The Urban Outfitters brand is "on the mend", analysts have said, after the lifestyle retailer revealed second-quarter earnings above consensus estimates and an increase in sales.

In the three months to the end of July, net profit amounted to US$67.5m, or $0.49 per share. This compared to earnings of $76.4m, or $0.52 per share in the prior year period, but $0.01 above consensus estimates, according to Stifel analysts.

The gross profit rate declined by 194 basis points versus the prior year's comparable period, but total sales were up 7% to $811.2m.

Comparable retail segment net sales were flat, but increased 21% at Free People, 6% at the Anthropologie Group and decreased 10% at Urban Outfitters. Wholesale segment sales rose 36%.

"We are pleased to announce record second quarter sales driven by strong performances at our Anthropologie and Free People brands," said CEO Richard Hayne. "This achievement is a testament to the strength and validity of our model and to the ability of our talented teams to create powerful lifestyle brands, through compelling product, imagery and experiences."

Stifel analyst Richard Jaffe noted that management plans to drive sales by expanding categories. Urban Outfitters will offer expanded product offerings online, through larger stores, and through the wholesale channel.

"Looking forward, management is cautiously optimistic regarding a turnaround at the Urban Outfitters division as the improved merchandise assortment is gaining traction" analysts said. "This improvement, combined with continued strength at both Anthropologie and Free People, should drive better results in the 3Q."