URBN or DECK: Which Apparel & Shoes Stock Should You Bet On?

Urban Outfitters, Inc. URBN and Deckers Outdoor Corporation DECK compete for dominance in the Retail - Apparel and Shoes industry. Urban Outfitters, with its diverse portfolio, including Anthropologie, Free People and its subscription-based Nuuly service, has established a loyal customer base across multiple lifestyle segments. Meanwhile, Deckers, with its powerhouse brands UGG and HOKA, holds commanding positions in premium footwear categories with unmatched brand loyalty.

While operating in the same industry, URBN and DECK differ in their strategic approaches. However, both face similar challenges, including weather-related sales volatility and shifting consumer preferences. Which of these two specialty retail giants offers the more compelling investment case? Let us take a closer look.

The Case for Urban Outfitters

URBN has established itself as a strong player through consistent performance across its portfolio of brands. Its ability to manage product assortments, control inventory levels and minimize markdowns reflects an efficient merchandising strategy. This disciplined execution translates into higher margins and better operating leverage. The company’s focus on customer demand trends and quick product refresh cycles helps it stay ahead in a competitive market.

Anthropologie and Free People have been standout performers within URBN's portfolio. These brands have demonstrated a strong connection with their customer base, driven by a clear brand identity and curated product offerings. Their appeal across different demographics and lifestyle segments helps drive new and repeat traffic. With strong customer engagement and successful merchandising, these brands continue to gain market share. The Comparable Retail segment’s net sales increased 8.3% at Anthropologie and 8% at Free People in the fourth quarter of fiscal 2025.

The company's Wholesale segment demonstrated strong growth, largely fueled by Free People's focus on full-price selling and rising demand from specialty and department stores, particularly for the FP Movement brand. Meanwhile, Nuuly, the company's rental platform, saw a 78.4% surge in net sales, with subscriptions rallying 55.6% and active subscribers growing 53.5% in the fiscal fourth quarter. Nuuly also reached a milestone, achieving its first full year of profitability with $13 million in operating profit, highlighting its growing potential for long-term contribution to URBN’s growth.

Urban Outfitters is expanding its physical retail footprint with plans to open 58 stores in fiscal 2026, including locations for Free People, FP Movement and Anthropologie. The company is also refining its portfolio by closing underperforming stores and focusing on smaller, higher-productivity locations. In the long term, URBN aims to expand FP Movement to 300 stores across North America. With a focus on brand strength, digital integration and strategic expansion, URBN is well-positioned for sustained success into fiscal 2026 and beyond.

For fiscal 2026, Urban Outfitters expects to achieve mid-single-digit sales growth. This performance is anticipated to be led by low to mid-single-digit positive retail comps at Free People and mid-single-digit positive comps at Anthropologie. While the Urban Outfitters brand may see flat to slightly negative comps in the fiscal first quarter, gradual improvement is expected over the year. 

Nuuly is projected to deliver double-digit revenue growth for the fiscal year, supported by rising subscriber numbers. Additionally, the wholesale segment is expected to see mid-single-digit growth for the year, with low-double-digit growth in the fiscal first quarter.

The Case for Deckers

DECK is making significant strides with its brand portfolio, showcasing the increasing popularity of its UGG and HOKA brands. UGG remains a leader in the premium lifestyle footwear market, while HOKA continues to rise in the high-performance athletic footwear segment. Both brands benefit from strong customer loyalty, driven by effective inventory management and full-price sell-through rates.

Deckers envisions a 15% year-over-year rally in fiscal 2025 net sales to $4.9 billion, with HOKA anticipated to grow 24% and UGG by 10%. This is up from its earlier projection of $4.8 billion in net sales.

The company’s innovation strategy is also a key growth driver. HOKA's new releases, such as the Bondi 9 and Cielo X1, reinforce the brand’s leadership in the performance footwear category. UGG is diversifying beyond its traditional winter offerings, expanding into sneakers, hybrid styles and men’s fashion. These innovations ensure that Deckers remains aligned with evolving consumer preferences, allowing for the continued expansion of its product offerings.

International expansion remains a critical aspect of DECK’s strategy. Both UGG and HOKA are gaining traction globally, with targeted growth efforts in high-potential markets like China. This international push, combined with product diversification, strengthens the company's long-term revenue prospects and broadens its appeal in the global markets.

Deckers’ fast-growing direct-to-consumer (DTC) segment is another pillar of its success. In the third quarter of fiscal 2024, DTC net sales increased significantly, supported by robust digital performance and an expanding network of flagship retail stores. The company's investment in omnichannel capabilities, including enhanced e-commerce and loyalty initiatives like UGG Rewards, is driving customer acquisition and fostering stronger brand loyalty.

However, DECK is facing several near-term challenges, including inventory constraints and rising costs that are impacting its fiscal performance. The slowdown in UGG sales due to earlier-than-expected demand fulfillment is expected to affect revenues in the fiscal fourth quarter. Additionally, a 150-basis-point freight cost headwind, along with foreign exchange pressures of approximately 50 basis points, can erode profitability in the final quarter.

URBN Vs DECK: How Do Estimates Stack Up?

The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2026 sales and earnings per share (EPS) suggests year-over-year growth of 6.6% and 14.5%, respectively. The consensus estimate for EPS for the current fiscal year has moved up 7.4% in the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The Zacks Consensus Estimate for Deckers fiscal 2025 sales and EPS implies year-over-year growth of 15.4% and 21%, respectively. The consensus estimate for EPS for the current fiscal year has decreased 0.2% in the past 60 days.

URBN Vs DECK: A Look at Stock Performances

Despite operating in the same industry, the stock trajectories of Urban Outfitters and Deckers have moved in starkly opposite directions. DECK shares have declined 36.6% in the past six months, underperforming both its peers and the industry. In contrast, the URBN stock has gained 42.8% over the same period, significantly outpacing the industry’s sharp decline of 17.5%.

Urban Outfitters Vs Deckers: A Dive Into Stock Valuation

URBN’s forward 12-month price-to-earnings (P/E) multiple sits at 10.61X, below its median of 11.05X in the last three years. DECK is trading at a forward P/E multiple of 16.23X, below its median of 22.75X in the last three years. 

Urban Outfitters’ stock looks cheap from a valuation perspective, potentially offering attractive entry points for value-conscious investors. Moreover, with strong brand momentum and a solid strategy, the company is well-positioned for continued growth. We note that Deckers seems more pricey than Urban Outfitters, given their current P/E ratios.

URBN Vs DECK: Which is the Smarter Bet?

Between Urban Outfitters and Deckers, the former appears to be the smarter bet at this juncture. While both companies boast strong brand portfolios and growth plans, URBN is executing across multiple fronts — from driving brand momentum at Anthropologie and Free People to scaling its Nuuly rental platform and expanding its retail footprint. The company’s merchandising discipline and focus on brand identity have helped it remain resilient in a challenging retail landscape.

In contrast, Deckers, despite having powerhouse brands like UGG and HOKA, is currently navigating near-term pressures, such as inventory constraints and rising costs, which may limit its upside in the short term. With URBN’s diversified growth engines and more attractive valuation, it stands out as a more compelling opportunity.

URBN currently carries a Zacks Rank #2 (Buy), whereas DECK has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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