Glen T. Senk - Chief Executive Officer, Director John E. Kyees - Chief Financial Officer Tedford G. Marlow - President of Urban Brand, Worldwide Freeman M. Zausner - Chief Administrative Officer

Kimberly Greenberger - Citigroup Dana Telsey - Telsey Advisory Group Christine Chen - Needham & Company Stacy Peck - Saints Research Sharon Zackfia - William Blair Brian Tunick - J.P. Morgan Roxanne Meyer - UBS Edward Yruma - Keybanc Holly Guthrie - Boyn & Scatter Eric Beder - Brean Murray, Carret & Co. Betty Chen - Wedbush Morgan Jeff Black - Barclays Capital Liz Pierce - Roth Capital Richard Jaffe - Stifel Nicolaus Robert Samuels - Oppenheimer Michelle Tan - Goldman Sachs Adrienne Tennant - Friedman, Billings, Ramsey Erika Maschmeyer - Robert W. Baird Liz Dunn - Thomas Weisel Partners Robin Murchison - Suntrust Robinson Humphrey Margaret Whitfield - Sterne, Agee & Leach Michelle Clark - Morgan Stanley Laura Champine - Cowen & Company Howard Tubin - RBC Capital Markets Randal Konik - Jefferies Jennifer Black - Jennifer Black & Associates Janet Kloppenburg - JJK Research Maggie Gilliam - Gilliam & Company

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Incorporated second quarter fiscal 2010 earnings call. (Operator Instructions) The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company’s filings with the Securities and Exchange Commission. I would now like to introduce your host for today’s conference, Mr. Glen Senk, CEO. Sir, you may begin. Glen T. Senk: Good morning, and welcome to the URBN quarterly conference call. Joining me today are John Kyees, our Chief Financial Officer and our senior team including the majority of our brand and operational leads. Earlier today the company issued a press release outlining the financial and operating results for the three and six month periods ending July 31, 2009. I will begin today’s call by reading prepared remarks regarding our performance; then the group and I will be pleased to answer any questions you may have. The text of today’s conference call can be found on our corporate website at www.urbanoutfittersinc.com. We believe the company performed admirably in the quarter given the challenging marketplace conditions. To summarize second quarter fiscal 2010 results compared to the same period last year: the company reported $78 million of income from operations, resulting in an operating margin over 17%; earnings were $49 million or $0.29 per diluted share despite an increase in the quarter’s tax rate; total company sales increased by 1% to $459 million; comparable retail segment sales, which includes our Direct-to-consumer channel, decreased by 3%. Comparable store sales decreased by 6%, with reductions of 4%, 16% and 8% respectively at Anthropologie, Free People and Urban Outfitters. Direct-to-consumer sales jumped 17% despite a 2% reduction in circulation, with all three brands posting double-digit increases; wholesale revenues declined by 7% to $26 million. Gross margins declined 26 basis points, with significant gains in initial markups being offset principally by an increase in merchandise markdowns to clear seasonal product and a higher rate of store occupancy expense driven by the decrease in comparable store sales. Comparable store inventories decreased 7% by quarter’s end. Selling, general and administrative expenses, expressed as a percentage of sales, increased by 89 basis points largely due to the deleveraging of fixed, store-related costs and the impact of a one-time development expense associated with a prospective Terrain location. Finally, cash, cash equivalents and marketable securities grew by $155 million to $583 million. I’ll now go into more detail on each of our key business metrics for the quarter, starting with sales. New and non-comparable store sales contributed $18 million for the quarter, including an offset of $10.7 million in currency translation adjustments to the comp for foreign-based sales. The Company opened 10 new stores—4 Anthropologie stores, 1 Free People store and 5 Urban Outfitters stores. Within the quarter, comp sales performance was consistent in May and July and weakest in June. By region, sales at Anthropologie were strongest in the South, sales at Urban Outfitters were strongest in the Midwest, and sales at both brands lagged on the West Coast. By location type, sales were strongest in malls for both brands and weakest in metropolitan locations for Anthropologie and lifestyle centers for Urban Outfitters. Transaction counts for the quarter were flat, with increases of 2% and 11% at Anthropologie and Free People respectively, and a 2% decrease at Urban Outfitters. Store’s average unit selling prices decreased by 1%—up 1% at Anthropologie, and down 23% and 2% at Free People and Urban Outfitters respectively. Units per transaction decreased 5% on average—down 7%, 1% and 4% at Anthropologie, Free People and Urban Outfitters respectively. Direct sales for the quarter increased 17% to $71 million despite a circulation decrease of 2%. The penetration of Direct-to-consumer sales to total Company sales increased by 215 basis points to 15.5%, underscoring a shift in the way our consumer is shopping. These results were driven by over 19 million website visits, a gain of 22% or three-and-a-half million visits from the prior year’s quarter. Our Direct-to-consumer business was double-digit positive at all brands, and at Free People, with just 18 out of the 33 Free People stores falling into the comp group, Direct-to-consumer revenue exceeded comp store revenue yet again. By merchandise category, at Anthropologie, the women’s accessories business led the pace and at Urban Outfitters, the women’s apparel business was strongest. We exited the second quarter with strong fall fashion cues and I believe we are well positioned for the second half of the year. As I’ve communicated consistently throughout the spring, the customer is seeking fashion and there’s practically no evidence of price elasticity on compelling product. Undistinguished basics, or any commodity-like product, is another story altogether— there it’s a buyer’s market and the right price is critical. I believe the challenging environment has triggered profound changes in the consumer psyche. As we move into the “new normal”, I believe the customer will be more discriminating, I believe she’ll be looking for authenticity, I believe she’ll modulate the way she shops for commodity product versus special product, and I believe she’ll shop brands whose values she shares—all changes that I believe will play to our strengths for years to come. Now let me turn your attention to wholesale. With the addition of Leifsdottir, total quarterly wholesale revenue declined by 7% versus the same quarter last year. Free People’s wholesale revenue decreased by 13% for the quarter, with sales to department stores decreasing by 9% and sales to specialty stores decreasing by 21%, in large part due to credit quality. The brand’s regular price average unit selling price decreased by 4% and regular price unit sales declined by 9%. I believe Free People outperformed most brands on the contemporary floor, and we ended the quarter achieving our desired inventory plan with all of our major partners. Fall and holiday deliveries are modestly below last year, so it is likely the current trend will continue over the short term. Leifsdottir, the Company’s new wholesale line, generated revenue of $2.0 million in the quarter. The selling at our retail partners has far exceeded expectation, so we are encouraged by the brand’s potential. I’d like to now turn your attention to gross margin, operating expense and income. Despite the reduction in comp sales, gross margins for the quarter decreased by just 26 basis points to 40.8%. The company continued to experience meaningful gains in initial margin, which were more than offset by an increase in markdowns to clear seasonal product and a higher rate of store occupancy expense driven by the decrease in comparable store sales. The organization continued to aggressively control expenses. Total selling, general and administrative costs for the quarter, as a percent of sales, rose by 89 basis points to 23.7%, largely reflecting de-leverage of fixed store expenses due to the decline in the comp, and one-time site development expenses associated with a prospective Terrain location. The company generated an impressive 17.1% operating margin, earning $78 million of income from operations, a decrease of 5% versus the same quarter last year. Our net income for the quarter was $49 million, with earnings per diluted share of $0.29, a decrease of 14% from the prior year. The Company’s quarterly tax rate closed at 38.3%, versus 33.2% during the prior year, primarily due to substantial tax rate increases in certain municipalities where we have sizeable volumes of business, and a lower proportion of holdings income from tax-free securities based on a strategic shift to lower-risk investments. I closed our last call by remarking that I was feeling more optimistic than I had since October 2008, and I added, that in many ways, I was feeling more optimistic than ever about the long term prospects for URBN. The good news? I continue to feel that way. I couldn’t be more proud of how our team has reacted over the last nine months. They’re responded to the changes in the environment at breakneck speed, and they’ve proven that they’re as good at inventory and expense discipline as they are at creating compelling brands. URBN’s culture has always emphasized a balance of creativity and control, and the team has exhibited an exceptional level of discipline that will reap benefits for years to come. What the numbers don’t illustrate is the investment we’ve continued to make in our business including a joint venture agreement with our largest Asian buying agent in support of our concept-to-market strategy—the strategy that will give the planning, merchant and design teams an unprecedented level of flexibility to get the right product at the right price in the right place at the right time. A multitude of web-based initiatives including site-redesigns, increased functionalities, expanded product offerings, strategies to monetize social media and the addition of a mobile site for the Urban Outfitters brand. A marketing and business intelligence database that will profoundly impact all of our brands and channels. A 50% increase in the size and capacity of our East coast distribution center. A European infrastructure that will ultimately resemble the North American infrastructure, providing necessary support for an ambitious European expansion. Proof-of-concept tests on Terrain and Leifsdottir, plus early-stage development of other potential new brands. And last, but most important, an increasing level of investment in people—our single greatest asset. Our team has proven that they are adept at driving profit in the face of challenging fundamentals, and equally important, they are likewise committed to growth, with continued focus on four main strategies: increasing productivity in all of our core businesses; elevating the penetration of direct-to-consumer sales to total company sales; driving international expansion; and adding new brands to the URBN portfolio. For a company that’s achieved an average of 26% annual revenue growth and 7% annual comp growth since 2001, single-digit sales increases are not in our corporate DNA. We do not believe that the country will be returning to 2007 consumer spending levels anytime soon, but we feel the environment reflects a degree of heightened stability, and we are confident that there is abundant opportunity for growth. The changes facing our industry are profound, and the future belongs to those who are disciplined, nimble and unafraid to challenge the prevailing mindset. The URBN family is committed to doing all of that and more. We will compete the way we always do -- by remaining wholly customer-focused and working hard to excite the customer on a daily basis; by taking managed risks so that we stimulate the customer with newness and innovation; and by making our stores, catalogs and websites unexpected, fun and utterly compelling—all while mining the opportunity to transform our business for the next generation of consumers. Our company’s overarching goal has been constant and simple: to grow revenue by at least 20%, to grow profit at a faster rate than sales, and to reach a minimum of 20% operating margin. As always, the leadership team and I look forward to continuing to inspire our customers and reward our shareholders and employees alike. I will now open the call to questions. As is our custom, I ask each of you to limit yourselves to one question. I apologize in advance—if you ask more than one question, we will respectfully respond only to your first query. Thank you.

