Richard A. Hayne - Chairman and President Glen T. Senk - EVP, and President, Anthropologie Tedford G. Marlow - President, Urban Retail John E. Kyees - CFO Meg Hayne - President, Free People Brand

Neely Tamminga - Piper Jaffray Betty Chen - Wedbush Morgan Kimberly Greenberger - Citigroup Gabrielle Kivitz - Deutsche Bank Adrienne Tennant - Friedman, Billings, Ramsey Roxanne Meyer - CIBC World Markets Margaret Mager - Goldman Sachs Christine Chen - Needham & Company LLC Brian Tunick - JP Morgan Janet Kloppenburg - JJK Research Liz Dunn - Thomas Weisel Lyn Walther - Wachovia Securities Holly Guthrie - Janney Montgomery Scott Lauren Levitan - Cowen and Company Elizabeth Pierce - Roth Capital Partners Margaret Whitfield - Stern Agee R.J. Hottovy - Next Generation Samantha Panella - Raymond James Barbara Wyckoff - Buckingham Research Robin Murchison - SunTrust Robinson Humphrey Jennifer Black - Jennifer Black & Associates Crystal Kallik - D.A. Davidson Dana Telsey - Telsey Advisory Group

Good day ladies and gentlemen, and welcome to the Urban Outfitters' Second Quarter Fiscal 2008 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder this conference call is being recorded. The following discussions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please note that the actual financial results of the Company for the periods being discussed, may differ materially from the financial results projected or implied in the forward-looking statements. Additional information concerning factors that could cause actual financial results to differ materially from projected results is contained in the Company's Annual Report on Form 10-K, and in other documents filed by the Company with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update forward-looking statements. No recording or rebroadcast of this call is permitted without the Company's expressed written information. I would now like to introduce your host for today's conference Mr. Richard Hayne, President and Chairman of the Board. Sir, you may begin. Richard A. Hayne - Chairman and President: Thank you. Good morning everyone. It is a pleasure to welcome you to our quarterly conference call. Earlier the Company issued a press release that outlines the financial and operating results for the three months ended July 31st, 2007. We will now elaborate on that release. Joining me for this morning's call are Glen Senk, our Chief Executive Officer; Ted Marlow and Meg Hayne, Presidents of the Urban Outfitters and Free People brands, respectively; and our entire senior executive staff. Now that Glen is CEO, he will be giving the in-depth review of the Company's results. After he finishes, we will each be available to answer your questions. The text of today's conference call can be found at our corporate website, urbanoutfittersinc.com. Glen, if you would give your report now, please. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you, Dick. And I would like to also express my thanks to the group for joining the call this morning. There was much to be pleased with in our second quarter performance. Once again, the Company achieved a quarterly sales record with total revenues increasing by 22% to $348.4 million. Total Company comparable store sales grew by 5%; Anthropologie and Free People achieved impressive comparable store sales gains of 14% and 28%, respectively, which more than offset the Urban Outfitters' decline of 3%. The Company's new and non-comparable store sales contributed $35.7 million, a performance nicely favorable to plan. The Company's direct channel grew by 35% to $42.5 million. Free People revenue grew 33% to $27.4 million. The Company's gross margin grew by 64 basis points to 37.3% with improvements in markdowns and store occupancy expense. The Company earned $0.19 per diluted share; a 24% increase in earnings over the same period for last year. And finally, the Company completed a number of important initiatives, several of which I will highlight today. There were also opportunities in the quarter: We were disappointed with the Urban Outfitters North American retail business from both a sales and margin perspective; it is our utmost priority to bring this business back to its historical comparable store performance which averaged 9% during the last five years, and that's including last year's negative 10% performance. While a 37.2% gross margin and a 13.6% operating margin puts us near the top of our peer group, the performance is short of our historical high and our own expectations. I'll now go into more detail on each of the metrics of our business, starting with sales. In the Anthropologie and Free People retail business, all merchandise divisions were positive, with women's apparel and intimate apparel leading the trend. Within women's apparel virtually every category with the exception of skirts was positive. We think it's fair to say that the turnaround in Anthropologie is complete and that the performance at Free People was exceptional. In the Urban Outfitters retail business the biggest opportunities rest in the women's apparel and accessory divisions, both of which were negative. We have an excellent grasp on the issues. Put simply, it's an assortment issue, not a fashion issue. There's not enough assortment to drive the business. We are confident that an increase in style count, and a more appropriate balance of silhouette, color, novelty, fabric, brand, and price point will improve the performance. Comparable store sales trends were relatively constant throughout the quarter. At Anthropologie, there was virtually no geographic variance in the business; at Urban Outfitters, the West Coast underperformed relative to the rest of the US-based group, and the Canadian and European businesses were both nicely positive. At all of our brands, there were no significant performance differences between freestanding, metro, lifestyle center and mall-based stores. The comparable stores' average unit retail prices rose 10.3% during the quarter and were nicely positive at all brands. Units per transaction fell 2.4% in total, and store transactions fell 2.6% in total, largely impacted by a 6.8% reduction at Urban Outfitters. During the quarter, as we continue to expand our store base, selling square footage increased 16% compared