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Urban Outfitters Reports Q2 Earnings Jump 46%

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
   channel
  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.

Management second quarter commentary is located on our website at www.urbanoutfittersinc.com. A conference call will be held today to discuss second quarter results and will be web cast at 5:00 pm. EDT at: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115825&eventID=3220834

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,
                               ------------------------  ------------------------
                                  2010         2009         2010         2009
                               -----------  -----------  -----------  -----------
  Net sales                      $ 552,159    $ 458,626  $ 1,032,120    $ 843,422
  Cost of sales, including
   certain buying,
   distribution and occupancy
   costs                           317,378      271,535      596,553      513,021
                               -----------  -----------  -----------  -----------
    Gross profit                   234,781      187,091      435,567      330,401
  Selling, general and
   administrative expenses         127,912      108,650      246,487      205,840
                               -----------  -----------  -----------  -----------
    Income from operations         106,869       78,441      189,080      124,561
  Other income, net                    616          939        1,039        3,030
                               -----------  -----------  -----------  -----------
    Income before income
     taxes                         107,485       79,380      190,119      127,591
  Income tax expense                35,828       30,359       65,505       47,765
                               -----------  -----------  -----------  -----------
    Net income                    $ 71,657     $ 49,021    $ 124,614     $ 79,826
                               ===========  ===========  ===========  ===========
  Net income per common
   share:
   Basic                            $ 0.42       $ 0.29       $ 0.74       $ 0.48
                               ===========  ===========  ===========  ===========
   Diluted                          $ 0.42       $ 0.29       $ 0.72       $ 0.47
                               ===========  ===========  ===========  ===========
  Weighted average common
   shares and common share
   equivalents outstanding:
   Basic                       168,908,598  167,919,873  168,880,803  167,691,718
                               ===========  ===========  ===========  ===========
   Diluted                     172,325,996  170,719,274  172,572,985  170,521,836
                               ===========  ===========  ===========  ===========

  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                             57.5%        59.2%        57.8%        60.8%
                               -----------  -----------  -----------  -----------
    Gross profit                     42.5%        40.8%        42.2%        39.2%
  Selling, general and
   administrative expenses           23.1%        23.7%        23.9%        24.4%
                               -----------  -----------  -----------  -----------
    Income from operations           19.4%        17.1%        18.3%        14.8%
  Other income, net                   0.1%         0.2%         0.1%         0.4%
                               -----------  -----------  -----------  -----------
    Income before income
     taxes                           19.5%        17.3%        18.4%        15.2%
  Income tax expense                  6.5%         6.6%         6.3%         5.7%
                               -----------  -----------  -----------  -----------
    Net income                       13.0%        10.7%        12.1%         9.5%
                               ===========  ===========  ===========  ===========
                         URBAN OUTFITTERS, INC.
                 Condensed Consolidated Balance Sheets
            (in thousands, except share and per share data)
                              (unaudited)

                                                January
                                    July 31,      31,       July 31,
                                      2010        2010        2009
                                   ----------  ----------  ----------
               Assets
  Current assets:
   Cash and cash equivalents        $ 244,954   $ 159,024   $ 152,885
   Marketable securities              346,107     342,512     135,875
   Accounts receivable, net of
    allowance for doubtful
    accounts of $1,360, $1,284
    and $1,368, respectively           42,474      38,405      32,039
   Inventories                        243,203     186,130     217,050
   Prepaid expenses, deferred
    taxes and other current
    assets                             85,875      80,142      46,005
                                   ----------  ----------  ----------
  Total current assets                962,613     806,213     583,854
  Property and equipment, net         559,945     539,961     528,295
  Marketable securities               157,607     243,445     294,519
  Deferred income taxes and other
   assets                              46,902      46,474      38,553
                                   ----------  ----------  ----------
  Total Assets                     $1,727,067  $1,636,093  $1,445,221
                                   ==========  ==========  ==========
   Liabilities and Shareholders'
               Equity
  Current liabilities:
   Accounts payable                  $ 92,151    $ 78,041    $ 85,336
   Accrued expenses, accrued
    compensation and other
    current liabilities               106,260     110,508      74,764
                                   ----------  ----------  ----------
  Total current liabilities           198,411     188,549     160,100
  Deferred rent and other
   liabilities                        155,369     150,769     136,906
                                   ----------  ----------  ----------
  Total Liabilities                   353,780     339,318     297,006
                                   ----------  ----------  ----------
  Shareholders' equity:
   Preferred shares; $.0001 par
    value, 10,000,000 shares
    authorized, none issued                --          --          --
   Common shares; $.0001 par
    value, 200,000,000 shares
    authorized,
    168,100,495,168,558,371 and
    168,200,288 issued and
    outstanding, respectively              17          17          17
   Additional paid-in capital         138,413     184,620     175,839
   Retained earnings                1,245,846   1,121,232     981,165
   Accumulated other
    comprehensive loss               (10,989)   (9,094)       (8,806)
                                   ----------  ----------  ----------
  Total Shareholders' Equity        1,373,287   1,296,775   1,148,215
                                   ----------  ----------  ----------
  Total Liabilities and
   Shareholders' Equity            $1,727,067  $1,636,093  $1,445,221
                                   ==========  ==========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Urban Outfitters, Inc.

CONTACT: Urban Outfitters, Inc.
Oona McCullough, Director of Investor Relations
(215) 454-4806