(Operator Instructions) Our first question comes from the line of Kimberly Greenberger from Citigroup. Kimberly Greenberger - Citigroup: My question is for John -- John, the gross margin was well above where we had expected it. I think probably we hadn’t factored in the magnitude of the initial markup improvement. I am wondering if you can just help us understand the magnitude of the IMU improvement versus let’s say the markdowns and the occupancy deleverage. Thanks. John E. Kyees: Well, Kimberly the margin -- the initial margin improvement was comparable to the markdown excess and we would expect that to have a good opportunity to continue. It’s a product of better buying and sourcing mix from our third-party brands to our own brands. Kimberly Greenberger - Citigroup: John, just so I -- John E. Kyees: Sorry? Glen T. Senk: Next question.

Our next question comes from the line of Ms. Dana Telsey from Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: Good afternoon, everyone. Glen, can you talk a little bit about as you look at Anthropologie and the Urban Outfitters business, how you are looking at the product assortment and pricing initiatives going forward and how do you see the mix changing? Thank you. Glen T. Senk: Thanks, Dana. You know, we’ve been pretty consistent in our views really all spring long and by that I mean if -- what we’ve said is if we have fashion, there’s really not a lot of price elasticity. On the more basic product there is price elasticity and what we’ve said pretty consistently is we are going to let the customer tell us where she wants the AUR and as you can see from our results, it’s slightly down, just less than a percentage point down from a year ago. So in general, they are pretty happy with kind of flattish pricing. And I don’t expect that to change but we’ll let the customer tell us.

Your next question comes from the line of Christine Chen from Needham & Company. Christine Chen - Needham & Company: Thank you and congratulations on a very solid quarter -- impressive margins. I was wondering if you could give us an update on potential opportunities in Asia. I know that you’ve been approached in the past -- just wondering what you are thinking about that and timing and what options might be. Glen T. Senk: Yes, Christine -- Ted and Matt Kaness, our head of strategy and new business development and I were just in Asia a few weeks ago for several weeks doing a fair amount of research. I think it’s too early for us to talk about any timing. We have a board meeting next week where Ted, Matt and I will present our findings. My hunch is that it is likely we will do something at some point but it is just too early for us to talk about timing at this point. I think we will probably have an announcement on that in the next three to six months. Christine Chen - Needham & Company: Okay. Thank you.

