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Urban Outfitters Reports Q3 Earnings Increase 17%

As of October 31, 2010, total comparable retail segment inventories (which includes our direct-to-consumer channel) increased by 8% at cost while total comparable store inventory increased by 1% at cost. Total inventories grew by $55 million or 23%, on a year-over-year basis, driven primarily by the acquisition of inventory to stock new retail stores.

For the three months ended October 31, 2010, selling, general and administrative expenses, expressed as a percentage of net sales, increased by 27 basis points. This increase was primarily due to higher fulfillment costs related to the increased penetration of international direct-to-consumer sales, investments in systems and international infrastructure. For the nine months ended October 31, 2010, selling, general and administration expenses, expressed as a percentage of net sales, decreased by 21 basis points versus the prior comparable period. This decrease was primarily due to leveraging of direct store fixed and controllable costs helped by the positive comparable retail segment sales during the nine months ended October 31, 2010.

 During the three months ended October 31, 2010, the Company's quarterly tax rate decreased to 30.8% from 36.1% in the prior year's comparable quarter. This decrease was due to the favorable mix of earnings in certain foreign jurisdictions, the current year federal rehabilitation credit and favorable revisions to state tax estimates resulting from tax return filings. The Company expects the annual effective tax rate to be approximately 34% 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 repurchased 1,220,000 common shares during the fiscal year ended January 31, 2007. During the three months ended October 31, 2010, the Company repurchased 4,273,267 common shares for $133 million at an average price of $31.06 per share. During the nine months ended October 31, 2010 the Company repurchased and subsequently retired 6,288,447 common shares. As of October 31, 2010, 491,553 shares were available under the stock repurchase program.

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