URBN 2027 회계연도 2분기 실적 발표 콘퍼런스 콜: 사상 최대 매출, 누리 마진 10% 달성

얼반 아웃피터스(Urban Outfitters, Inc., NASDAQ: URBN)가 모든 리테일 부문 브랜드, 누리(Nuuly), 도매(Wholesale) 사업 전반의 성장에 힘입어 영업이익이 증가하며 2027 회계연도 2분기 역대 최대 매출과 순이익을 기록했다고 발표했다. 경영진은 일회성 관세 환급, 관련 이자 수익, 세금 혜택을 제외한 조정 기준 실적을 설명했다.

핵심 요약

• 매출액(Net sales)은 전년 동기 대비 10% 증가한 17억 달러로 회계연도 2분기 기준 역대 최대치를 기록했으며, URBN은 8분기 연속으로 매출과 이익 모두 역대 최대 실적을 달성했다.
• 영업이익은 11% 증가한 사상 최대치인 1억 9,300만 달러를 기록했으며, 희석 주당순이익(EPS)은 9% 증가한 1.72달러를 기록했다.
• 리테일 부문 동일매출(comparable sales)은 6% 성장했으며, 디지털 매출 성장률이 오프라인 매장 성장률을 소폭 상회했다. 리테일 부문의 모든 브랜드가 플러스 동일매출 성장을 달성했다.
• 누리(Nuuly) 매출은 29% 증가한 1억 7,900만 달러를 기록했다. 평균 활성 구독자 수는 30% 증가한 48만 4,000명을 기록했으며, 해당 사업부는 처음으로 분기 영업이익률 10%를 달성했다.
• 경영진은 회계연도 3분기 총매출이 높은 한 자릿수 비율로 성장하고, 매출총이익률은 전년 동기 대비 25~50bp 개선될 것으로 전망했다.
• 중동 전쟁 관련 유류 할증료로 인해 회계연도 3분기와 4분기에 각각 약 70bp의 마진 하락 압박이 발생할 것으로 예상된다.

핵심 재무 데이터

매출총이익률은 매장 임차료 레버리지 효과와 건당 배송비 절감 혜택을 받았다. 이러한 상승 요인은 관세 비용 증가, 입고 운송 유류 할증료, 앙트로폴로지(Anthropologie)의 할인 판매 증가분을 상쇄했다.

사업 및 영업 성과

누리(Nuuly), 수익성 갖춘 성장 동력으로 부상

누리는 1,800만 달러의 영업이익을 창출하며 분기 영업이익률 10%를 달성했다. 활성 구독자 수는 통상적인 여름철 계절성을 따르기 전인 6월 초에 50만 명을 돌파했다.

제품 구색은 35% 확대되어 거의 33,000개 선택지에 달했다. 누리는 이번 분기 동안 리볼브(REVOLVE)의 자체 브랜드(PB) 및 기타 파트너를 추가했으며, 나이키(Nike)는 8월, 제이크루(J.Crew)는 10월 입점이 예정되어 있다.

운영 역량도 확장되고 있다. 누리의 캔자스시티 물류 시설은 60만 제곱피트에서 100만 제곱피트로 확장되어 최대 60만 명의 구독자를 지원할 수 있다. 필라델피아 인근에 계획된 시설은 2028년 말 오픈할 예정이다. 경영진은 완공 시 전체 물류 네트워크가 약 120만 명의 구독자를 지원할 것으로 예상하고 있다.

누리는 또한 내년 상반기 출시를 목표로 프로그램 확장안을 개발 중이다. 경영진은 구독자에게 플랫폼을 통해 개인 스타일을 접할 수 있는 추가적인 방법을 제공함으로써 사용자당 평균 매출(ARPU)을 높이기 위한 이니셔티브라고 밝혔다.

FP 그룹, 브랜드 성장 견인

FP 그룹 매출은 10%의 리테일 부문 동일매출 성장, 신규 매장 오픈 및 도매 매출 성장에 힘입어 15% 증가했다.

프리 피플(Free People) 매출은 리테일 동일매출 9% 성장에 힘입어 11% 증가했다. FP 무브먼트(FP Movement) 매출은 26% 증가했으며, 리테일 동일매출은 13% 성장했다. 이번 분기 동안 FP 무브먼트 매장 4개가 신규 오픈하여 단독 매장 수가 97개로 늘어났다.

FP 그룹 도매 매출은 FP 무브먼트, 속옷(Intimates) 및 여성 의류가 이끌며 19% 성장했다. 경영진은 이 부문이 회계연도 2분기 기준 역대 최대 영업이익을 기록했다고 밝혔다.

얼반 아웃피터스, 광범위한 동일매출 성장 기록

얼반 아웃피터스 매출은 8% 증가했으며, 글로벌 리테일 부문 동일매출은 8% 상승했다. 북미 지역은 데님, 바지, 라운지웨어, 노블티 제품, 신발의 호조로 이득을 보았다. 북미에서는 디지털 동일매출이 매장 매출을 앞질렀고, 유럽에서는 매장 실적이 디지털을 상회했다.

유럽은 지난 수년간의 높은 기준 실적 부담에도 불구하고 9%의 리테일 부문 동일매출 성장을 달성했다. 경영진은 해당 지역의 수익성 개선도 언급했다.

앙트로폴로지, 재고 소진 작업 진행

앙트로폴로지 매출은 3%의 리테일 부문 동일매출 성장과 신규 매장에 힘입어 5% 증가했다. 의류 및 액세서리는 플러스 동일매출 성장을 기록한 반면, 홈 부문은 보합세를 보였다.

회사가 재고 소진을 진행함에 따라 할인율은 높은 수준을 유지했다. 그러나 경영진은 이른 가을 신제품이 라인업에 추가되면서 7월 정상가 판매 동일매출이 플러스로 돌아섰다고 밝혔다. 앙트로폴로지는 이번 분기 동안 10%대 초반의 영업이익률을 유지했다.

뷰티 부문은 높은 한 자릿수 동일매출 성장을 기록했으며 선별적으로 확장되고 있다. 앙트로폴로지의 대형 뷰티 포맷 매장은 23개 매장에서 운영 중이며, 경영진은 가을까지 이 수를 대략 두 배로 늘릴 계획이다.

기술 및 물류 투자 지속

URBN이 마케팅, 매장 인건비, 기술 분야에 대한 지출을 늘리면서 판매관리비는 매출 성장세에 맞춰 증가했다. 회사는 공급망, 크리에이티브, 디자인, 마케팅, 재고 관리 기능 전반에 인공지능(AI)을 도입하고 있으나, 경영진은 복잡한 시스템에서 측정 가능한 효율성이 실현되기까지는 시간이 걸릴 것이라고 당부했다.