Your next question comes from the line of Stacy Peck from Saints Research. Stacy Peck - Saints Research: Thanks. Just following up on Kimberly’s gross margin question, I think she got cut off there but -- so John, were we looking at maybe 150 basis points of negative or of occupancy deleverage? And did you have a benefit from the obsolescence reserve? If so, how much? And should we be looking for 50 to 100 basis points in costing help going forward? What should we assume there? And more broadly, given what is happening with product costing and the tight inventory management, what level do you guys think we should assume as a sort of normal gross margin for Urban now going forward? John E. Kyees: Obviously we’re not going to get into all the detail that you are asking in terms of our margin performance but I will tell you that our occupancy result was better than you would have expected, predicated on the negative 6 comp. It was not the 150 deleverage that you might have expected based on our history. So with that being said, that’s probably as detailed as we want to get on this margin discussion. Glen T. Senk: Stacy, I’ll say a few things here -- first off, I want to call out David Zeal, our director of development; Wade McDevitt, who does our real estate, we’ve been working very, very hard for the last several years on our site selection. We’ve talked extensively about the fact that we’ve gone and renegotiated many of our deals, particularly the ones that are coming due in the next few years. Dave has done an extraordinary job with construction over the last several years, so as John said, we certainly deleveraged occupancy but not nearly I think what the group would expect because of the fantastic job that Dave, Wade, and the rest of the group have done. Secondly, I want to call out to Barbara [Roseoff], who is our Executive Director of Production and all of the merchant heads in all of our businesses, they collectively have done a phenomenal job of pounding away at the initial margin. This started years ago, this effort. It’s continuing. As I mentioned in my prepared comments, we executed our joint venture agreement with our largest far eastern buying agent, which is part of the strategy. We’ve been talking since our secondary, seven or eight years ago we’ve been talking IMU opportunity. We’ve achieved what we said we were going to do seven, eight years ago several times over. We think there’s a lot of opportunity for us going forward. As John said to Kimberly’s first question, in general -- we are not going to get into details -- in general, the IMU improvement was offset by the markdown decrement. Whether or not we are going to continue to experience those markdowns for the next quarter or the next several quarters, I really -- I don’t know and if I did know, I couldn’t say but I think the IMU improvement is real and I think that we have continued opportunity there.

Your next question comes from the line of Kimberly Greenberger from Citigroup -- she got cut off. I’ll put her back in. Your line is open. Kimberly Greenberger - Citigroup: I just want to make sure I understood that John’s answer was implying that merchandise margin was approximately flattish. It sounds like with Glen’s clarification, that’s the case but I just wanted to make sure I understood it properly. John E. Kyees: That’s correct. Kimberly Greenberger - Citigroup: Okay. Thanks so much.

Your next question comes from the line of Sharon Zackfia from William Blair. Sharon Zackfia - William Blair: Good morning. I wanted to talk through kind of where you are with new store productivity for the three concepts this year and how you are thinking about expansion for 2010 and the rate of SG&A growth -- I know you were holding back SG&A growth this year and your break-even comp was a little bit lower than normal. How are you thinking about that for 2010? Glen T. Senk: Sharon, our new store productivity I think, and I’m looking at John for him to shake his head, is probably the best number that we’ve ever had, certainly since we’ve been tracking it. So again, kudos to both Wade McDevitt and to Ted, to Wendy [Wersberger], Wendy Brown, and Meg for collectively doing a much better job, picking the right locations and negotiating the best deals. They’ve done a terrific job there. With regard to SG&A, I want to emphasize what we’ve said in our prepared comments. The company has continued to invest in a variety of growth initiatives. When our business hit the wall back last October, the first thing that Dick and the board said to me is do not cut the muscle. We have not had lay-offs. We have not cut investment in a myriad of growth initiatives. What we have done is gone back, every single expense pocket of our business and worked with our suppliers, our partners, to whittle to the core. So we’ve done that but we have not delayed investment and I think that differentiates us from our peer group and I want to be very, very clear about that. So John, I don’t know if you want to add anything else. John E. Kyees: No, I think Glen is right on the money. We’ve done a nice job, our SG&A only grew slightly less than 5% this quarter, which is if you look at your history, we’ve typically grown more than 20% year-to-year, so this has been an exceptional year for us and I would expect us to keep a pretty good lid on that going forward.

Your next question comes from the line of Brian Tunick from J.P. Morgan. Brian Tunick - J.P. Morgan: Thanks. Good morning. I guess maybe Glen, you highlighted the accessory business and Anthropologie. Could you just maybe give us more color on how the apparel is trending and what do you see as the loves, as you’ve talked about before? And then just for -- for maybe Ted, just on how he feels about inventories now at the Urban Outfitters division -- should we expect less markdowns going into the quarter? Glen T. Senk: Brian, as I think you and the rest of the group know, we prefer not to give out fashion information on these calls. What I will reiterate, which is what I said in the prepared comments, is there is a lot of fashion in the business. I mean, we had very, very strong [cues], very, very strong highlights in all of our brands. We are very, very liquid. We have money open for the third quarter. We are -- the majority of our open-to-buy is open for the fourth quarter. So the merchant team and the supplier organization again have done an extraordinary job of compressing the calendar so that we can react quickly to trends. As you know, all three of our brands dropped fall catalogs in the beginning of July so we get very good fall selling information literally by July 4th, July 5th, and the merchant teams are reacting. With regard to Urban, I’ll turn it over to Ted. Tedford G. Marlow: I think the question was inventory at Urban and markdowns -- with regard to the inventory, as you know our dialog on inventory always revolves around weeks of supply and the weeks of supply in the Urban business for the second quarter was slightly higher than last year. I’ll remind you that last year we improved weeks of supply by three weeks over the previous year and the net result of that is weeks of supply in the environment we were operating in this year in the second quarter was the second-best performance we’ve had in the last six years. That’s kind of the history that I have in my files and I don’t know that it’s probably not even further back than that but over the last six years, our performance on weeks of supply certainly was in line with what we would want to [inaudible]. On the markdown front, we’ve talked a little bit previously on the call about IMU balancing out markdowns. We had very good performance in that regard in the Urban brand as well. Our IMU was up nicely and that’s on top of up nicely last year and I am quite confident that on an MMU basis, any markdowns that are needed to be taken will more than be covered by IMU. Brian Tunick - J.P. Morgan: Thanks very much. Glen T. Senk: Thanks, Brian. The one other thing I will add is in terms of just the FIFO analysis, the quality of our inventory is again fresher than it has been since I’ve been monitoring it -- very, very fresh.

