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Urban Outfitters Reports Record Q4 Sales and Earnings

PHILADELPHIA, March 8, 2007 (PRIME NEWSWIRE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Anthropologie, Free People and Urban Outfitters brands, today announced earnings of $35.7 million and $116.2 million for the quarter and year ended January 31, 2007, respectively. Earnings per diluted share were $0.21 for the quarter and $0.69 for the year.

As stated in the Company's previous sales release on February 6, 2007, total sales for the fourth quarter increased 13% to a record $360.8 million. Comparable store sales at Urban Outfitters and Anthropologie were down 4% and 7%, respectively and increased 4% at our Free People stores. Total Company comparable store sales decreased 5% versus a combined 8% increase during the same quarter last year. Direct-to-consumer sales rose 23% and Free People Wholesale sales jumped 29% for the quarter.

Sales for the year ended January 31, 2007 increased 12%, to a record $1.22 billion. Total comparable store sales for the period decreased by 6% versus an 11% increase last year. Direct-to-consumer sales rose by 18% while Free People Wholesale sales surged 39%.

"We have seen steady improvement in the reaction to our fashion offerings over the past few months," stated Richard A. Hayne, Chairman and President. "Both the Anthropologie and Free People brands delivered positive 'comp' store sales for the month of February and since we will anniversary negative 'comps' each quarter this fiscal year, we feel guardedly optimistic about achieving our modest sales plans for the year," finished Mr. Hayne.


 Net sales for the periods were as follows:

                          Quarter ended               Year ended
                            January 31,               January 31,
                         2007         2006         2007         2006
                         ----         ----         ----         ----
                          (in thousands)            (in thousands)
 Urban Outfitters
  store sales          $161,615     $144,205   $  547,847   $  508,106
 Anthropologie
  store sales           125,424      115,837      439,185      395,157
 Direct-to-
  consumer sales         52,638       42,665      153,712      130,581
 Free People sales       21,119       15,882       83,973       58,263
                       --------     --------   ----------   ----------
   Total net sales     $360,796     $318,589   $1,224,717   $1,092,107
                       ========     ========   ==========   ==========

For the quarter and year ended January 31, 2007, gross profit margins decreased by 281 basis points and 418 basis points, respectively, versus the prior year's comparable periods. For both periods, these reductions were primarily due to additional markdowns and price adjustments to clear seasonal inventory, a higher rate of fixed store occupancy expense due to 'comp' store sales decreases and adjustments to inventory related valuation reserves.

As of January 31, 2007, total Company inventories grew by $14.0 million or 10.0% 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 fell by 2.9%.

For the quarter and year ended January 31, 2007, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 38 and 145 basis points, respectively, versus the same periods last year. The increase was primarily caused by the effect of 'comp' store sales declines on store related expenses.

The Company's annual effective tax rate improved to 31.7% from 38.4% based upon receipt of certification for work performed on the development of its new offices that qualifies for certain one-time federal tax incentives; the execution of certain reorganization efforts and the relief of valuation allowances related to foreign net operating loss carry-forwards. The Company believes it will receive an additional one-time benefit in FY08 from its office relocation work and on-going benefits in FY08 and future years from its tax planning efforts.

During the year ended January 31, 2007, the Company opened 14 new Anthropologie stores, 2 new Free People stores, and 16 new Urban Outfitters stores, or 32 new stores in total. The Company plans to open at least 38 new stores during the current fiscal year.

In three personnel notices, the Company announced today that the Board of Directors, at the Chairman's recommendation, is expected to elect Glen Senk to a newly created position of Chief Executive Officer at its regularly scheduled Board meeting on May 22, 2007. If elected, Mr. Senk would oversee each of the three existing Brands and the corporate shared services functions. Mr. Hayne, the current Chairman and President, would retain his titles and would oversee Board related matters, set strategic goals and objectives in consultation with the CEO and with the approval of the Board of Directors, and would oversee the launch of new concepts. Finally, the Company announced the promotion of Meg Hayne from interim Managing Director to President of the Free People brand.