2027 회계연도 설비투자(CAPEX)는 약 4억 7,500만 달러로 계획되어 있다. 이 중 약 50%는 물류, 35%는 리테일 매장 확장 및 지원, 15%는 기술 및 본사 확장에 할당된다.

URBN은 이번 회계연도 동안 약 54개 매장을 신규 오픈하고 약 18개 매장을 폐점할 계획이다. 오픈 예정 매장에는 FP 무브먼트 매장 21개, 프리 피플 매장 12개, 앙트로폴로지 매장 12개, 얼반 아웃피터스 매장 8개가 포함된다.

경영진 실적 가이던스

매출총이익률 전망은 전년 동기 대비 관세 감소 및 임차료 레버리지 효과를 전제로 하며, 유류 할증료로 인해 일부 상쇄될 수 있음을 반영했다. 경영진의 전망은 현재의 유가 관련 할증료가 2027 회계연도 잔여 기간 동안 유지되고 추가적인 관세 변화가 시행되지 않는다는 가정을 바탕으로 한다.

리스크 및 주시해야 할 항목

• 중동 전쟁 관련 유류 할증료로 인해 입고 운송비, 내륙 수송비 및 배송 비용이 상승하고 있다.
• 현재 유류 비용은 회계연도 2분기 최초 상품 마진에 약 50bp, 출고 배송 및 운송 비용에 20bp의 영향을 미쳤다.
• 앙트로폴로지는 제품 구색을 재조정하고 남아있는 부진 재고를 정리함에 따라 다소 높은 할인율을 계속 적용할 것으로 예상한다.
• 누리의 분기 수익성은 계절성을 띤다. 경영진은 영업이익률이 2분기 10%에서 하반기에는 높은 한 자릿수 수준으로 완화될 것으로 예상한다.
• 우호적인 관세 전망은 추가적인 정책 변화가 없다는 것을 전제로 한다. URBN은 추가적인 IEEPA 관세 관련 환급을 대부분 수령했으며, 남은 금액은 미미할 것으로 예상된다.
• 얼반 아웃피터스 유럽은 지난 수년간의 기저효과 부담에 직면해 있으며, 경영진은 이로 인해 회계연도 3분기 동일매출 성장세가 둔화될 것으로 예상하고 있다.

애널리스트 Q&A 하이라이트

• 앙트로폴로지 상품 구색: 경영진은 7월의 긍정적인 정상가 매출과 이른 가을 신제품에 대한 초기 반응 덕분에 재주문 스타일에 대한 신뢰도가 높아졌다고 밝혔다. 해당 브랜드는 지속 가능한 중간 한 자릿수 동일매출 성장세를 회복하는 데 계속 집중하고 있다.
• 누리 구독 유지율 및 브랜드 믹스: 구독자 유지율은 비교적 안정적으로 유지되었다. URBN 자체 브랜드가 상품 구색의 중심을 유지하는 한편, 구독자의 선택 폭을 넓히는 외부 브랜드가 이를 보완할 것으로 예상된다.
• 누리 마진 경로: 경영진은 규모의 경제, 물류 개선, 고정비 레버리지 효과에 힘입어 누리가 궁극적으로 연간 10% 이상의 영업이익률을 달성할 수 있을 것으로 계속 믿고 있다. 구체적인 시점은 제시되지 않았다.
• 패션 트렌드: 경영진은 데님과 풍성한 하의 실루엣이 여전히 강세를 보이고 있으며 2028 회계연도까지 지속될 것으로 예상된다고 설명했다. 운동화 매출 역시 3대 주요 리테일 브랜드 모두에서 견조했던 것으로 나타났다.
• 가격 및 프로모션: URBN은 통상적인 신학기 프로모션 수준을 넘어서는 광범위한 할인 경쟁 심화는 관찰되지 않았다고 밝혔다. 경영진은 동일 제품의 가격 인상보다는 제품 및 카테고리 믹스에 힘입어 평균 단가가 계속 소폭 상승할 것으로 예상하고 있다.
• 8월 영업 동향: 경영진은 8월 현재까지의 동일매출이 계획에 부합했다고 밝혔다. 얼반 아웃피터스의 8월 높은 한 자릿수 매출 증가율은 주로 정상가 판매가 견인한 것으로 파악되었다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, ladies and gentlemen, and welcome to the Urban Outfitters, Inc. Second Quarter Fiscal 2027 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Oona McCullough, Executive Director of Investor Relations. Ms. McCullough, you may begin.

Oona McCullough

Good afternoon, and welcome to the URBN Second Quarter Fiscal 2027 Conference Call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the 3- and 6-month period ending July 31, 2026. 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. 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.

Please note, on today's call, management will be speaking to our financial results on an adjusted basis, which does exclude one-time benefits related to refunds for IEEPA tariffs previously paid, associated interest income, and a tax benefit related to the release of a valuation allowance against certain foreign net deferred tax assets. Each of these items is detailed in our press release as well as the investor presentation that is posted to our URBN Investor Relations website. I will now turn the call over to Dick.

Richard Hayne

Thank you, Oona. In the second quarter, our teams once again produced record quarterly sales and earnings per share. Net sales grew 10% to $1.7 billion, operating income increased by 11%, and EPS grew 9% to $1.72. This marks the eighth consecutive quarter of record sales and profits. I salute our leaders and their teams for their talent, hard work, and remarkable consistency. Additionally, all retail segment brands delivered positive comps and the wholesale and subscription segments registered record second quarter results as well.

Now to provide more details on our Q2 performance, I'll pass the call over to Frank Conforti, our Co-President and Chief Operating Officer. After Frank, Dave Hayne, President of the Nuuly brand, will update you on our subscription rental business. Following Dave, our CFO, Melanie Marein-Efron, will walk you through our outlook for Q3 and the second half of the year. I will then wrap things up with a few closing thoughts before we open the call for your questions. Frank, it's all yours.

Francis Conforti

Thank you, Dick, and good afternoon, everyone. Today, I'm excited to share our company's second quarter record results. Then I will dive into some detailed notes by brand, followed by a tariff and fuel cost update.

Overall, our teams delivered another outstanding quarter, exceeding our plans and setting new sales and operating profit records. Total URBN sales grew by over 10%, reaching a Q2 record of $1.7 billion. All our Retail segment brands delivered positive Retail segment comps, while 4 of our 5 brands boasted record second quarter sales. Nuuly continued its impressive double-digit revenue growth, and our Wholesale segment also delivered exceptional double-digit revenue growth.

