Dive Brief:
- Urban Outfitters Inc.-owned Nuuly is bolstering its fulfillment center operations by investing in automation and expanding its capacity to serve subscribers, Nuuly President David Hayne said on an Aug. 26 earnings call.
- The clothing rental subscription service has expanded its fulfillment center in the Kansas City, Missouri, area to 1 million square feet, enabling the building to support up to 600,000 subscribers. Nuuly aims to automate as much of the operation as possible to reduce logistics expenses, according to Hayne, who also serves as chief technology officer for Urban Outfitters Inc.
- "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," Hayne said.
Dive Insight:
Nuuly is pushing to lean more on automation within its operations as it looks to efficiently serve a spike in demand for its services. Net sales for Urban Outfitters Inc.'s subscription segment, which includes Nuuly, increased 28.6% year over year for the quarter that ended July 31, driven by a 30.4% surge in average active subscribers.
"Shipping, receiving, laundering, and inspecting wardrobes for 0.5 million subscribers requires significant investment, deep focus and continuous optimization," Hayne said.
Nuuly will also tap the automation suite developed at the Kansas City location for its upcoming operations at a new facility outside Philadelphia, which is slated to open in late 2028, Hayne said. The building will expand Nuuly's East Coast operation from 300,000 square feet to 1 million square feet, boosting its regional capacity from 200,000 to 600,000 subscribers in the process.
"Once this project is complete, the full Nuuly network will support roughly 1.2 million subscribers with a significantly more efficient operation," Hayne said.
As Nuuly expands its operations to support growth, Urban Outfitters Inc. is planning to spend about $475 million in capital expenditures in fiscal year 2027, with roughly 50% dedicated to logistics investments. The logistics spending will help expand capacity and automation in the company's retail segment and its subscription business, Urban Outfitters Inc. CFO Melanie Marein-Efron said on the call.
That's an expansion from spending projections Marein-Efron outlined in February, when the company planned to invest $385 million for fiscal 2027. About 40% of that figure was tied to logistics investments.
Meanwhile, Nuuly has also made efforts to boost the delivery experience for subscribers, Hayne said. The clothing rental service has integrated an estimated delivery date on order checkouts and introduced options to expedite deliveries and fulfillment processing. Additionally, Nuuly has rolled out seven-day carrier coverage, enabling weekend deliveries, according to Hayne.
