In total, the company earned $34.5 million or $2.6 million less than the same quarter last year. This quarter’s earnings reflect the benefit derived from a 450 basis point reduction in the company’s annual effective tax rate. That improvement is primarily a result of:

- One-time federal tax incentives associated with the renovations performed on the new corporate offices,
- State tax benefits derived from the new corporate offices,
- State tax benefits associated with the distribution center.

On earnings per share basis the company earned 21 cents per share compared to 22 cents per share a year ago. In addition to the tax rate improvement, the earnings per share number were positively affected by the company''s stock repurchase program. In the third quarter the company bought 1,050,000 of its shares on the open market and an average price of $16.99.

From the beginning of the current fiscal year the company has opened 23 new stores, including:

- Urban Outfitters – 13 stores,
- Anthropologie – 8 stores.
- Free People – 2 stores.

Fiscal 2007 Outlook

- In addition to the 23 new stores already opened this year, the company plans to open at least 9 additional new stores in the remaining two and a half months of the current fiscal year.
- The Anthropologie and Urban brands plan to relaunch web sites at a new more robust in January of 2007. This new platform should provide an increase in site speed and functionality which should help to drive additional sales next year.

- Total wholesale bookings are 32% ahead for the Holiday selling season and 13% up for the spring season when measured on a comparable basis.
- The company expects to continue to grow sales at 20% or more each year, and it plans to return to the target 20% operating profitability.

Key questions and answers from the third quarter fiscal 2007 earnings call conducted by Urban Outfitters, Inc. on November 09, 2006.

You said that The Free People comparable store sales were flat for the quarter. Could you comment on that?

The number of transactions was flat, but the sales were up 9%. That was driven almost entirely by AUR.

Could you comment on mark down and carryover inventory by brand now relative to last year?

At this point, the company is in different situation in its fashion business than last year. It is operating the business on weeks of supply that it considers acceptable, which is less than 10 weeks of supply on marked down goods. The company is in a better place this year in regards to currency of inventory and fashion offer in the home business which have benefited from this set. It is taking whatever goods it has on a month in month out basis to maintain that rate.

What percent of the holiday floor set in the country has been rolled out?

The company has been putting a lot of efforts for more than 10 days to get everything in the proper way. It believes that the floor set should be complete in all stores by the weekend before Thanksgiving.

What kind of results are you seeing in the stores that have been rolled out the longest?

Urban Outfitters has seen improvement in the performance of its comps in those stores. Business softened up in the last week, but the beginning of November is positive.

You said that markdowns going into fourth quarter this year are below last year levels. Is that correct?

The inventory is down 13% on a comparable store basis. That number could have even been better as on a conjunctive basis Anthropologie would have been down 15 as well.

Could you comment on the way the new fashion is accepted by your customers?