Our total URBN sales growth was partly driven by a 6% increase in the Retail segment comp with digital comps slightly exceeding store comps. Nuuly delivered strong 29% revenue growth, driven primarily by an increase of almost 113,000 average active subscribers compared to Q2 last year. Additionally, the Wholesale segment delivered a 19% increase in revenue, driven by growth across both specialty and department store accounts.

Next, I will turn your attention to gross profit. URBN saw an 11% increase in gross profit dollars, while the gross profit rate increased by 4 basis points to 37.7%. Due to strong sales, we nicely leveraged store occupancy expense and through several impactful initiatives, which improved our customer service and lowered our expense per package, we were able to leverage delivery expense despite the negative fuel surcharges related to the war. These benefits were partially offset by higher initial merchandise costs due to higher year-over-year tariff costs, inbound freight fuel surcharges, and slightly higher markdowns at the Anthropologie brand.

The good news is through the team's exceptional execution, we were able to offset all of these headwinds and deliver an improved gross profit margin rate. Additionally, as you will hear from Melanie in a few minutes, we believe there is an incremental margin opportunity coming in the second half of the year.

In the quarter, SG&A increased by 10%, in line with sales growth. We are happy to report that we were able to continue to invest in the business without deleveraging SG&A. The increase in SG&A dollars was driven by marketing investments at several of our brands, store payroll expenses, and investments in technology. The marketing efforts drove increases in traffic, both in stores and online for the total URBN Retail segment, while Nuuly's marketing campaigns resulted in healthy double-digit growth in average active subscribers. The increase in store payroll expenses was to support the growth in our store sales. The technology investments relate to several exciting AI-related projects that we anticipate will benefit the company for years to come.

Overall, total URBN operating income grew by 11% compared to last year, reaching an all-time record operating income for URBN of $193 million. Net income increased to $149 million, while earnings per share increased by 9% to $1.72 per diluted share.

Moving on to brand performance, starting with Anthropologie. The Anthropologie brand reported total revenue growth of 5%, driven by a 3% Retail segment comp and new store growth. The brand generated another positive Retail segment comp in the second quarter, extending its multi-year streak. Results were driven by positive comps in Apparel and Accessories, while Home was flat for the quarter. Customer growth increased by over 4% in the quarter across new, active, and reactivated customers, primarily driven by the early fall influencer campaign in July that supported the transition to early fall products. This well-received event enabled the team to get strong fall and holiday season product reads, which the brand continues to distort into for the second half of the year.

During the quarter, the brand experienced elevated markdowns as the team continued to work through slower turning inventory. Early reads on fall transition products have been very encouraging as fashion newness flows into the assortment. In fact, as this product hit the assortment in July, regular price comps turned nicely positive. Looking at some more details on Anthropologie's product performance. Apparel growth was driven by positive comps in dresses and bottoms. The Accessory category growth was driven in part by strong comp performance in shoes. The Home category was flat as a positive furniture comp was offset by a slight decline in home accessories.

Anthropologie's results this quarter reflect a well-managed business operating with discipline and flexibility. The brand continues to foster strong customer connections, sustain positive overall top line growth, and deliver a healthy low teens operating margin rate. Overall, we are pleased with the brand's execution. And based on our current plans, we believe the brand has the ability to deliver low- to mid-single-digit positive comps in the third quarter.

Now turning to the Urban Outfitters brand. Total Urban Outfitters sales grew by 8% and the global Retail segment comp was 8%, with strength across both North America and Europe. Digital comps outpaced store comps in North America, while in Europe, store comps outperformed digital. In North America, the team delivered positive comps across Women's Apparel, Accessories, and Home, led by strength in our key focus categories, denim, pants, lounge, novelties, and shoes.

Within women's apparel, the business is being driven by a strong bottoms trend, an emphasis on key item execution and robust performance from our own brands such as BDG and Out From Under. The positive Retail segment comps were driven by regular price sales outpacing total comp. The brand's marketing initiatives fueled positive traffic in both stores and digital this quarter, resulting in double-digit digital growth and new customer acquisition while maintaining high retention rates across their existing base. This success is rooted in the brand's strategic commitment to platform diversification, meeting its audience wherever they engage.

This quarter, the brand continued to strengthen its community engagement, leveraging user-generated content and amplifying video across social channels, expanding its reach on platforms like TikTok, [ Search ], Reddit, and ChatGPT. Additionally, for the back-to-school season, Urban Outfitters launched its first-ever connected TV commercial themed, All Together Now, featuring more than 75 real UO student customers from over 10 universities across the United States. This campaign strongly reinforced the brand platform of supporting students through the milestone and tradition of their college journey. By leaning into this authentic community-oriented approach, the brand continues to foster deeper connections with its core audience.

In Europe, the business continues to exceed expectations. The European team produced a 9% retail segment comp despite being up against difficult multi-year comp comparisons. European stores outperformed the digital channel, leading to a healthy increase in profitability for the quarter. Their consistent execution in product and marketing is allowing the brand to continue capturing meaningful market share. We are proud of the continued progress of the Global Urban Outfitters brand. Looking ahead to the third quarter, we believe the Global Retail segment comp could be in the mid-single-digit range. This will primarily be driven by the North American business, which we believe could deliver high-single-digit positive comps, while the European business could moderate to a mid-single-digit positive comp range due to very difficult multiyear comparisons.

Next, let's turn to the FP Group. The FP group delivered another impressive performance this quarter. The team achieved a total revenue increase of 15%. This growth was driven by positive Retail segment comps, new store growth, and strong gains in the wholesale segment. The Retail segment comp of 10% was broad-based across both the store and digital channels, with store performance outpacing digital during the quarter. Customer traffic and AUR was nicely positive for both channels. Positive comps in both channels were driven by strong regular price sales, reflecting the high quality of the brand's offerings and strong customer demand. Furthermore, customer acquisition and overall customer growth were positive across both channels, fueled by compelling content and product execution delivered by the brand's creative, marketing and product teams.

The FP group's Wholesale segment delivered a 19% increase in revenue during the quarter, led by the continued strength of FP Movement, Intimates, and Women's apparel across our wholesale partners. This execution, combined with well-controlled inventory, allowed the FP group to deliver record operating profit for the second quarter. Overall, the FP group executed a nearly flawless quarter.

