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Urban Outfitters Q2 profit jumps 46 percent

August 16, 2010 3:00 PM

- Total sales up 20%

Press Release:

PHILADELPHIA, Aug 16, 2010 (GlobeNewswire via COMTEX) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle specialty retail company operating under the Anthropologie, Free People, Leifsdottir, Terrain and Urban Outfitters brands today announced earnings of $72 million and $125 million for the three and six months ended July 31, 2010, respectively. Earnings per diluted share were $0.42 for the quarter and $0.72 for the six months ended July 31, 2010.

Total Company net sales rose by 20% over the same quarter last year to $552 million. Comparable retail segment net sales, which include our direct-to-consumer channels, jumped 11% for the quarter while comparable store net sales increased 7% for the quarter. Comparable retail segment net sales at Anthropologie, Free People and Urban Outfitters increased 13%, 24%, and 9%, respectively for the quarter. Direct-to-consumer net sales soared 36% and wholesale segment net sales rose 16% for the quarter.

"We are delighted to announce record second quarter sales and earnings, with every brand, channel, region and shared service group delivering exceptional results," said Glen T. Senk, Chief Executive Officer. "Given the context of an uncertain economic environment, the Company continues to focus on superior creative execution combined with disciplined inventory and expense management," finished Mr. Senk.

Net sales by brand and channel for the three and six months were as follows:

Three Months Ended Six Months Ended

July 31 July 31

------------------------- ------------------------

Net sales by brand 2010 2009 2010 2009

------------ ----------- ------------ ----------

Urban Outfitters $ 243,232 $ 211,396 $ 453,737 $ 392,682

Anthropologie 256,353 203,740 481,032 368,346

Free People 46,876 39,177 87,444 74,960

Other 5,698 4,313 9,907 7,434

------------ ----------- ------------ ----------

Total Company $ 552,159 $ 458,626 $ 1,032,120 $ 843,422

============ =========== ============ ==========

Net sales by


Retail Stores $ 425,655 $ 361,789 $ 794,196 $ 661,580

Direct-to-consumer 96,571 70,931 182,838 131,741

------------ ----------- ------------ ----------

Retail Segment 522,226 432,720 977,034 793,321

------------ ----------- ------------ ----------

Wholesale Segment 29,933 25,906 55,086 50,101

------------ ----------- ------------ ----------

Total Company $ 552,159 $ 458,626 $ 1,032,120 $ 843,422

============ =========== ============ ==========

For the three and six months ended July 31, 2010, gross profit margins improved by 173 and 303 basis points, respectively, versus the prior year's comparable periods. The increase in the quarter was primarily due to a lower rate of markdowns to clear seasonal inventories, leveraging of store occupancy expense driven by positive comparable store sales and improvements in initial merchandise margins. The improvements for the six months ended July 31, 2010 were primarily due to improved initial merchandise margins, leveraging of store occupancy expenses and a lower rate of merchandise markdowns.

As of July 31, 2010, inventories grew by $26 million or 12%, on a year-over-year basis, driven by the acquisition of inventory to stock new retail stores. Total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 3% at cost.

For the three and six months ended July 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 52 basis points for both periods, versus the comparable periods last year. These decreases were primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the quarter and year to date.

During the three months ended July 31, 2010, the Company's quarterly tax rate decreased to 33.3% from 38.2% in the prior year's comparable quarter. This decrease was due to the favorable impact of foreign operations income as well as a one-time federal rehabilitation credit earned related to our newest building at the company's headquarters at the Navy Yard in Philadelphia, PA. The Company expects the annual effective tax rate to be approximately 35% for the full year.

On February 28, 2006, our Board of Directors approved a stock repurchase program. The program authorizes the Company to purchase up to 8,000,000 shares of our common shares from time-to-time, based upon prevailing market conditions. We purchased 1,220,000 common shares during the fiscal year ended January 31, 2007. During the quarter ended July 31, 2010, the Company repurchased and subsequently retired 2,015,180 common shares for $68 million at an average price of $33.72 per share. As of July 31, 2010, 4,764,820 shares were available under the share repurchase authorization.

During the six months ended July 31, 2010, the Company has opened a total of 16 new stores including: 5 Urban Outfitters stores, 8 Anthropologie stores and 3 Free People stores. As of February 1, 2010, the Company converted one Free People store to a new Free People wholesale showroom. The Company expects to open approximately 45 new stores during the fiscal year.

Urban Outfitters, Inc. is an innovative specialty retail company which offers a variety of lifestyle merchandise to highly defined customer niches through 160 Urban Outfitters stores in the United States, Canada, and Europe, a catalog and two web sites; 145 Anthropologie stores in the United States, Canada and Europe, a catalog and two websites; Free People wholesale, which sells its product to approximately 1,400 specialty stores and select department stores; 36 Free People stores, a catalog and web site; Leifsdottir wholesale, which sells its product to approximately 65 specialty stores and select department stores, Leifsdottir web site and 1 Terrain garden center and web site as of July 31, 2010.

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