Your next question comes from the line of Roxanne Meyer from UBS. Roxanne Meyer - UBS: Let me add my congratulations on a terrific quarter. My question revolves around the direct business -- I mean, such a strong showing, up 17% on lower circulation -- just wondering how that has made you think about your circulation strategy going forward and also obviously the plans are for retail to grow over time but how you think about what the potential could be for the direct business? Glen T. Senk: The direct penetration has been increasing in the neighborhood of a point a year. Obviously this quarter it increased more than that. And we are very excited by that -- as John said, in terms of channel, it’s the most profitable channel for us. It is definitely the way people are shopping. I think it’s starting to have a reverse effect that people are shopping the web first and then going into our stores, so it’s highly synergistic. As I said, we are making a myriad of investments, everything -- we redesigned the sites at Anthropologie and Free People. We launched the mobile site for Urban Outfitters. We have improved functionality in all three of our sites, so we are just -- we are doing everything we can to mine the social media, all three brands have Facebook pages now and so on. So we are doing everything we can to drive business there and the direct heads have done a fantastic job. Where it’s going to land, I don’t know. Could it be 25% penetration for total company sales? Absolutely. Could it be 30%? Possibly. Again, we’re going to let the customer tell us. The other thing, which I will ask Freeman Zausner to talk about briefly, is the investment we are making in our database which will support our CRM initiative but also our direct business. So Freeman, do you want to mention a word about that? Freeman M. Zausner: Sure, Glen. We have our comprehensive database, marketing and CRM initiative, which will embrace an enterprise data warehouse -- a campaign management software suite and a business intelligence software. They will be designed this year and implemented throughout the end of this year and through calendar ’10. It will have a major impact on personalization, a 360 degree view of our customers, and all marketing efforts in all channels. Glen T. Senk: And that goes back to your question, Roxanne, about retail -- we’ve been flying blind with our retail business. We really don’t know who shops, why they shop, how the communication that we send out impacts their shopping behavior and so on. We’ve now selected over a million names in the Anthropologie business. We’ll start collecting names at Urban Outfitters and Free People as well, and then we’ll have this database to really slice and dice that information that we can make more effective decisions. And it’s very, very exciting. Roxanne Meyer - UBS: Great. Thanks for the color and continued best of luck.

Your next question comes from the line of Edward Yruma from Keybanc. Edward Yruma - Keybanc: Thanks very much for taking my question. Just a further clarification point -- I know you had previously guided to SG&A being up on an absolute basis, 5% to 10% up for the year and you’ve now had two quarters where you’ve been beneath that. How should we think about the flow of SG&A for the remainder of the year? Glen T. Senk: I think it will flex pretty much with sales, as I’ve said before, about 30% of our SG&A is variable. So as our comps continue to improve, I would expect that 5% to grow a little bit, just because of the variable portion but I still think we’ll be pretty comfortable with that 5% to 10% growth throughout the second half. Edward Yruma - Keybanc: Great and given the performance, have you had to accrue for performance bonuses? Thank you. Glen T. Senk: The performance bonuses had been accrued for. Edward Yruma - Keybanc: Great, thanks.

Your next question comes from the line of Holly Guthrie from [Boyn & Scatter]. Holly Guthrie - Boyn & Scatter: Thank you and let me add my congratulations. Just a question on real estate -- given all the changes that we’ve seen over the past year, could you give us some color on -- over the next six months and maybe even into next year on opening both domestically and internationally by divisions? Glen T. Senk: Holly, we always goal, in the two large brands, roughly 15, 16 stores a year. Some years we’ve fallen a little short. Some years we’ve done a little bit more than that but that’s -- and that’s in North America. That’s roughly what our targets are. In Europe, we’ve typically for the Urban brand we’ve typically opened a store or two a year. We’ll begin to accelerate that. We have the first Anthropologie opening this October, October 23rd. The second Anthropologie, that’s opening on Regent Street in London. The second Anthropologie in Europe will open in the first quarter of 2010. I think we will begin to see Europe accelerate. Andrew McLean, our Chief Operating Officer for Europe, started with us in January and just moved to the U.K. about a month ago and he is creating the kind of infrastructure there that will resemble what we have done here so that Hugh and James, who run Urban Outfitters and Anthropologie respectively, can focus on real estate and merchandising and marketing and not so much back-of-house. So I think John is feeling comfortable with a number around 50 stores next year and barring any unforeseen circumstances, I think we’ll be roughly in that range. Holly Guthrie - Boyn & Scatter: Thank you.

Your next question comes from the line of Eric Beder from Brean Murray. Eric Beder - Brean Murray, Carret & Co.: Good morning. Congratulations. Could you talk a little bit about Leifsdottir and Terrain, where you see those going and when do you think the training wheels might come off on those in terms of creating stores for Leifsdottir and expanding Terrain? Glen T. Senk: Terrain started comping last April, so they’ve been comped for several months now. We have learned a tremendous amount. For those of you who visited the location last year, if you go back and visit it this year, I think you will see a lot of change. It is absolutely stunning. We all say internally that it reminds us of the beginnings of Anthropologie. It took Anthropologie a couple of years to get profitable. There was a lot of playing around with the merchandise mix, the merchandising, the marketing and John Cansella, who runs Terrain, is in the midst of doing that right now. I mean, we are optimistic about the prospects for the concept. I think it is likely we will open a second location so that we have a second location to get feedback on. But in terms of us proclaiming what it’s going to look like five or 10 years from now, I think it’s too soon to tell. Leifsdottir is probably a little bit more predictable because it’s in a business category and a model that we know quite a bit about. We just had a fantastic quarter, just did a little bit more than $2 million. I guess the best news there is the way that it is selling in our accounts, particularly Nieman Marcus, where it will roll out to 31 doors for the second half of the year. And the sell-throughs have been terrific. The customer response has been terrific and again, it’s too early for us to say what it is going to look like in the next couple of years but based on all of the learnings that we have from Free People wholesale, I think it is likely that [it will be a sizable wholesale business]. Eric Beder - Brean Murray, Carret & Co.: Thank you.

Your next question comes from the line of Betty Chen from Wedbush Morgan. Betty Chen - Wedbush Morgan: Thank you and congratulations. I was wondering, Glen, if you could give us your thoughts on the product right now at both Anthropologie and Urban. I think you’ve mentioned -- obviously you felt even better now than you did a quarter ago and then related to that, could you also give us an update on the initiative at Urban Outfitters in terms of increasing the owned brand product mix? I know there’s been a lot of hiring needed to build up that team, so any update on that and the potential margin benefit from it would be very helpful. Thanks. Glen T. Senk: Okay. You know, I realized after I graded the assortments on the last earnings call that I probably should not have done that. I had so many people follow-up with me. I think, if I had to rank them right now, I would say the assortments at Anthropologie look the best. I think all three businesses look relatively good. Dick always talks about the target and whether or not we are in the bullseye, one rung out, two rungs out -- I think we are -- all three brands are hitting the targets but they are hitting the target in different places. Anthropologie probably closest to the bullseye. With regard to Urban, I’ll let Ted respond. Tedford G. Marlow: In regard to the initiatives on the design team, I would say that that is right at the top of our initiative roster. The organization has been filled in nicely over the past year, year-and-a-half. I believe the org structure that we are currently working with dedicated to women’s product design and development is right at 30 people. There are a couple of roads that remain open that we are continuing to look for. The improvements that we have seen in the business have been seen in metrics across the board, whether you are talking about turn or you are talking about IMU improvement. Both of those categories and both of those metrics have been performing very well. The penetration on private brands, we really break it down in a number of different ways. If I were to give a percentage that does go through design in one way or another, we are over half of the product mix, well over half the product mix at this point, design does touch in some way, from pure out and out design from the get go to being involved in some reinterpretation work with buyers on product that they are acquiring in the market but we have been able to move the needle north of half of what’s coming into the business at this point. Glen T. Senk: And Betty, I want to congratulate both Bill Cody, our Chief Talent Officer; and Ted, Meg, and the Wendy’s on the hiring that they have done in the last six months. We have gotten several exceptional designers and senior designers into the organization. You know, every cloud has a silver lining and one of the silver linings over the last nine months is it’s been increasingly easy for us to recruit people into the organization. I mean, when a company earns 17.1% pretax income in a challenging environment, I think that the potential employees say hey, this is a place where I want to be. So that’s been a real positive for us. Betty Chen - Wedbush Morgan: Just a quick follow-up, if I could -- I mean, where can we see that private label mix go to from about 50% and any timing related to that? Glen T. Senk: I think that when Dick conceived of this business, his vision was always that we would have a healthy mix of market product and owned brand product, so I think 50% is probably where it is going to be and there might be opportunities in certain categories and at certain times, depending upon the fashion, how good the market looks, how good our internal product looks. But 50% penetration is roughly where we want to be. Betty Chen - Wedbush Morgan: Okay. Thank you so much and the stores look great. Best of luck.