Urban Outfitters, Inc. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 106 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters catalog and web site; 93 Anthropologie stores in the United States; an Anthropologie catalog and web site; and Free People, the Company's wholesale segment, which sells its product to approximately 1,500 specialty stores, department stores and catalogs, as well as through 8 Free People stores, a web site and catalog as of January 31, 2007.

A conference call will be held today to discuss fourth quarter results and will be web cast at 11:00 a.m. EST on: http://ir.urbanoutfittersinc.com/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=1484340

This news release is being made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Certain matters contained in this release may constitute forward-looking statements. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, overall economic and market conditions and the resultant impact on consumer spending patterns, including any effects of terrorist acts or war, availability of suitable retail space for expansion, timing of store openings, seasonal fluctuations in gross sales, the departure of one or more key senior managers, import risks, including potential disruptions and changes in duties, tariffs and quotas and other risks identified in filings with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.


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


                       Quarter Ended             Fiscal Year Ended
                       -------------             -----------------
                        January 31,                January 31,
                        -----------                -----------
                     2007          2006          2007          2006
                     ----          ----          ----          ----
 Net sales         $360,796      $318,589    $1,224,717     $1,092,107
 Cost of sales,
  including
  certain buying,
  distribution
  and occupancy
  costs             228,343       192,687       772,796        643,501
                   --------      --------      --------       --------
   Gross profit     132,453       125,902       451,921        448,606
 Selling,
  general and
  administrative
  expenses           84,188        73,105       287,932        240,907
                   --------      --------      --------       --------
   Income from
    operations       48,265        52,797       163,989        207,699
 Other income,
  net                 1,642         1,587         6,169          4,698
                   --------      --------      --------       --------
   Income before
    income taxes     49,907        54,384       170,158        212,397
 Income tax
  expense            14,176        18,791        53,952         81,601
                   --------      --------      --------       --------
   Net income      $ 35,731      $ 35,593      $116,206       $130,796
                   ========      ========      ========       ========

 Net income per
  common share:
   Basic           $   0.22      $   0.22      $   0.71       $   0.80
                   ========      ========      ========       ========
   Diluted         $   0.21      $   0.21      $   0.69       $   0.77
                   ========      ========      ========       ========


 Weighted average common
  shares and common
  share equivalents
  outstanding:
   Basic        164,440,611   164,314,810   164,679,786    163,717,726
                ===========   ===========   ===========    ===========
   Diluted      168,585,418   170,481,054   168,652,005    169,936,041
                ===========   ===========   ===========    ===========


 AS A PERCENT OF
  NET SALES:
 Net sales           100.0%        100.0%        100.0%         100.0%
 Cost of sales,
  including
  certain buying,
  distribution
  and occupancy
  costs               63.3%         60.5%         63.1%          58.9%
                     ------        ------        ------         ------
   Gross profit       36.7%         39.5%         36.9%          41.1%
 Selling,
  general and
  administrative
  expenses            23.3%         22.9%         23.5%          22.1%
                     ------        ------        ------         ------
   Income from
    operations        13.4%         16.6%         13.4%          19.0%
 Other income,
  net                  0.4%          0.5%          0.5%           0.4%
                     ------        ------        ------         ------
   Income before
    income taxes      13.8%         17.1%         13.9%          19.4%
 Income tax
  expense              3.9%          5.9%          4.4%           7.5%
                     ------        ------        ------         ------
   Net income          9.9%         11.2%          9.5%          11.9%
                     ======        ======        ======         ======




                        URBAN OUTFITTERS, INC.
                 Condensed Consolidated Balance Sheets
            (in thousands, except share and per share data)
                             (unaudited)