Within the FP Group, the Free People brand had a strong second quarter with total sales growth of 11% and a retail segment comp of 9%. These positive comps were driven by continued strength in key categories, led by Bottoms and Intimates. The FP Movement brand remains a standout, delivering exceptional results with total revenue growth of 26% and a 13% Retail segment comp. This performance was fueled by the brand's ability to consistently deliver technical innovation and fresh fashion in the activewear space. The expansion strategy for FP Movement remains on track as they successfully opened 4 new stores during the quarter. This brings the total number of stand-alone stores to 97. FP Movement's exceptional performance highlights the incredible opportunity for future growth and increased market share for the brand.

As we move into the third quarter, the consumer continues to respond positively to the Free People and FP Movement brands fall assortment. Given this ongoing momentum, we believe the FP group Retail segment has the ability to deliver high single-digit positive comps in Q3. Additionally, we believe the FP group Wholesale segment can deliver healthy mid-teens revenue growth in the third quarter.

The last topic I want to address is the overall tariff and freight environment and its impact on our business. First, let's discuss fuel costs. We are currently navigating higher inbound freight costs, domestic transportation costs and higher delivery expenses, driven by fuel surcharges associated with the ongoing war in the Middle East. These additional costs had a negative impact of approximately 50 basis points in IMU and 20 basis points in outbound delivery and freight expense. We are assuming these costs and their negative impact will remain consistent for the remainder of the year.

As we noted earlier, through the team's disciplined execution, we were able to more than offset these macro headwinds and deliver increased gross profit margin dollars and rate in the quarter. If the price of oil declines and holds at any point in time in the future, we would expect to see a corresponding reduction in these expenses.

Next, let's discuss tariffs. During the second quarter, we received substantially all of our refund relating to the incremental IEEPA tariffs imposed beginning in the spring of FY '26. The remaining refund amounts and impact to our profitability are anticipated to be de minimis. Looking ahead to the second half of the year, we begin to anniversary higher tariffs in the prior year. And despite the recently enacted Section 301 tariffs, our overall effective tariff rate will be favorable for the remainder of the year, assuming no other changes are enacted.

In summary, the record-breaking second quarter of fiscal year '27 reflects the underlying strength of our diversified portfolio. Total revenue grew by 10%. The FP group delivered standout performances across both retail and wholesale segments. Urban Outfitters continued its strong top line comp alongside meaningful operating results improvement. Nuuly robustly grew its average active subscriber base while delivering a double-digit operating profit rate. Anthropologie sustained its positive comp trend and strong operating margins while remaining focused on optimizing the assortment.

We entered the back half of the year proud of all team's performances, confident in our growth plans, and well-positioned to execute on our strategic priorities. Now I will turn the call over to Dave Hayne, President of Nuuly and Chief Technology Officer of URBN.

David Hayne

Thank you, Frank, and good afternoon, everyone. I'm pleased to share another standout quarter for Nuuly, where robust subscriber momentum drove record revenue and profitability. In the second quarter, average active subscribers reached 484,000, up 30% versus last year, and we actually crested over 500,000 active subscribers in early June before easing back into our typical summer seasonality.

This strong growth translated directly into robust financial results on both our top and bottom lines, with Q2 revenue rising 29% to $179 million and, for the first time in brand history, quarterly operating income landing at 10%, equating to $18 million. Q2 is seasonally our strongest margin quarter, and we do anticipate back half operating rates will ease back into the high-single-digits, but the ongoing bottom line progress is very positive, and our results are a major milestone for the business.

Looking ahead, for full year FY '27, we believe Nuuly can deliver over $700 million in revenue with a high-single-digit operating profit rate. So what has been driving this strong momentum? From day 1, scale was a prerequisite for success in this business model and scale could only be achieved if subscribers found joy in our program. We have been driving this joy with a relentless focus on 3 core pillars: our assortment, the customer experience, and operational execution.

First, our assortment, the heart of the business and the primary reason subscribers choose Nuuly. Our choice count is up 35% from last year to nearly 33,000 choices. We remain thrilled to have our URBN sister brands at the heart of our assortment while continuing to broaden the selection of brands around them. Brand participation on Nuuly is truly a 2-way street. Larger partners see meaningful follow-on sales across their own direct channels, while emerging brands appreciate the visibility, brand awareness, and new customer acquisition they derive from the platform.

Our team is constantly on the lookout for new brand partners, and we receive regular inbound interest from potential partners as well. This past quarter, we launched REVOLVE's private label brands, including Lovers + Friends and Tularosa, which have performed well, especially with our West Coast occasion wear customer. We also added Collina Strada, Faithfull, and Addicted along with capsule collaborations with SIMONMILLER and Tyler McGillivary 2 strong marketing moments in the quarter. Looking ahead, 2 exciting household names are joining the platform later this year. Nike is rolling out this month and J.Crew will debut in October.

Second, the customer experience. Having 33,000 choices ensures we have something for everyone, but we recognize that large catalogs can sometimes be overwhelming. To address this, we've looked beyond fashion and retail for models to emulate and streaming platforms like Netflix and Disney+ serve vast catalogs of content to large subscriber bases, yet their experiences feel tailored to the user. Over the past year, we've improved our personalization engine to serve smarter recommendations based on style and brand affinities, resulting in big increases in satisfaction metrics. Similarly, we've also introduced a custom fit guidance engine that learns from post-rental survey data, solving a subscriber friction point by helping to identify the best size before ordering.

Both of these enhancements leverage compounding data feedback loops. The more the community grows and the more a subscriber uses Nuuly, the smarter the platform becomes for both that subscriber and the community as a whole. And more recently, we have focused on improving the checkout and delivery experience for subscribers. We've brought more certainty to the ordering process by integrating estimated delivery date to checkout, along with options to expedite both your delivery service and fulfillment processing. We've also introduced 7-day carrier coverage for weekend deliveries, all of which give subscribers more confidence when planning their rentals around their calendar. By listening closely to customer feedback, we directed our team's energy towards these targeted enhancements to bring even more joy to the program.

Our third pillar of focus is scaling operational execution. Shipping, receiving, laundering, and inspecting wardrobes for 0.5 million subscribers requires significant investment, deep focus, and continuous optimization. In Kansas City, we've meaningfully expanded our footprint from 600,000 to 1 million square feet, and this building is now capable of supporting up to 600,000 subscribers. Our focus has been on automating as much of the operation as possible. Additional garment storage automation goes live this month, an automated order sortation system will go live in Q4, and an automated picking solution is planned to launch mid next year. Together, once live and fully functional, we believe these automated innovations will save us meaningfully on logistics expenses.