Your next question comes from the line of Jeff Black from Barclays Capital. Jeff Black - Barclays Capital: Thanks. So Glen, can you drill down on the wholesale business for a minute? You mentioned that some of the weakness is coming from credit constraints. How much of the account base is feeling this and if you look back, how much growth over the past couple of years has been due to these smaller accounts and what does that do to the picture going forward for the next year or so? Thanks. Glen T. Senk: Great question. I mean, it really has varied -- our specialty business has been anywhere from 35% to more than 50% of our sales, depending upon the quarter. It’s on the lower side right now, given the credit issues that so many of our partners are having. My sense is, and this is anecdotal, it’s not factual -- that it’s beginning to stabilize and I am saying that and John is shaking his head yes -- I am saying that because I am just not hearing when I walk back into the finance area, I’m not hearing the kinds of conversations I was hearing three or four months ago. You know, we love our specialty store business. We love the way they represent our product. We love what we learned from them so we have done and we will continue to do everything we can to support them. But the department stores have been easier and as I said, our business is obviously slightly negative in the department stores but based on my conversations with all of the principals, the department stores were doing much better than our peer group. Jeff Black - Barclays Capital: Great. Thanks. Good luck.

Your next question comes from the line of Liz Pierce from Roth Capital. Liz Pierce - Roth Capital: Thanks and I’ll add my congratulations. John, I wondered if you could just clarify on the tax rate for us? John E. Kyees: Liz, going forward, I would project that you would use a year-to-date rate, rather than the second quarter rate. Second quarter experienced some surprises with a couple of municipalities raising tax rates substantially and making them retroactive for the year and as Glen said in the prepared remarks, unfortunately we do -- or fortunately, depending on how you look at it, we do a lot of volume in those particular municipalities and it’s having a negative impact on our tax rate. Liz Pierce - Roth Capital: And if I could just follow-up -- should we then use that also for next year? John E. Kyees: We hope that we can find ways to improve that tax rate but at this point, I would say it would be safer to use that. Liz Pierce - Roth Capital: Okay. Thanks, good luck.

Your next question comes from the line of Richard Jaffe from Stifel Nicolaus. Richard Jaffe - Stifel Nicolaus: Good morning. If I could ask just a follow-on question to the [foreign], and then if John could quantify the one-time impact of Terrain, that would be helpful. Glen, if you could talk about international growth, it seems to be a remarkably successful Urban transferring across borders to the U.K. and into Europe, Anthropologie looking promising -- could you sort of big picture talk about how you see both brands expanding internationally? Do you see it as a landmark or flagship in selected countries or much more pervasive as you move into the continent? Glen T. Senk: Great question, Richard and one of these calls, we’re going to get them to pronounce the agency correct. This is just a standard. As a company, we -- for us, and I know the flagship strategy works for other companies -- for us, we don’t really believe in the flagship strategy. You know, I think to have a flagship store in our own company is somewhat disrespectful to all the other locations. It’s like having a favored child and I think the brilliance of our model is that in North America, our stores work everywhere and they are profitable and they are highly profitable everywhere. And you know, I remember when I interviewed with Dick I think 18 years ago, I said to him why did you open the first Anthropologie in Wayne, Pennsylvania? And he said because anybody could do a lot of business in New York City and if we could find a way to make it work in Wayne, Pennsylvania, then it will work anywhere. And so our model is really based on everybody being equal and having a profound desire to please the customer wherever she lives. And the same will be true for Europe. Now certainly the London stores will do more business than the stores outside of London but that doesn’t meant that we won't be equally if not more profitable in secondary and tertiary markets. So it won't be a flagship strategy. It will be a multi-store strategy where James and Hugh, Ted and I actually have a meeting this afternoon with our real estate group to continue to drill down into the details but I think that we are looking at a minimum of 100 stores between the two brands in Europe and probably more. Richard Jaffe - Stifel Nicolaus: Wow. Glen T. Senk: Yeah, we’re very, very excited about it. I mean, if you look at the five major markets, they comprised about 70% of the apparel spend in Europe and that’s the U.K., Spain, France, Germany and Italy. And we will probably follow the customer in those markets. Richard Jaffe - Stifel Nicolaus: That’s exciting stuff. Thank you. Glen T. Senk: Thank you. John. John E. Kyees: Richard, the Terrain impact in the second quarter this year in terms of a net loss was comparable to what it was last year. Glen T. Senk: And the one-time expense you called out, what was that? John E. Kyees: That was built into that comparable negative, or the comparable loss to last year so we really haven’t specified that. Glen T. Senk: Okay. Thank you very much.

Your next question comes from the line of Robert Samuels from Oppenheimer. Robert Samuels - Oppenheimer: Good morning, everyone. You are obviously going to end the year with a sizable amount of cash on the balance sheet. Can you just talk about what your plans are, your thinking around this, what you are going to do with it? Glen T. Senk: You know, I am sure we’ll talk about it at the board meeting next week. I think -- you know, we’re smiling around the table. We have said before that we wouldn’t rule out the possibility of an acquisition. I think it’s highly unlikely that it would be a large acquisition. I think that if we were ever to acquire anything, and the operative word there is if, it would be a small business that had strategic synergies to the URBN portfolio. So that’s one possible use. We certainly could do a buy-back. We are authorized to do one. We have elected not to do one and we went into the -- we talk about this in every board meeting. We certainly don’t mind having the kind of cash that we have on hand in this economic environment and that’s basically -- John, do you want to add anything? John E. Kyees: No, I think Glen hit it on the head -- the only depressing part about it is that the interest rates in the marketplace are not particularly exciting, as you’ll notice by our other income being lower than last year, even though we have $160 million more in cash. So that’s unfortunate but outside of that, Glen summarized it very well. Glen T. Senk: And I think, John, correct me if I am wrong but when you look at our cash on hand relative to the rest of our financial metrics, we kind of fall in the middle of the pack. John E. Kyees: It’s relatively consistent with many others. Robert Samuels - Oppenheimer: And then quickly, just on SG&A, even though comp came in or comp was better than the first quarter, dollars were at the low end of the plan so just wondering if you can keep the same sort of level going forward in the back half? John E. Kyees: No, I would say it’s not out of the question that we can continue to manage the SG&A dollars pretty effectively. Again, if comps grow from the negative 6 to something better than that, then I would expect the SG&A to grow commensurately. Robert Samuels - Oppenheimer: Thanks.

