Nuuly Bets $475M on Automation to Hit 1.2 Million Subscribers

Quick Facts

Nuuly’s Kansas City fulfillment center now spans 1 million square feet and can support up to 600,000 subscribers, with garment storage automation going live in September 2026.
A second 975,000-square-foot facility in Falls Township, Pennsylvania, is slated to open in late 2028, backed by at least $150 million in investment and 600 new jobs.
Urban Outfitters plans roughly $475 million in capital expenditures in fiscal 2027, with 50% earmarked for logistics investments across its retail and subscription businesses.

Urban Outfitters’ clothing rental service Nuuly is accelerating its fulfillment automation push as subscriber growth strains existing capacity. Nuuly President David Hayne disclosed the timeline on an Aug. 26 earnings call, outlining a phased automation rollout designed to cut logistics costs and scale the business toward 1.2 million subscribers.

The Kansas City, Missouri, facility now covers 1 million square feet. Hayne, who also serves as Urban Outfitters’ chief technology officer, said additional garment storage automation goes live in September 2026. An automated order sortation system follows in the fourth quarter of 2026. An automated picking solution is planned for mid-2027.

“Shipping, receiving, laundering, and inspecting wardrobes for 0.5 million subscribers requires significant investment, deep focus and continuous optimization,” Hayne said.

The Kansas City buildout is part of a five-year, $60 million plan that began operations in February 2024. Nuuly plans to replicate the automation suite at a second facility in Falls Township, Bucks County, Pennsylvania, which expands its East Coast footprint from 300,000 square feet to nearly 1 million square feet. That location is set to open in late 2028 and will push regional subscriber capacity from 200,000 to 600,000. The investment totals at least $150 million and will create 600 warehouse jobs plus 450 positions at Urban Outfitters’ 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.

The infrastructure spending comes as Nuuly posts strong financial results. The subscription segment generated $568 million in net sales and roughly $35 million in profit for the year ended Jan. 31, 2026, after spending several years in investment mode before turning its first annual profit in 2025. For the quarter ended July 31, subscription segment net sales rose 28.6% year over year, driven by a 30.4% surge in average active subscribers.

Nuuly has crossed 500,000 active subscribers and now counts more than twice the active subscribers of its closest competitor. Rent the Runway reported 155,692 active subscribers in its Q1 2026 results, according to a Wells Fargo note cited in the research. Nearly 70% of Nuuly subscribers have never rented from any platform before, according to the company’s own customer research.

Urban Outfitters CFO Melanie Marein-Efron said the company plans approximately $475 million in capital expenditures in fiscal 2027. Logistics investments will consume about 50% of that budget, up from a 40% allocation in a February 2026 projection of $385 million. Retail store expansion accounts for roughly 35%, and technology and home office work takes the remaining 15%.

Urban Outfitters set a first-half revenue record, with total company net sales rising 10.9% to $3.14 billion. Nuuly’s rental subscription segment contributed 31.4% net sales growth for the half. The company’s next public milestone for the service is $1 billion in annual sales, though no timeline has been attached to that target.

COO Frank Conforti framed the buildout as a long-term market play. “The performance at Nuuly over the past year has fortified our confidence that our business model is strong, and the rental market opportunity is very large,” Conforti said.