Additionally, we recently announced a significant new investment outside Philadelphia, just a 10-minute drive from our current facility. We are planning for the new building to open in late calendar year 2028, and it will expand our East Coast operation from 300,000 to 1 million square feet, increasing our regional subscriber capacity from 200,000 to 600,000 subscribers as well as leveraging the automation suite that we have developed in Kansas City. Once this project is complete, the full Nuuly network will support roughly 1.2 million subscribers with a significantly more efficient operation.

With much of our recent focus on operational improvements and with our fulfillment investments underway, we believe it is time to revisit the customer experience and consider how we can make the Nuuly program even more valuable for subscribers. We are underway with an extension of the program to be launched in the first half of next year that we believe will increase average revenue per user or ARPU by offering new ways for subscribers to discover, access, and source their personal style through Nuuly. We will share more details as the launch approaches, but we're excited about this opportunity and how it can improve the customer experience and our business metrics.

Taking a step back, I hope you can understand why we are so excited about this business. Nuuly is a genuine growth engine and a true differentiator for URBN. The progress we're seeing is the direct result of the support from our leadership and the incredible efforts of our extraordinary team. I want to thank our thousands of associates across our fulfillment centers and home office for their tireless work over the past several quarters. Your dedication to our subscribers is an inspiration. Thank you. I'll now turn the call over to Melanie.

Melanie Marein-Efron

Thank you, Dave, and good afternoon, everyone. On today's call, I will discuss our thoughts on the third quarter and full year fiscal '27. We're off to a solid start this quarter. And based on what we're seeing so far, we're planning for Q3 total company sales to grow in the high-single-digit range. Our Retail segment comp sales could grow mid-single digits, driven by high-single-digit positive retail segment comps at the FP group, mid-single-digit positive Retail segment comps at the Urban Outfitters brand and low- to mid-single-digit positive comps at the Anthropologie brand. At Nuuly, the brand could deliver high 20s revenue growth driven by continued subscriber momentum. Finally, our Wholesale segment could produce low teens growth.

We continue to believe we can deliver high single-digit total company sales growth for the full year fiscal '27. This growth could be driven by mid-single-digit Retail segment comps, high 20s revenue growth at Nuuly, and low teens growth for the Wholesale segment. Based on the current sales performance and plans, we believe our third quarter gross profit margins could improve by 25 to 50 basis points versus last year. The increase in Q3 gross profit rate could be primarily due to higher IMU due to lower tariffs versus last year and occupancy leverage, partially offset by higher fuel surcharges versus last year. We are assuming that current oil surcharges related to the ongoing Middle East war remain in effect for the remainder of FY '27.

These surcharges, which began in March 2026, impact inbound freight and outbound delivery and freight expenses. Based on the current surcharges, they represent approximately 70 basis points unfavorable impact on each of the third and fourth quarters. Based on our current plans, we believe our full year fiscal year '27 gross profit margins could improve by approximately 25 basis points versus last year with the second half showing benefit to IMU.

Based on our current sales performance and financial plan, we believe Q3 total growth in SG&A could grow at a rate below sales. The increase in SG&A dollars are based on planned marketing investments at all brands to support new customer acquisition, along with increased artificial intelligence and other technology investments.

Now for the full year, we believe that SG&A growth could grow at a rate in line with or below sales growth. As always, if sales performance fluctuates, we maintain a certain level of variable SG&A spending that we can fluctuate up and down depending on how our business is performing. We're planning for an effective adjusted tax rate of approximately 24.75% for Q3 and for the full year. Our plan for Q3 and full year adjusted tax rate reflects the exclusion of the benefit related to the Q2 release of a valuation allowance against certain net deferred net tax assets, which was included in the Q2 reported results.

Now moving on to inventory. We continue to be focused on increasing our inventory productivity and product turns. We believe that our inventory levels could grow at a rate at or below sales growth in Q3. For FY '27, capital expenditures are planned at approximately $475 million. The FY '27 capital project spend is broken down as follows: approximately 35% for retail store expansion and support, approximately 50% for logistics investments, and the remaining 15% for technology investments and home office expansion to support our growing business.

The logistics investments are to expand our capacity and automation in both the subscription and retail segment businesses. We will be opening approximately 54 new stores and closing approximately 18 stores during fiscal year '27. Our net new store growth is primarily being driven by growth in FP Movement stores. During fiscal year '27, we plan on opening 21 FP Movement brand stores, 12 Free People brand stores, 12 Anthropologie stores, and 8 Urban Outfitters stores.

As a reminder, the foregoing does not constitute a forecast, but is simply a reflection of our current views. The company disclaims any obligation to update forward-looking statements. Now it is my pleasure to turn the call back to Dick Hayne, Chief Executive Officer of URBN.

Richard Hayne

Thank you, Mel. Dave, big congratulations to you and the entire Nuuly team for achieving such impressive milestones this quarter. Reaching over 0.5 million subscribers and delivering a 10% operating margin are testaments to the validity of the subscription rental concept and the great execution you and your teams have accomplished in a short amount of time. Nuuly is definitely proving to be a powerful and profitable growth engine for our company. So thank you.

Nuuly was not the only brand to deliver a standout performance in Q2. As you heard, the Free People and FP Movement brands achieved double-digit sales and profit growth. And the Free People Wholesale segment crushed last year's strong performance by growing sales in the high teens and operating profits by 40%. The Anthropologie brand added to its impressive 21-quarter streak by posting nicely positive comps. The brand also delivered very healthy low teens operating margins.

The Urban Outfitters brand generated high-single-digit comp sales on both sides of the Atlantic. This marks continued progress for North America and reaffirms the excellent execution in Europe. Overall, Q2 brand performance across our entire portfolio ranged from very good to outstanding. This gives me considerable confidence as we enter the second half of the fiscal year and reinforces my belief in our multi-brand strategy. The foundation of our business has always been our talented teams with their outsized creativity, work ethic, and dedication. But as I've noted in previous commentaries, the strength of URBN, besides its people, lies in the structural diversification. diversity by brand, by demography, by product category, by distribution channel, and by geography. These are all factors that allow us to deliver consistent market-leading results across ever-changing fashion and economic cycles.

And as our brands grow, especially our emerging brands, that diversification increases. By 2030, I believe URBN's portfolio could consist of $5 billion-plus brands, each concentrated on a unique customer with unique products. Our structural advantage is further supported by the ability of our target customers. Much has been written in the media questioning the health and resilience of the consumer. However, based on what we see across our businesses every day, the economy and the customers remain in very solid shape. Job stability is real, take-home incomes are rising, and our customers continue to spend on fashion.