Your next question comes from the line of Michelle Tan from Goldman Sachs. Michelle Tan - Goldman Sachs: John, I was wondering if you could give us a sense of whether the IMU gains accelerated meaningfully this quarter? And then what the bigger driver is -- is it overall deflation versus your sourcing and strategy -- sourcing strategy and the mix changes that you have called out? John E. Kyees: Yeah, the IMU gains were substantially greater this quarter than they were in first quarter. It was an outstanding quarter and I think it’s based on a combination of things. I think it’s based on that -- the mix change of Urban moving more to owned brand, as Ted talked about and that’s probably the biggest issue but then there are significant negotiating successes with the production team on the product costs. Glen T. Senk: I really have to again call out Barbara [Roseoff], the head merchants in each of our businesses, and there are many, many people who have been working very hard on this for several years so this is the result of their hard work and I expect we will continue to see this -- this level of improvement, not continuing improvement but this level of improvement going forward. I don’t think it’s an external factor. I think it’s internal. Michelle Tan - Goldman Sachs: That’s great, thanks. And then on the occupancy side, do you see that kind of rate of second quarter continuing in terms of the lower I guess leverage point or the reductions that you are seeing? John E. Kyees: I believe so, again based on the elements that we talked about -- better site selections, lower construction costs and lower rents. All those will continue to impact the occupancy costs. Michelle Tan - Goldman Sachs: That’s perfect. Thanks for the help and good luck.

Your next question comes from the line of Adrienne Tennant from FBR. Your line is open. Adrienne Tennant - Friedman, Billings, Ramsey: Good morning and let me add my congratulations -- great quarter. My question is for Glen -- can you talk about Free People and the progress at the retail stores? It also looks like wholesale seemed to be stabilizing, so any trend going into the fall season on the wholesale business? Thank you. Glen T. Senk: The funny thing or not so funny thing about core Free People is if you combine their direct-to-consumer business with their comp retail business, they were actually comp positive. They were comp positive. I’m not going to give the numbers because that will let you back into the size of the business but they were nicely comp positive and there -- because their base of direct-to-consumer business is smaller, it impacted the mix much more dramatically than it does in the other two brands. Having said that, I think that we look more on brand and the content is better today than it was three months ago. I think that we probably moved the needle a little bit too much going into the year. We reacted to some of the fashion change and maybe did so without the Free People lens or filter and I think that Meg and the design group have done a much better job on that for the second half of the year. So I think you will -- I hope that you will see continued improvement. Adrienne Tennant - Friedman, Billings, Ramsey: And on the wholesale side, you are seeing the same type of reaction? Glen T. Senk: Yeah, same thing -- I think that the wholesale line at this point looks different than the retail line. There’s about -- between -- depending upon the time of year or the month, as little as 30% cross-over, probably an average month maybe 50% cross-over. And quite frankly, I think we did a better job managing the assortment in our wholesale business than we did in our retail business for much of the spring season. Adrienne Tennant - Friedman, Billings, Ramsey: Okay, great. Thank you very much and good luck.

Your next question comes from the line of Erika Maschmeyer from Robert W. Baird. Erika Maschmeyer - Robert W. Baird: Good morning -- again, great quarter. I noticed that I was getting more value focused marketing emails from Urban Outfitters division. Could you talk about this and the impact on sales and gross margin? And then do you continue to go forward with this type of marketing? Glen T. Senk: Erika, I think I’ll let Ted finish for me but the main point is what I said in the prepared comments -- the more distinct the fashion, the less price elasticity. The more basic the item is, the more price sensitive it is. And I think the big learning curve in the second quarter and a good deal of what you saw in the marketing was that the basics were more price sensitive than we realized they would be going into the second quarter and Ted and the group did a fantastic job of reacting within the quarter and that’s what you saw in the floor and in the e-mails but Ted, do you want to add to that? Tedford G. Marlow: The main thing I would talk about in this regard is our interest at the moment is evolving from really a brand -- from a channel centric approach to our marketing to more brand-centric approach and it goes back to some of what Freeman was talking about earlier. Most of our work over the last few years is -- has been fairly siloed where the retail group has their agenda and the direct group has their agenda and they are both driving their businesses. And we really are looking a little bit more cross-pollenization with the onset of this database marketing tool. So we’ve been experimenting with some marketing here as we’ve come through the first half of the year that is more retail sensitive, or more retail intensive than we had been in the past, learning the cross-over that we have in the database that we are working with. And that too probably has a bit to do with what you saw as we came through the quarter. Erika Maschmeyer - Robert W. Baird: Extremely helpful -- thanks so much.

Your next question comes from the line of Liz Dunn from Thomas Weisel Partners. Liz Dunn - Thomas Weisel Partners: Let me add my congratulations. Clearly there are a bunch of ways that you can get back to 20% operating margins but if you had to venture a guess, could you tell us what you think would need to happen on the top line and how much would come from gross margin and SG&A to get back to 20% operating margins? Glen T. Senk: I’ll let John answer that. John E. Kyees: Liz, I think the compelling part of the 17% in this quarter is that if you think about leverage points and the fact that if that had been a plus 3 or a plus 4 comp, then we probably would have been a 20% because we would have leveraged SG&A and occupancy effectively, so going into next year, I would say if we did our 7% comp that we’ve averaged for the last 8 years, that we could have a real good shot at doing 20%. It will come somewhat from leverage and somewhat from initial markup. And the inventory management has been good, so some of it could come from markdowns as well. Glen T. Senk: The exciting thing for me, and I keep repeating this, is that the impact over the last nine months I think will have sustainable changes for the company and quite frankly, we used to talk about 20% a year ago and I mean, we almost made it a year ago before we made these -- before we kind of revisited every expense line in the organization. So I think the probability and the speed with which we will hit 20% when our business -- when the top line improves is even higher or faster.

