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Urban Outfitters Q2 Earnings Up 49 Percent

PHILADELPHIA, Aug. 11, 2005 (PRIMEZONE) -- Urban Outfitters, Inc. (Nasdaq:URBN), a leading lifestyle consumer products company operating under the Urban Outfitters, Anthropologie and Free People brands, today 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 $0.36 this year versus $0.25 in the prior year.

As stated in our sales release on August 4, 2005, 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. is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through 82 Urban Outfitters stores in the United States, Canada, and Europe; an Urban Outfitters web site and catalog; 69 Anthropologie stores in the United States; an Anthropologie web site and catalog; and Free People, the Company's wholesale division, which sells its product to approximately 1,100 specialty stores, department stores and catalogs, as well as through 3 Free People stores and a web site.

A conference call will be held today to discuss first quarter results and will be web cast at 11:00 a.m. EDT on: http://ir.urbanoutfittersinc.com/ireye/ir_site.zhtml?ticker=URBN&script=1010&item_id=1108956

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)

                       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
                   =========== =========== =========== ===========
 Weighted average
  common shares
  and common share
  equivalents
  outstanding:

   Basic            81,806,803  80,554,025  81,647,205  80,421,047
                   =========== =========== =========== ===========
   Diluted          84,916,500  83,411,392  84,727,414  83,174,091
                   =========== =========== =========== ===========


 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         58.6%       59.4%       58.2%       59.2%
                         ------      ------      ------      ------
    Gross profit          41.4%       40.6%       41.8%       40.8%
 Selling, general
  and
  administrative
  expenses                21.9%       22.6%       22.3%       23.5%
                         ------      ------      ------      ------
    Income from
     operations           19.5%       18.0%       19.5%       17.3%
 Other income
  (expense), net           0.5%        0.2%        0.4%        0.1%
                         ------      ------      ------      ------
    Income before
     income taxes         20.0%       18.2%       19.9%       17.4%
 Income tax expense        8.0%        7.4%        7.9%        7.1%
                         ------      ------      ------      ------
    Net income            12.0%       10.8%       12.0%       10.3%
                         ======      ======      ======      ======


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


                              July 31,    January 31,   July 31,
                                2005         2005        2004(a)
                             ---------    ---------    ---------

                   Assets

 Current assets:
  Cash and cash
   equivalents               $  21,776    $  29,731    $  22,313
  Marketable
   securities                  143,262      125,953       79,973
  Accounts receivable,
   net of allowance
   for doubtful
   accounts of $689,
   $586 and $813,
   respectively                 19,195        8,364       10,420
  Inventories                  132,596       98,996       90,930
  Prepaid expenses,
   deferred taxes and
   other current
   assets                       29,097       24,824       18,707
                             ---------    ---------    ---------
 Total current assets          345,926      287,868      222,343

 Property and
  equipment, net               216,683      192,792      169,483

 Marketable securities          62,113       63,457       60,195
 Deferred income taxes
  and other assets              13,111       12,567        9,555
                             ---------    ---------    ---------
                             $ 637,833    $ 556,684    $ 461,576
                             =========    =========    =========
  
       Liabilities and Shareholders' Equity

 Current liabilities:  
  Accounts payable           $  47,945    $  39,102    $  37,214
  Accrued expenses,
   accrued
   compensation and
   other current
   liabilities                  53,778       59,169       45,836
                             ---------    ---------    ---------
 Total current
  liabilities                  101,723       98,271       83,050

 Deferred rent and
  other liabilities             58,805       56,169       40,582
                             ---------    ---------    ---------
 Total liabilities             160,528      154,440      123,632
                             ---------    ---------    ---------
 
 Shareholders' equity:
  Preferred shares;
   $.0001 par value,
   10,000,000 shares
   authorized, none
   issued                           --           --           --
  Common shares;
   $.0001 par value,
   200,000,000 shares
   authorized,
   82,152,021,
   81,447,444 and
   80,895,742 issued
   and outstanding,
   respectively                      8            8            8
  Additional paid-in
   capital                     127,938      109,430       99,517
  Unearned
   compensation                 (4,486)      (5,058)      (5,646)
  Retained earnings            353,435      295,394      242,282
  Accumulated other
   comprehensive
   income                          410        2,470        1,783
                             ---------    ---------    ---------
 Total shareholders'
  equity                       477,305      402,244      337,944
                             ---------    ---------    ---------
                             $ 637,833    $ 556,684    $ 461,576
                             =========    =========    =========


 (a) Certain prior year amounts have been reclassified to conform with
 the presentation of operating leases and auction rate securities as
 discussed in Note 2 to the Company's Annual Report contained in Form
 10-K for the fiscal year ended January 31, 2005, filed with the
 Securities and Exchange Commission on April 18, 2005.


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



                                            Six Months Ended
                                                July 31,          
                                          -------------------
                                          2005         2004(a)
                                          ----         ------
 Cash flows from operating activities:

  Net income                           $  58,041    $  37,377
  Adjustments to reconcile
   net income to net cash
   provided by operating
   activities:
    Depreciation and
     amortization                         18,571       15,274
    Tax benefit of stock
     option exercises                      7,374        6,198
    Stock-based compensation
     expense                                 572          120
    Changes in assets and
     liabilities:
      Increase in receivables            (10,870)      (3,708)
      Increase in inventories            (33,795)     (27,685)
      Increase in prepaid
       expenses and other
       assets                             (4,995)         (32)
      Increase in payables,
       accrued expenses and
       other liabilities                   1,947       29,260
                                       ---------    ---------
                                                                 

    Net cash provided by
     operating activities                 36,845       56,804
                                       ---------    ---------

 Cash flows from investing
  activities:

    Capital expenditures                 (38,081)     (36,616)
    Purchases of marketable
     securities                         (291,964)    (221,622)
    Sales and maturities of
     marketable securities               274,709      216,299
                                       ---------    ---------
    Net cash used in
     investing activities                (55,336)     (41,939)
                                       ---------    ---------

 Cash flows from financing
  activities:

    Exercise of stock options             11,134        4,274
                                       ---------    ---------
    Net cash provided by
     financing activities                 11,134        4,274
                                       ---------    ---------

 Effect of exchange rate
  changes on cash and cash
  equivalents                               (598)        (145)
                                       ---------    ---------
                                                                 

 (Decrease) increase in cash
  and cash equivalents                    (7,955)      18,994

 Cash and cash equivalents at
  beginning of period                     29,731        3,319
                                       ---------    ---------
 Cash and cash equivalents at
  end of period                        $  21,776    $  22,313
                                       =========    =========


  (a) Certain prior year amounts have been reclassified to
  conform with the presentation of operating leases and auction
  rate securities as discussed in Note 2 to the Company's
  Annual Report contained in Form 10-K for the fiscal year
  ended January 31, 2005, filed with the Securities and
  Exchange Commission on April 18, 2005.

CONTACT: Urban Outfitters, Inc.
John E. Kyees
Chief Financial Officer
(215) 564-2313