Urban Outfitters Sees 49% Income Jump For Q2

Urban Outfitters, Inc. announced for the three months ended July 31, 2005, net earnings jumped by 49% over the comparable quarter last year to $30.6 million. Second quarter diluted earnings per share rose to a record 36 cents this year versus 25 cents in the prior year.
Net sales for the quarter increased by 34%, to a record $253.4 million. Fueling this increase over the prior year period was:

 -- a 10% jump in total company comparable store sales
 -- a 31% increase in the number of stores in operation
 -- a 54% gain in direct-to-consumer sales
 -- an 84% surge in wholesale sales

Comparable store sales at Urban Outfitters, Anthropologie and Free People were up 13%, 6% and 36%, respectively; or a combined 10% versus a 26% combined increase during the comparable quarter last year. New and non-comparable store sales increases for the quarter totaled $33.1 million.

“July 'comps' were the best of the quarter due to strong customer response to our Fall fashion assortments,'' stated Richard A. Hayne, chairman and president. “This momentum, combined with the current positive spending mood of our customers, makes us optimistic about second half opportunities.''

Net sales for the periods were as follows:

                          Three months ended     Six months ended
                                July 31,              July 31,
                             2005       2004       2005      2004
                             ----       ----       ----      ----
                              (in thousands)        (in thousands)
 Urban Outfitters
  store sales              $122,309   $ 90,841   $226,418   $169,407
 Anthropologie
  store sales                90,603     73,766    177,910    140,340
 Direct-to-
  consumer sales             28,273     18,373     56,995     36,974
 Free People
  sales                      12,207      6,504     23,394     13,053
                           --------   --------   --------   --------
  Total net sales          $253,392   $189,484   $484,717   $359,774
                           ========   ========   ========   ========

For the three and six months ended July 31, 2005, gross profit margins increased by 72 basis points and 94 basis points, respectively, versus the prior year's comparable periods. These gains were primarily due to higher initial merchandise margins and improved inventory management, resulting in lower shrink and obsolescence.

As of July 31, 2005, total company inventories grew by $41.7 million on a year-over-year basis. The acquisition of inventory to stock new retail stores was the primary factor for this increase. Total comparable store inventories grew by 22% and 10% on a dollar and unit basis, respectively. Earlier delivery of Fall season apparel and a build in Anthropologie's housewares inventory were the primary drivers of these increases.

For the three and six months, selling, general and administrative expenses, expressed as a percentage of net sales, decreased by 79 and 114 basis points, respectively, versus the same periods last year. These improvements were primarily a result of greater than planned increases in 'comp' store sales coupled with effective control of store-related payroll and other store-related and fixed administrative expenses.

The company plans to open a total of 30-32 new stores in the current fiscal year, including 2-3 new Free People stores. Thus far during fiscal year 2006, the company has opened 12 new stores.

                             URBAN OUTFITTERS, INC.
                    Condensed Consolidated Statements of Income
                  (in thousands, except share and per share data)
                                  (unaudited)

                       Three Months Ended       Six Months Ended
                       ------------------       ----------------
                            July 31,               July 31,
                            --------               --------
                        2005        2004        2005        2004
                        ----        ----        ----        ----

 Net sales         $   253,392 $   189,484 $   484,717 $   359,774
 Cost of sales,
  including
  certain buying,
  distribution
  and occupancy
  costs                148,556     112,466     282,264     212,862
                   ----------- ----------- ----------- -----------


    Gross profit       104,836      77,018     202,453     146,912
 Selling, general
  and
  administrative
  expenses              55,371      42,898     108,210      84,396
                   ----------- ----------- ----------- -----------


    Income from
     operations         49,465      34,120      94,243      62,516
 Other income, net       1,326         346       2,090         302
                   ----------- ----------- ----------- -----------
    Income before
     income taxes       50,791      34,466      96,333      62,818
 Income tax expense     20,190      13,958      38,292      25,441
                   ----------- ----------- ----------- -----------
    Net income     $    30,601 $    20,508 $    58,041 $    37,377
                   =========== =========== =========== ===========

 Net income per
  common share:

   Basic           $      0.37 $      0.25 $      0.71 $      0.46
                   =========== =========== =========== ===========
   Diluted         $      0.36 $      0.25 $      0.69 $      0.45
                   =========== =========== =========== ===========