Your next question comes from the line of Robin Murchison from Suntrust. Robin Murchison - Suntrust Robinson Humphrey: Thanks very much and of course, congratulations. My question has been answered but let me ask just a housekeeping -- any holes in the organization, if you just kind of refresh our memories on talent that you are looking for? Thank you very much. Glen T. Senk: You know, we’ve been looking for a Chief Operating Officer for several years. I would say we’ve been aggressively looking for a Chief Operating Officer for the year. That person will be my partner in running the business. He or she will work with Freeman and John, Glen [Bodzi], and the rest of the shared service leads so that we have a world-class infrastructure to support our brands not only in North America but also Europe and eventually the Far East. It’s a -- it’s been an interesting journey. We have had some good candidates and we are continuing to speak to people. I would say in terms of openings, that is the single biggest opening. I mean, it’s -- you know, and by the way, this is kind of an investment that we are making in the future -- Freeman, John, Glen, Dave, Calvin -- you know, you go down the list, they are all doing terrific jobs, so it’s not like there’s a strong need now. This is a need for the future and we are being smart about it. Other than that, I think we are in pretty good shape. We are always hiring but we are in pretty good shape.

Your next question comes from the line of Margaret Whitfield from Sterne, Agee. Margaret Whitfield - Sterne, Agee & Leach: Good -- I guess it’s afternoon, everyone. I wonder, Glen, if you could elaborate on your earlier comment about investments in early stage -- early stage developments of new brands and whether that includes any M&A activity in this latest quarter. And if I could also ask, what is the strategy at Anthropologie regarding owned brands? Glen T. Senk: We have not acquired anything, if that’s what the question was. We certainly look at many businesses and Matt Kaness, who is our head of strategy and business development, is a terrific partner in doing that. But nothing -- no serious conversations. With regard to other new business ideas, the company has done a phenomenal job incubating ideas internally. Remember, we started with this business -- actually, originally it was called Free People and then Dick renamed it Urban Outfitters. Urban Outfitters bore Free People; Free People bore Anthropologie; Anthropologie bore Leifsdottir. Dick gave birth to Terrain and all of the brands -- you know, we have a very creative group of people here and all of the brands have a variety of very exciting ideas for new businesses that we are working on right now. We had a very high success rate. We are not planning on having the kind of success rate prospectively that we have had retrospectively but I think it is likely that a good portion, if not all of our new business ideas will be internally generated. We are not ready to talk about any of them yet but I will tell you we’ve got eight or 10 in the works. And then what was the last question? Margaret Whitfield - Sterne, Agee & Leach: The strategy on owned. Glen T. Senk: Yeah, that has not changed. It’s been penetrating roughly at 50% in Anthropologie for years and they have done a great job with it. It’s a mix, like at Urban, it’s a mix of roughly 50% owned brand, roughly 25% vendor collaborations in the market and then 25% of straight branded product. And that’s been consistent. Margaret Whitfield - Sterne, Agee & Leach: Thank you.

Your next question comes from the line of Michelle Clark from Morgan Stanley. Michelle Clark - Morgan Stanley: Good afternoon. John, you had mentioned last quarter that you were seeing modest benefit from rent concessions -- was that the case in the second quarter and do you expect that to play out in the back half of the year as well? Thank you. John E. Kyees: I think the whole occupancy leverage issue is related to a number of elements. I would say rent concessions are a piece -- certainly construction costs are a piece and the better site selection is -- has been very important, as evidenced by the performance of our new store against the base change. So overall, it’s a combination of things that are impacting occupancy. We would expect rent to continue to be an opportunity going forward. Michelle Clark - Morgan Stanley: Okay, great. John, could you just update us then on the leverage point for occupancy -- is it now at 3%? John E. Kyees: Well, that’s what we had been saying but in the first quarter -- or in the second quarter it actually ran lower than that. Michelle Clark - Morgan Stanley: Okay, great. Thank you.

Your next question comes from the line of Laura Champine from Cowen & Company. Laura Champine - Cowen & Company: You mentioned at the beginning of the call, Glen, that you thought that the consumer would modulate the way that they buy basics. You talked about some of the price sensitivity on basics. Could you comment a little further on what that means that they will modulate the way they buy basics and how Urban is going to adjust to that with your different brands? Glen T. Senk: Yeah, and I talked a lot about this during the last call -- I think the market is really bifurcating. I think the customer who wants a basic V-neck t-shirt or a basic pair of jeans can go online, she can price comparison shop within a nano-second, and many -- not all customers but many customers are going to go where the deal is and if you go online, which I am sure you do daily, the world of $15 denim and $3 tank tops and $5 t-shirts, it’s aplenty. And not so much at Anthropologie but at Urban, I’m not suggesting, I don’t mean to suggest that we are going to have $19 or $15 denim but we have to be mindful of -- particularly of back-to-school time that the kids are price sensitive and if they can get $3 tank tops at a competitor and our tank tops are $30, it’s going to cause a problem for us. So I’m not saying we have to be $3, but we have to be at a good price, given what our product stands for. So that’s kind of one part of the business. The interesting part of the business for us is really the fashion and what I said in the prepared remarks and boy does this resonate with me as I shop stores, which I did again last Friday, is the whole authenticity thing. I think in this day and age, the customer -- I really feel like the middle is dropping out. I think luxury obviously has been challenged for the time being but what I think really resonates with people is a connection to either an artist or a manufacturer, a level of authenticity in the product and I feel that our company and all of our brands can do that better than just about anybody. So it’s the story behind the merchandise -- people really want to know how something was conceptualized, how it was manufactured. They want to know about the people making the garment. They want stories, they want special product. And this is something that the chains and certainly the mass merchants can’t do and this is a calling card for our company and so that’s what I meant when I said modularly. I think they are going to some of the mass merchants for white T-shirts or basic denim but they are coming to us for the special product. Laura Champine - Cowen & Company: Thank you.

Your next question comes from the line of Howard Tubin from RBC Capital Markets. Howard Tubin - RBC Capital Markets: Just a question on inventory -- you’ve done a really great job managing it over the course of the last several quarters. Should we expect to see a per foot level or per store level down for the rest of the year throughout the fall season? And then is there any way you would like to comment on business here in the third quarter to date? Glen T. Senk: Howard, what was the last -- yeah, no, we’re not -- it’s too early in the quarter for us to make any comment. We’ll do that mid-quarter as is our custom. With regard to inventory, as Ted said earlier, we manage our inventory based on weeks of supply and we don’t plan it based on square footage or per store. I said very consistently for a long time, I think there’s opportunity in the long-term for us to reduce weeks of supply. In a perfect world, we would have tomorrow’s sales in the store today. That’s never going to happen but I think with the extraordinary job the organization has done compressing the calendar and everything that we have on our docket in terms of continuing improvements to our planning and allocation strategies, continuing improvements to our supply chain, the logistics side of supply chain, that over the next several years, we’ll see substantial weeks of supply reductions. And that has -- that only creates good. I mean, it lowers markdowns, it lowers selling expense, it improves the customer experience -- only good things come out of reducing weeks of supply. Howard Tubin - RBC Capital Markets: That’s great. Thanks.