Despite the ever-present noise, their shopping behavior has remained remarkably consistent. They are financially secure, highly engaged, and respond enthusiastically to new fashion. They continue to prioritize creativity and style over price, and our brands are delivering what they are looking for. We entered the second half of the fiscal year with strong operational momentum, supported by exceptional teams, a vibrant economy, resilient consumers, and clear strategic priorities across our portfolio.

In closing, I want to express my sincere gratitude to the entire URBN family, including our Co-Presidents, Meg and Frank and their teams, our brand leaders and their teams, and our 31,000 associates around the world. Collectively, you have produced another exceptional quarter, and I thank you. I also thank our global partners and our shareholders for their ongoing support and commitment. That concludes our prepared statements. We will now open the call for your questions.

Operator

[Operator Instructions] Our first question comes from the line of Lorraine Hutchinson from Bank of America.

질의응답

Lorraine Maikis

I wanted to focus my question on Anthropologie. Your early reads on fall give you confidence that you're out of the woods on the recent assortment challenges? And are you sort of the slower turning inventory at this point? Or do you expect any Anthro margin pressure in the third quarter?

Oona McCullough

Yes. Lorraine, I'll speak a little bit to that. But I first want to share that I think we feel good about the progress that was made throughout Q2. We ended July with nice full price comp increases as we transition to where now fall product earlier than last year, as Frank mentioned. This also represents our 22nd quarter of positive sales comps and an improvement from our 2% comp Q1 to a 3% comp in Q2. However, we're not satisfied with that, and we're working on ways to accelerate our growth.

This is also our 15th consecutive quarter of double-digit operating income rate, which I'm especially proud of this quarter given the IMU challenges our team faced with tariff and transportation cost headwinds. But to answer your question more directly, I think we're rebalancing our assortment to work through some of our known historical styles to make room for newness. And as we took this approach in July and our learnings from the July event drove full price comps, and it gave us a high degree of confidence around the styles that we've chased into.

Our newness will build as the quarter progresses. And as Frank mentioned in his opening remarks, I think we believe that our group can deliver low- to mid-single digits in the third quarter.

Francis Conforti

And Lorraine, this is Frank. Relative to Q3 margins, as you heard from Melanie, right now, our plan is to deliver 25 to 50 basis points of gross profit margin improvement in the third quarter. And that does contemplate giving Anthropologie the room to accelerate into the strong read that they're getting on fall and clear through some of that remaining product that they need to get out of.

Operator

And our next question comes from the line of Brooke Roach from Goldman Sachs.

Brooke Roach

I had a follow-up question on Anthropologie. And I was wondering if I can get your perspective on how you feel about the current competitive environment and your ability to gain share as you move beyond some of these fashion execution challenges? And then maybe a follow-up on market. Given the elevated level of promotions and the more moderate comp pace, is the Anthropologie brand still on track to deliver a mid-teen operating rate this year?

Oona McCullough

Okay. I'll -- I think our brand has definitely been gaining share. I think when you look at the 22 consecutive positive comps that outpaced the market, we have gained share, and I'm confident that we'll continue to do so. I think we'll continue to work through some of the assortment opportunities that I expressed, and that will require us to continue to have slightly higher markdowns, as Frank mentioned. And I think our ability to be able to do that is going to come from our team's ability to leverage some of our speed to market initiatives as well as understanding kind of as our customers' preferences evolve, how we can keep pace with that.

So I feel confident that we can continue to gain market share, and I -- we're squarely focused on getting back to that mid-single-digit comp range. And our teams are really focused on it, and I feel like we'll make progress on that.

Operator

And our next question comes from the line of Adrienne Yih from Barclays.

Adrienne Yih-Tennant

And well done on all fronts. My question is -- URBN Inc. is in a very unique position from just kind of overseeing or seeing kind of all the different fashion trends that might be happening in apparel, footwear, athleisure, et cetera. So I don't know who exactly I'm directing this to, but whoever wants to chime in. We're hearing kind of -- that we're long into the denim cycle, long into that kind of silhouette shift. There's talk of lifestyle footwear having an ebbing moment. And I know I see a lot of that, a lot of newness happening on Anthropologie, Tricia. So can you guys talk about sort of what you're seeing, particularly Nuuly, because that's on the bleeding edge, right, of fashion turnover. Dave, can you jump in there. But any comments on what you're seeing, the evolution and why you should be more resilient than kind of some of the more vertically-oriented or some of the brands for that matter?

Richard Hayne

Okay, Adrienne, I'm going to start out, and I will sort of pass it around the entire table because it is a wide-ranging question. First of all, on the athletic shoe front, I understand where your comment is coming from. But I just want you to know that all 3 of our brands are seeing very strong increases in athletic shoe sales. So we are not participating in any of the downturns that have been discussed recently. Yes, we have insight, and I think we -- I brought up in my commentary that the diversification that we have as a company gives us a lot more room for delivering the kinds of consistent higher comps than many of our competitors. So yes, we're seeing that.

Now as to the denim being long in the tooth, we don't see that. Denim is doing quite well. But I do believe -- we have been talking about the bottom trend for almost 7 years now. And my experience would tell me that most silhouettes and the trends they're in rarely exceed a decade in length. So we're due for a change in the next, let's say, 3 years or so. But right now, and I want to emphasize, the whole fuller bottom trend remains extremely strong, and we expect that to continue into FY '28.

I can't really tell you what's going to come next. And I guess I should say even if I knew, I wouldn't broadcast it today. But I don't think that we will be seeing it for at least another year. Does anybody want to add to it? Okay. I guess not...

Margaret Hayne

I will add. This is Meg Hayne. One of the things that we're really relying on is AI. We've been doing a lot of work in AI with seeing trends coming and taking it to a personal place for each brand. So with that tool, I think we have a lot of opportunity to continue to grow.

Operator

And our next question comes from the line of Matthew Boss from JPMorgan.

Matthew Boss

Great. Thanks. So at core Urban, could you elaborate on the consistent comp strength the past 4 quarters and opportunity you see remaining? At Anthropologie, and it's kind of to touch on the answer a few back, but what do you see as a sustainable multi-year comp profile for the brand? And then Dick, could you just touch on comp trends that you've seen in August at both of those concepts?

Richard Hayne

I'll start. We've given you our comp plans from the Retail segment, the Anthropologie low- to mid-singles, Free People and Free People Movement, high-singles; and the Urban brand high-singles, broken down by high-singles at North America and mid-singles at Europe. So we're really thinking it's going to be mid to high. So we're sort of right in the middle of it. And what we're seeing August to-date really is in line with our plans. So I can't give you much more in terms of comps beyond that. Sheila, you want to talk about Urban?

