This summary is based on the second quarter fiscal 2007 earnings call conducted by Urban Outfitters, Inc. (URBN: chart) on August 10, 2006.

Key Investors Issues

- Net income fell to $25.7 million, or 15 cents per share, from $30.6 million, or 18 cents per share, a year ago.
- Sales increased 13 percent to $285.6 million from $253.4 million last year.
- Total company inventories grew by $15.9 million or 12% on a year-over-year basis.
- Year-to-date, the firm has repurchased 170,000 shares of its common stock at an average price of $17.22.

Second Quarter Highlights

Net sales for the quarter increased 13% over the prior year to $285.6 million.

Factors driving this increase over the prior year period were:
- A 29% increase in the number of stores in operation resulting in new and non-comparable store sales increases of $36.2 million;
- A 64% jump in Free People wholesale sales;
- An 11% gain in direct-to-consumer sales.

Total company comparable store sales decreased 7% during the second quarter.

By brand, store sales decreased by 2% at Anthropologie, 11% at Urban Outfitters and increased by 8% at Free People. In the prior year''s second quarter, store sales at these brands increased by 6%, 13% and 36%, respectively, and total company comparable store sales rose by 10%.

Gross profit margins decreased by 468 basis points, versus the prior year''s comparable period.

This reduction was primarily due to a higher rate of fixed store occupancy expense caused by store sales decreases and additional markdowns to clear seasonal inventories.

Total company inventories grew by $15.9 million or 12% 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 5.9%.

Selling, general and administrative expenses, expressed as a percentage of net sales, increased by 128 basis points versus the same periods last year.

The rate increase was primarily caused by the effect of store sales declines on fixed store related expenses. The combination of variable store labor expenses, and other SG&A categories, were flat to last year as a rate of sales.

The number of diluted shares outstanding decreased by 1% on a year-over-year basis.

Some of that decrease was due to the share repurchase program authorized by the company’s Board of Directors in May of this year.

Year to Date Highlights

Gross profit margins decreased by 550 basis points versus the prior year''s comparable period.

This reduction was primarily due to a higher rate of fixed store occupancy expense caused by store sales decreases and additional markdowns to clear seasonal inventories.

Selling, general and administrative expenses, expressed as a percentage of net sales, increased by 131 basis points versus the same periods last year.