Your next question comes from the line of Randal Konik from Jefferies. Randal Konik - Jefferies: Great, a quick one -- going back to the first quarter on the IMUs, you said that -- you made a comment that the wholesale business was hurt by some close-out performance or higher than normal close-out performance -- was that the case in the second quarter or were all channels of distribution up in the IMU? Thanks. Glen T. Senk: We won't go into details by brand but we did not have the close-out issue in the second quarter that we had in the first quarter. Randal Konik - Jefferies: Great, thanks.

(Operator Instructions) Your next question comes from the line of Jennifer Black from Jennifer Black & Associates. Jennifer Black - Jennifer Black & Associates: Good morning and let me add my congratulations. I wondered if you could talk a little bit about Leifsdottir -- the product looks great and I wonder if you are in a position to raise price points. And then I also wondered how much cross-over there is, and I realize it’s small at this point -- there is in your own stores versus wholesale? Thank you. Glen T. Senk: And with respect to Leifsdottir? Jennifer Black - Jennifer Black & Associates: Mmmhmm, with respect to Leifsdottir. Glen T. Senk: There’s not a lot of cross-over. Occasionally Anthropologie will buy a bit of Leifsdottir but it is a very, very small percentage of their assortment. The average price, selling price in Leifsdottir is about $240 and we feel comfortable with where that is right now. We are projecting that it will be roughly a $10 million wholesale or roughly a -- call it a $22 million to $25 million retail business this year. And that is done largely through Neiman Marcus, Bergdorf Goodman, Nordstrom, Bloomingdales, and roughly 50 specialty doors. So again, it’s too early for me to make a statement about what it’s going to look like in the next several years but considering this is its first full year of business, I just think that’s a stellar result. I don’t see the prices going up. I think that the great thing about all of our brands is that they are uniquely positioned. I call Leifsdottir Young Designer and it fits with Mark by Mark Jacobs, DBF, Milly, Fee by Chloe -- but it really does something very different than any of those brands do just in the way that Free People, Urban, and Anthropologie do something different than their peer group. Jennifer Black - Jennifer Black & Associates: Thank you very much. It looks great.

Your next question comes from the line of Janet Kloppenburg from JJK Research. Janet Kloppenburg - JJK Research: Congratulations. Just a couple of questions on the gross margin improvement, which was a big surprise to me -- on the timeline of opportunity, Glen, where would you say the company is? This is the first time that we’ve seen such a surprise in the gross margin -- where is it coming from the higher private label business and I believe lower costs on the third-party vendors -- so where are we along the timeline and can you help us understand the opportunity going forward? And just secondly, when you talk about open to buy and being so open, I am just wondering as you do devote more of your open to buy to your own label products, if that doesn’t somehow increase your lead times, and maybe constrains your flexibility on open to buys? Glen T. Senk: I’ll respond to the second question first -- it’s a misnomer to think that our own product is any faster or slower than the market product. In fact, it’s probably faster at this point because internally I think we’ve done a better job compressing the calendar than many of our resources. I mean, when you have distribution that on the low end are 3,000, 4,000, 5,000 units, it’s not like people have the merchandise hanging. They cut it for us, so there’s really no difference in terms of speed from buying in the market versus our own brand. I think that where we are, the bulk of the IMU improvement came from our sourcing, so the penetration of owned brands, the total certainly helped but the bulk of the improvement came from the tremendous job that Barbara and the merchant heads, and I also should call out Kelly from Urban and Denise from Anthropologie and Jeff from Free People, our heads of plan, because they’ve also done a great job. This has been a multi-year effort and we are seeing the results of this tremendous effort. I mean, I think that Dick probably started talking about this three years ago. We started making investments in this a couple of years ago and we are about -- in terms of our CTM, our concept to market, we are about two years into a three-year plan but I honestly can’t tell you, Janet, when it’s going to finish because every time we think we are getting close to the end, we see new opportunity. Janet Kloppenburg - JJK Research: So then we should expect a continued positive bias to gross margin as we go forward? Glen T. Senk: Well, gross margin is a function of a lot of things -- it’s a function of initial margin, markdowns -- Janet Kloppenburg - JJK Research: Excuse me, merchandise margin -- a positive bias function. Glen T. Senk: Oh, merchandise margin is a function of markdowns in IMU. I think that to answer your question, I think that there is continued IMU opportunity and when we did our secondary, Dick used to talk about 200 points. As I said earlier, we [bill out] that 200 points probably twice [inaudible] secondary and I think that we have -- I don’t want to put a number to it but I think that we have significant opportunity going forward. The markdowns are a whole other number -- I mean, the reality is in a -- you know, our markdown rate is running significantly higher than it runs when we have an average 7 comp, or even when we are a flat comp. I mean, when -- we are buying tight but make no mistake about it -- we took higher markdowns than we normally run and that we like to run, so when we can get to a normalized markdown rate again, there’s going to be nice MMU improvement, maintain merchandise improvement. Janet Kloppenburg - JJK Research: Given your optimism, Glen, would you say that there is an opportunity for markdown levels to begin to come in here as we go through the back half, particularly with easier comparisons? Glen T. Senk: You know, I really don’t know, Janet. I hope so but I think -- I think the minute the comps improve, the markdowns will reduce. I hope so. I mean, we have a phenomenal staff and they don’t generally make the same mistake twice, so I hope so but I wouldn’t count on it right now. Janet Kloppenburg - JJK Research: Okay. Best of luck to you all. Glen T. Senk: Thank you.

Our final question comes from the line of Miss Maggie Gilliam from Gilliam & Company. Maggie Gilliam - Gilliam & Company: I had another question on Leifsdottir -- is it good performance at wholesale partially a function of a very -- a channel distribution you have for it? And second of all, it’s a brand that lends itself very well to other products. I know you don’t -- at least licensing has not been in your vocabulary but would you comment on that? Glen T. Senk: I think it is doing well because I think the group did an exceptional job with it, so kudos to Johannes [Yurisjarvi] who is the head designer, to Wendy [Wersberger] who helped her conceive the line, Barbara Roseoff and her staff who helped produce it -- the product is beautiful. It is -- it is remarkable to me how quickly it’s become a brand. I mean, if you Google it, it comes up. If you go to peoples’ websites, they have it. It really is a testament to how beautifully conceived and executed the line was, so congratulations to them. With regard to other product extensions, I agree. It’s something we are talking about internally. We’re not ready to comment on it yet but I wouldn’t be surprised if we expand it outside apparel. Maggie Gilliam - Gilliam & Company: Thank you. Glen T. Senk: Thank you.

We have no more questions in the queue at this time. Mr. Senk, I will turn the conference back over to you. Glen T. Senk: All right. Well, thank you so much for everyone. Great questions, as always and we look forward to speaking to you individually and collectively in three months. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You can now disconnect. Everyone have a wonderful day.