Sheila Harrington

Yes. Matthew, I would say -- and I would, first of all, credit the team with the success of the strength of comp and the consistency. But largely, we're focused on our strategy, the consistency at which we continue to apply. From a product perspective, our growth categories continue to resonate with the customer, the strength of the denim and bottom business, the strength of our lounge business, and our accessory business. From a marketing perspective, the team just continues to gain momentum and really, really see double-digit new customer acquisition and now the ability to retain and see those customers come back.

Really, that's about meeting the customers where they are, diversifying the platforms at which we engage with our customers and having a lot of fun while they're doing it. From a channel perspective, really building some momentum in our digital channel, enhancing the experience, running a considerable amount of A/B tests to remove friction in that channel.

In the retail channel, we have a new leader in place who's really been focused on engagement and improving the level of service and then just continuing to operate with more discipline, which is helping us close that gap to profitability. So I just couldn't be more proud of the team remaining disciplined, and consistent, and applying the same principles of our strategy.

Richard Hayne

Tricia, do you want to talk about Anthropologie in this one question?

Tricia Smith

Yes. I think we've talked about it. We are -- feel confident that we can deliver low- to mid-singles in Q3. We're very focused on getting back to mid-singles, and that's where I think we believe we can operate when we are operating in a place probably more consistently to where we had been the previous, probably, 20 quarters. So I think we believe long term, we can be a mid-single-digit comp. And I'm confident that with what the teams are learning, what they're applying, the nimbleness in which they're recognizing opportunities and the July results, give me a lot of confidence in the fact that when we can turn the season earlier, when we can flow more new products, both onto our site and in our stores, we see nice full price sales comp. So I'm confident that we can get there. I can't say when, but I do feel very confident in our teams to deliver -- ability to deliver what we said in that low- to mid-single digit in the short term.

Operator

And our next question comes from the line of Paul Lejuez from Citi.

Paul Lejuez

A question on Nuuly. You talked about [ these ] any changes. It seems it has been [Technical Difficulty].

Richard Hayne

Paul, you're going in and out. It's hard for us to hear it.

Paul Lejuez

Sorry. Is this any better?

Unknown Executive

Yes.

Paul Lejuez

So on Nuuly, I'm curious about the retention rates and any changes you've seen on that front? And also curious how the business is evolving as it grows in terms of brands on the platform, in terms of how much is from [ Free ] People and Anthro versus third-party brands? And where do you think that goes over time in terms of your own brands as a percentage of total that's available versus third party?

Unknown Executive

Yes. Thanks, Paul. I appreciate the question. Retention rates -- well, first of all, starting back with just Nuuly in general, it's amazing how stable some of the metrics are across the Nuuly business from month-to-month, from year-to-year. We've been very happy with the retention rates that we've seen. The retention rates have remained relatively stable. I think we do see those subscribers that have started with us very early tend to be those subscribers that are the most engaged and most excited about the program and most loyal. And as you continue to add more subscribers, the new subscribers that you add do have a slightly different retention profile, but still very stable with what we've been seeing. And so we're very happy about that.

In terms of the brand profile across the platform, we -- as I've said in my commentary, incredibly happy and thrilled to always have the URBN brands at the core of our platform. I think it's what makes the platform so attractive. I think the amazing work that our design teams do across our brands is what really drives the strong value to the heart of the platform for Nuuly, but adding those brands around the URBN brands is really what continues to add additional value and benefit to the subscribers.

So we see that there's going to be a continued interest to continue to add more brands in the future. That's our goal. That's our team's goal. But we do see that the URBN brands will continue to be at the heart of that assortment. Now will that percentage change year-to-year? It may. It may as we grow. But right now, we're -- that also has been pretty stable.

Operator

And our next question comes from the line of Alex Straton from Morgan Stanley.

Alexandra Straton

Maybe for Frank, I know you trimmed the SG&A guidance a little bit versus last quarter. Can you just talk about where you're finding incremental savings? And then for Frank or Dave, just on Nuuly, can you talk about how that business got to the 10% margin so fast, especially compared to last year? I think you landed at mid-single digit. And just how you think about the path beyond high-single-digit or so this year that I think you guided to?

Francis Conforti

Alex, thanks for the question. I'll take the Nuuly profitability one and then hand over SG&A to Mel. First, just honestly, we couldn't be more excited by the progress Nuuly continues to make. A huge congratulations to Dave and the entire Nuuly team. As we've stated previously, and honestly, I think our belief remains stronger than ever, that we believe the brand can run at a 10% operating profit rate, if not better, on an annual basis. As you know, there is a seasonality to their business from one quarter to the next and how the subscribers ebb and flow. But literally, they continue to show year-over-year improvement quarter after quarter, marching to the 10% annual rate.

We haven't set a time line yet on when we think the brand can hit 10% or exceed it. But as you can see, they're getting closer each quarter to getting there on an annual rate, and they're not that far off. I think relative to this quarter, they continue to see improvement in the rate in the areas that I think are going to be consistently improving year-to-year. So you see improvement in logistics and you see improvement in other fixed costs as they just continue to scale the business. As you heard from Dave's prepared remarks, I think he use the word -- it was a prerequisite, Dave, for this business' success was its ability to scale and eclipsing hopefully, will be close to $700 million this year. They've definitely achieved that.

Melanie Marein-Efron

With respect to your question on SG&A, Alex -- excuse me. We were able to keep SG&A growth in line with sales growth really because we were able to leverage our direct store controllable expenses in our stores and some other expenses that at the same time allowed us to distort investments in marketing to drive sales and new customers and invest in technology initiatives such as artificial intelligence. So that's kind of the...

Operator

And our next question comes from the line of Dana Telsey from Telsey Advisory Group.

Dana Telsey

Congratulations. As you think about the Nuuly business and expanding other brands, obviously, you mentioned Revolve, I think, and J.Crew. What are the types of brands or categories are you looking to expand into? And then when I think about -- I think, the beauty category, whether it was Urban and Free People, what's your thoughts on the beauty category and the opportunity there, given I think that was one of the slower categories? And just lastly, with AUR, how are you thinking of pricing going forward and the price of newness versus core?

Unknown Executive

Yes. Dana, thanks for the question. So brands on Nuuly, I would say that we take a perspective that it starts with -- there is a certain price profile that we need to kind of work within just given where the brand sits. Notoriety of the brand is very important, something that our subscribers are asking for, something that we think our subscribers will like and know, is something of interest that we tend to filter on. We do like to bring new brands that they may never heard of to the platform. I think that adds value and interest. So I think it's a combination of lots of different things. I wouldn't say there's any one specific kind of filter that we use, but that's really what our merchant teams are here for and what they do a great job of, is trying to decide what the right brand profile and brand mix is on the platform to really maximize the subscriber interest and subscriber value.

