Shares of apparel retailer Urban Outfitters (URBN 16.02%) soared on Wednesday after the company reported financial results for its fiscal third quarter of 2025. As of 11:30 a.m. ET, Urban Outfitters stock was up about 15%.
Record results for Urban Outfitters
Urban Outfitters had its best third quarter, which ended in October, in its history, with net sales of nearly $1.4 billion and net income of $103 million. That was good for 6% growth on the top line as well as a 24% increase on the bottom line. These numbers bested investors’ expectations.
It’s been a good time for apparel retailers, generally speaking. But Urban Outfitters results look particularly good. The company has several brands. But two of its smaller brands — FP Movement and Nuuly — are growing at a strong pace and even posting profits on their own.
Looking forward, consolidated results for Urban Outfitters are looking promising, with chief operating officer Frank Conforti saying, “We are optimistic for the entire holiday season.” It seems like the investing community was buying into that optimism today.
Is this a strong growth opportunity?
Management spent significant time talking about its Nuuly brand, which is an apparel rental subscription service. Its Nuuly subscriber base surged 50% year over year in Q3, ending with 297,000 members. Moreover, the service hit its first operating profit on a stand-alone basis. And management believes it can grow this business to millions of subscribers.
This is just one way Urban Outfitters is looking to boost its growth in coming years. Given the stock’s cheap valuation at just 14 times earnings, this could be an apparel stock to watch because its growth prospects could be stronger than many of its peers, providing a catalyst to send the stock higher over the long term.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.