Urban Outfitters has the holiday spirit

Here’s one thing Urban Outfitters investors are thankful for: today was the stock’s best day since May.

Shares climbed 13.54% after the retailer every 17 year-old you know is obsessed with posted great Q3 numbers: EPS crushed expectations, revenue jumped 12%, and retail same-store sales increased by 8%, above forecasts of 5.2%. In fact, every single one of Urban Outfitters’ brands (its namesake, as well as Anthropologie and Free People) enjoyed strong same-store sales growth.

Executives said that, despite the shaky macroeconomic environment, Urban Outfitters shoppers were still willing to pay full price for items, even while they waited for holiday sales. CEO Richard Hayne noted on the firm’s earnings call that, "customer engagement was lively.”

The retail Super Bowl

Urban Outfitters isn’t the only retailer that’s had a major rally thanks to a surprisingly strong surge in demand.

Meme stock Kohl’s jumped 42% on Tuesday after its own earnings report, thanks to a short squeeze, and it climbed another 7.49% today. As we discussed yesterday, Abercrombie & Fitch also pulled off a major comeback, jumping over 37% after its earnings on Tuesday. It rose 5.38% this afternoon. And Best Buy gained over 5% after it reported strong demand for tech upgrades. The stock rallied another 1.67% today.

The bottom line: Despite headwinds like tariffs and a faltering labor market, consumers appear to be headed into the all-important holiday shopping season strong.

But wait—didn’t consumer confidence fall to its lowest level since April just yesterday? While that’s true, the numbers were likely distorted by the government shutdown, according to Chief Economist for LPL Financial Jeffrey Roach, who wrote that he expects a “rebound” next month.

After all, the holidays are traditionally all about spending time with loved ones, reflecting on the year, and of course, shopping.—LB

Urban Outfitters benefitted from total strength across its portfolio, including its hidden jewel: clothing rental service Nuuly.

Nuuly boosted Urban Outfitter’s revenue this quarter with the sort of sales the market loves: subscription. Its $98 per month fee means predictable, recurring revenue. And it’s helped by the fact that part of its inventory conveniently sits inside the stores of Urban Outfitters’ brands already, boosting margins. That store footprint also allows Nuuly to double down on convenience, recently letting customers return their monthly rental totes directly to Urban Outfitters stores.

Listen to today’s episode of Brew Markets Daily to learn why I think Nuuly will continue to eat Rent the Runway’s lunch and gain market share.—AB