Richard Hayne

So Tricia, do you want to take the beauty question?

Tricia Smith

Yes. Thank you. We've been really encouraged and excited about beauty at Anthropologie. It's not really been a category we've talked a lot about, but it's grown very consistently, delivered high-single-digit comps in Q2. And we continue to expand the beauty assortment and our store footprint really thoughtfully. It's now in 23 stores, our more expanded space, and we're really doubling that store count come this fall.

We're very selective about which categories and brands we introduce with quality and curation mattering the most to our customers along with assortment breadth. And we really believe Beauty and Wellness represent a new opportunity given how naturally they complement our customers' existing relationship with brands. So I couldn't be more pleased with the consistent performance of Beauty and the growth opportunity for us in Anthropologie.

Richard Hayne

And Dana, I'm going to ask Frank and Oona and Mel to talk about AUR tonight with you because we have to move along so there are a couple of other people can get a question.

Operator

Certainly. And our next question comes from the line of Marni Shapiro, The Retailer Tracker.

Marni Shapiro

Congratulations to everyone. Sheila, I'm obsessed with Out From Under. It looks so amazing. But can we talk a little bit about Free People and Free People Movement. They are on fire. That viral Babydoll romper is all over my feet. The brands are flooding my feed. Your tourist stores in New York, it's all international people. So can you talk a little bit about the growth opportunity for both the brands, Free People and Movement here and internationally?

Sheila Harrington

Yes. Marni, thank you. Free People continues to see strong momentum internationally. We started the growth with DTC over a decade ago and our first store, just shy of 9 years ago. And what we're seeing is strong double-digit comp growth in Q2, outpacing our North America growth in Free People. We're managing 14 stores currently across the U.K. and Europe. And watching the growth that Urban and Emma's team has led, we know we have a lot of growth in front of us for Free People since the customer seems to be responding to the brand extremely well.

And then we've had separately some early strong read for FP Movement internationally. And Andrea and the team are building plans for European growth, starting with wholesale and DTC, but stores to follow. Our partnership with Barry's and Selfridges, which we touched on in our Q1 earnings call, continues to deliver strong growth and only reinforces the conviction that we had to push forward there.

Richard Hayne

Thanks, Sheila. Marni, I would never forget you.

Operator

And our next question comes from the line of Mark Altschwager from Baird.

Mark Altschwager

Hopefully, the pricing question is still fair game on the call. But Dick, you spoke about consumers prioritizing creativity over style and price, but there has been a lot of focus out there on pricing tailwinds for the sector beginning to moderate. And would love to just hear your view there for your segment of the market, are you seeing competitors reset price as they move through the tariff inventory? And does your plan for the back half of the year, fourth quarter, assume or incorporate any flexibility should you see the promotional environment begin to pick up?

Richard Hayne

Yes. We don't really see the promotional activity picking up, as you put it. I think there may have been a brief point in time, in June right around the Amazon -- their Prime Day. Thank you. Where it seemed to have picked up, but very recently, I don't think there has been much, if at all. The promotions that we see right now are all related to back-to-school and the promotions always play a big role in back-to-school, just like they do for Black Friday.

So Urban is no exception. We have some promotional activity for the Urban brand this back-to-school season, but it's been very similar to last year. And much of the high-single-digit comp gains that the Urban brand is enjoying this August is being driven by full price sales. So the only difference between this year and last year, as far as we can see, is timing. And that's week-over-week builds are happening slightly later this year due to the Labor Day calendar shift. We don't really anticipate promotions getting any more severe until we hit, as I said, Black Friday and then all bets are off.

Francis Conforti

And I think as it just relates to core AUR, Mark, for us, obviously, price comparisons are a little more complicated than some other companies. We don't have a lot of carryover product from last year and mix plays a huge role in our overall AUR by brand and for the company. As Dick and everyone has mentioned, we remain in a strong bottom cycle, which tends to be favorable from a price perspective. Not only bottoms have a higher price point, it's such a strong bottom cycle. We're seeing the ratio of tops to bottoms sort of exceed historical averages and outpace on the bottoms, which overall drives price.

And then additionally, I think you've seen some elevation, higher product -- excuse me, higher quality put into the product within the Anthropologie and Free People brands, and that just continues to perform well. Accessories, you've seen really strong handbag performance at Free People with -- at higher price points as well as outerwear. So for us, I think our AUR is more about just a mix issue of where we are from a fashion cycle. And I don't think we anticipate that changing this year. So our AURs are planned up a bit for the remainder of the year. But again, that's driven by mix and driven by where the fashion is. It's not a like-for-like comparison conversation.

Richard Hayne

Okay. I think that -- one more question.

Operator

And our final question for today comes from the line of Simeon Siegel from Guggenheim.

Unknown Analyst

This is [ Dan ] on for Simeon. You touched on briefly a couple of times tonight, but I wanted to see where you stand in your AI implementation with regards to product life cycles. Is one brand further along the journey than another and maybe when it starts to show through in a meaningful way?

Richard Hayne

Sure. Simeon, Dave, do you want to take that?

David Hayne

Yes, sure. So in the second quarter, we've really continued to deploy AI across the company. We've been very excited about that deployment. We've been making great progress putting AI tools in the hands of our associates and really enabling them to optimize their workflows. And this has really kind of enabled an explosion of creativity across our teams and is building interesting things that help them get their jobs done faster and get more work done. So we're really seeing some exciting new use cases really almost every day.

At the same time, our tech team has been accelerating their software delivery cycles, and we've been really building out some capabilities, strong capabilities there. We're focused on enabling and hardening some of these more impactful AI use cases across supply chain, creative, design, marketing, inventory teams, and even other areas, and we're really excited about the potential in these areas as well. We do think that driving measurable efficiencies across these very complex areas and complex systems will take time to fully materialize and figure out, but we're very confident in the trajectory of what we're doing with AI deployment across the company and very excited about what the possibilities are.

And the speed to market and the production and design areas is really one big area of focus for us. We're seeing a lot of exciting capabilities emerge there and really excited to get that in front of the teams, and we've been excited as they've gotten the tools, that they're really making some strong headway. So very excited about AI across the company.

Richard Hayne

I believe that ends our call. Simeon, thank you. And thank you all very much for joining us, and we'll talk to you in -- what is it? Three months now.

Unknown Executive

Goodbye.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.