growth in stores and online, with FT Movement leading the way with a comp sales increase of 49%. Each of these brands achieved record third quarter brand revenue, which more than offset a negative comp at the Urban Outfitters brand. URBN's bottom line results were even more impressive than our strong sales growth. Total URBN operating income soared 90% higher than the prior year to $109 million and earnings jumped 123% to $83 million, or $0.88 per diluted share. Our earnings growth was driven in part by a 27% increase in gross profit dollars, while gross profit rate surged by over 500 basis points. The improvement in gross profit rate was due to significantly improved initial margins, as well as lower markdown rates at all brands. I will now provide more details by brand with a little help from Dave Hain on Nuuly.