Urban Outfitters has been performing well operationally, despite a challenging macroeconomic environment. While Free People and Anthropologie are experiencing strong growth, Urban Outfitters is lagging behind. The North American market is posing some pressure on Urban Outfitters. However, Free People and Anthropologie’s focus on higher-end consumers puts them in a relatively better position, as history has shown during economic crises.

Several factors contribute to Urban Outfitters’ positive outlook. Free People and Anthropologie are showing strong momentum, Nuuly is experiencing continued growth, the company’s valuation is favorable, and its inventory and balance sheet are in good shape.

As a result, we recommend buying Urban Outfitters with a target price of $32. The company operates over 500 stores for its Urban Outfitters and Anthropologie brands, as well as around 190 Free People stores globally. Despite a challenging macro backdrop, Urban Outfitters has managed to outperform its peers thanks to operational discipline, lean inventory, omnichannel capabilities, and customer loyalty.

Urban Outfitters recently reported strong sales growth, particularly for Free People and Anthropologie, despite some decline at Urban Outfitters. The company’s Nuuly segment is also experiencing exponential growth. Looking ahead, Urban Outfitters faces challenges in the North American market, but improvements in the supply chain and the continued growth of Nuuly are expected to contribute to its profitability.