Nuuly Tops 500,000 Subscribers as Urban Outfitters Posts Record Q2 Revenue

Quick Facts

Urban Outfitters posted record Q2 net sales of $1.50 billion, up 11.3% year over year, with net income of $143.9 million.
Nuuly net sales grew 28.6% to $179 million in Q2, with active subscribers surpassing 500,000 in early June.
Urban Outfitters has committed $150 million to expand Nuuly’s Pennsylvania fulfillment center, targeting capacity for 1.2 million subscribers.

Urban Outfitters reported record revenue for its fiscal second quarter ended July 31, 2025, with total net sales rising 11.3% to $1.50 billion. Net income reached $143.9 million, or $1.58 per diluted share, beating analyst estimates of $1.48 by 6.76%.

The standout was Nuuly, the company’s clothing rental subscription segment. Nuuly posted $179 million in net sales for the quarter, a 28.6% increase. Average active subscribers grew by nearly 113,000, a 30.4% year-over-year jump.

“We actually crested over 500,000 active subscribers in early June before easing back into our typical summer seasonality,” Nuuly President Dave Hayne said on an analyst call Wednesday.

CEO Richard Hayne credited broad-based performance across the company’s five brands and three business segments. “All five brands achieved positive comparable sales across all geographies,” he said. “We saw exceptional performance across all of our segments: Retail, Subscription, and Wholesale.”

The retail segment posted 7.8% net sales growth, with comparable retail net sales up 5.6%, split evenly between store and digital channels. The wholesale segment grew 18.1%, driven by a 19.5% increase in Free People wholesale sales to specialty customers. Gross profit margin improved to 37.6% from 36.5% in the prior year period.

Nuuly’s Structural Edge

Nuuly’s growth is backed by a cost advantage its competitors cannot match. Products from Urban Outfitters, Anthropologie, and Free People made up roughly 45% of Nuuly’s inventory in 2025, acquired at cost, according to Wells Fargo analysts. Subscribers receive six items per month for $98, and can return orders at any Urban Outfitters retail location.

A Wells Fargo note described Nuuly as having “quickly become an industry leader” with more than twice the active subscribers of rival Rent the Runway, which reported 155,692 active subscribers as of its Q1 2026 results posted June 3.

COO Frank Conforti said the company’s confidence in the model is growing. “We are thrilled that Nuuly now appears to be leading the industry with an opportunity to continue to see significant growth,” he said.

Brand and Infrastructure Expansion

Nuuly’s brand selection count grew 35% year over year to nearly 33,000 choices in Q2. New additions included Collina Strada, Faithfull, and Edikted, along with capsule collaborations with Simon Miller and Tyler McGillivary, and Revolve’s private label brand. Nike is set to launch on the platform this month, with J.Crew following in October.

The company is also building out its fulfillment infrastructure to support future subscriber growth. Nuuly is expanding its East Coast operation from 300,000 to 1 million square feet with a new facility outside Philadelphia. Urban Outfitters has committed $150 million to the Falls Township, Pennsylvania, campus and plans to create 600 jobs there by 2033, with 450 additional roles at its Philadelphia Navy Yard headquarters.

“Once this project is complete, the full Nuuly network will support roughly 1.2 million subscribers with a significantly more efficient operation,” Hayne said. Automated garment storage, order sortation, and a picking solution are all expected to launch within the next 12 months.

Consumer Demand Signal

Retail analyst Michael Zakkour said Nuuly’s growth reflects a clear shift in how younger shoppers approach fashion. “It appeals to younger consumers who love variety in their wardrobes but are concerned about sustainability,” Zakkour said. “At the same time, they are cost-conscious, and Nuuly checks both boxes.”

For the six months ended July 31, 2025, Urban Outfitters reported record net income of $252.2 million, or $2.73 per diluted share. Nuuly’s subscription segment net sales rose 31.4% for the same half-year period.