                                                   January 31,
                                                   -----------
                                                2007          2006
                                                ----          ----
                  Assets
 Current assets:
  Cash and cash equivalents                   $ 27,267      $ 49,912
  Marketable securities                        132,011       141,883
  Accounts receivable, net of
   allowance for doubtful accounts
   of $849 and $445, respectively               20,871        14,324
  Inventories                                  154,387       140,377
  Other current assets                          31,869        38,687
                                              --------      --------
 Total current assets                          366,405       385,183

 Property and equipment, net                   445,698       299,291
 Marketable securities                          62,322        64,748
 Deferred income taxes and other
  assets                                        24,826        19,983
                                              --------      --------
                                              $899,251      $769,205
                                              ========      ========

       Liabilities and Shareholders' Equity
 Current liabilities:
  Accounts payable                            $ 57,934      $ 41,291
  Other current liabilities                     77,384        92,217
                                              --------      --------
 Total current liabilities                     135,318       133,508
  Deferred rent                                 88,650        74,817
                                              --------      --------
 Total liabilities                             223,968       208,325
                                              --------      --------

 Shareholders' equity:
  Preferred shares; $.0001 par
   value, 10,000,000 shares
   authorized; none issued                          --            --
  Common shares; $.0001 par value,
   200,000,000 shares authorized;
   164,987,463 and 164,831,477
   issued and outstanding, respectively             17            16
  Additional paid-in capital                   128,586       134,146
  Retained earnings                            542,396       426,190
  Accumulated other comprehensive income         4,284           528
                                              --------      --------
 Total shareholders' equity                    675,283       560,880
                                              --------      --------
                                              $899,251      $769,205
                                              ========      ========





                      URBAN OUTFITTERS, INC.
           Condensed Consolidated Statements of Cash Flows
                         (in thousands)
                          (unaudited)


                                         Fiscal Year Ended January 31,
                                         -----------------------------
                                              2007             2006
                                              ----             ----
 Cash flows from operating activities:
  Net income                               $ 116,206        $ 130,796
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Depreciation and amortization             55,713           39,340
    Excess tax benefits from stock
     based compensation                       (5,040)          13,399
    Stock-based compensation expense           3,498            1,153
    Loss (gain) on disposition of
     property and equipment, net               1,393             (631)
    Changes in assets and liabilities:
     Increase in accounts receivable          (6,371)          (6,002)
     Increase in inventories                 (13,416)         (41,597)
     Decrease (increase) in prepaid
      expenses and other assets                2,214          (21,071)
     Increase in accounts payable,
      accrued expenses and other
      liabilities                             42,630           33,804
                                           ---------        ---------
  Net cash provided by operating
   activities                                196,827          149,191
                                           ---------        ---------

 Cash flows from investing activities:
   Cash paid for property and equipment     (221,385)        (127,730)
   Proceeds from disposition of property
    and equipment                                 --            3,769
   Purchases of marketable securities       (182,653)        (416,018)
   Sales and maturities of marketable
    securities                               193,274          396,304
                                           ---------        ---------
  Net cash used in investing activities     (210,764)        (143,675)
                                           ---------        ---------
 Cash flows from financing activities:
   Exercise of stock options                   6,351           15,230
   Excess tax benefits from stock-based
    compensation                               5,040               --
   Share Repurchases                         (20,801)              --
                                           ---------        ---------
  Net cash (used in) provided by
   financing activities                       (9,410)          15,230
                                           ---------        ---------

 Effect of exchange rate changes on
  cash and cash equivalents                      702             (565)
                                           ---------        ---------
 Increase (decrease) in cash and cash
  equivalents                                (22,645)          20,181

 Cash and cash equivalents at beginning
  of period                                   49,912           29,731
                                           ---------        ---------
 Cash and cash equivalents at end of
  period                                   $  27,267        $  49,912
                                           =========        =========

CONTACT: Urban Outfitters, Inc.
John E. Kyees, Chief Financial Officer
(215) 454-5500