to the same period last year. During the quarter, we opened one new Anthropologie store, bringing the total to 96; three new Free People stores, bringing the total to 11; and one new Urban Outfitters store, bringing the total to 111. I want to reiterate that our new store performance is ahead of plan for all three brands which speaks to the improvements we've made to our real estate selection process. I'd also like to note that Free People opened its first store on the West Coast in Torrance, California; its first stand alone store in Greenwich, CT; and its first metro store in Bucktown, Chicago. All three new stores are performing exceptionally well and speak to the exciting expansion potential of the brand. Now, let me turn your attention to our direct channel. Our sales trend accelerated from the first to second quarter. Total channel sales jumped 35% against the same period last year to $42.5 million relative to a circulation increase of 21% to 7 million catalogs, and the channel's 12.2% penetration to the total Company increased 117 basis points. All brands contributed as the Company experienced a 28% jump in website visits and an 8% increase in average order value. Our brands achieved outstanding creative execution during the quarter. But I'd like to make particular mention of two Urban Outfitters marketing-related initiatives. The brand launched a highly innovative blog during the quarter which generated nearly 150,000 unique visits and almost 10 million page views. They also crafted a unique, wildly popular event with Yaris which featured live music in 13 of our largest market stores. Each event enjoyed full-capacity attendance, and the web-related communication collected more than 45,000 names. The trend also accelerated from the first to second quarter for Free People, where total quarter sales increased 33% versus the same period last year to $27.4 million. Improvements were across the entire wholesale customer base driven by an 11% increase in unit sales and a 16% increase in average selling price. Equally important, sell through and margin data from our customers have been extremely positive; the past quarter ranked as one of the brand's best quarters-to-date. I'd like to now turn your attention to gross margin, operating expense, and income. The total Company gross margin for the quarter rose 64 basis points to 37.3%. As I mentioned in my opening commentary, this performance is solid relative to our peer group, but fell short of our plan and expectation. All three brands experienced moderate IMU pressure in the quarter, but for different reasons: Anthropologie needed to accelerate receipts and thus incurred airfreight charges throughout the quarter; Free People Wholesale had a lower-than-expected average unit retail on closeout sales; and Urban Outfitters experienced IMU pressure largely relating to mix. The Company's markdowns were modestly below last year but significantly unfavorable to plan, driven largely by markdowns taken in the Urban Outfitters retail business to clear seasonal product. Store occupancy leveraged by 40 basis points, driven largely by the Anthropologie retail business. Company inventory levels at quarter-end were within our planned weeks-of-supply: up 3% in total; up 8% at Anthropologie and down 1% at Urban Outfitters. The Company's operating expense de-leveraged by 62 basis points in the quarter, principally due to corporate property charges relating to its new home office facility, which we will begin to anniversary its phased opening in the third quarter; and also to legal fees relating to protecting our intellectual property, which we expect will be nonrecurring. I'd like to remind you that the increase in new home office expense is more than offset by a related reduction in our annual effective tax rate. Company income from operations for the quarter increased 22% to $42.3 million or 13.6% of sales. The Company, through its tax planning strategies, reduced its tax provision for the quarter by 120 basis points to 35.4% of income, thus earnings for the quarter increased 24% to $0.19 per share. Before I change focus to the quarters ahead, I'd like to highlight two exceptional achievements: Dave Ziel, our Chief Development Officer, and his very able team have made extraordinary progress in design and value engineering the Company's construction costs. We expect to achieve our planned 20% reduction of construction costs per-square-foot relative to our fiscal '07 performance. Dave believes he can continue to improve his performance into next year which should allow the Company to return to historically lower depreciation rates within the next few years. Secondly, I would like to recognize, Ken McKinney, our Director of Distribution, who accomplished another significant feat this past quarter. Ken and his team opened our new 175,000 square foot distribution center in Reno, Nevada. Within just eight days of opening, the new facility has already outpaced our third-party service provider's peak volume. I want to publicly acknowledge Ken's flawless execution on this major initiative. As we look ahead, the Company has several priorities. First, and most importantly, the Company must improve the Urban Outfitters North American retail business. We are hopeful that we can make several short term adjustments within our merchandising strategy. We believe that it may take several quarters to achieve a sustainable, historically-profitable result, however. As I mentioned earlier in my remarks, we are confident that we understand the issues at hand and we've begun to take appropriate steps to improve the business. We've filled two senior executive positions over the last several months. Jim Brett, will serve as Urban Outfitters' General Merchandize Manager, and Sun Choe, will serve as the Urban Outfitters' Women's Divisional Merchandize Manager. I've had the pleasure of working with Jim for the last several years at Anthropologie, where he served as Divisional Merchandize Manager of home furnishings under Wendy Wurtzburger. Jim has 20 years of department and specialty store experience, majority of which was spent in the apparel business. He is one of the brightest, most driven merchants I have worked with and I am certain that he will be a major asset to the Urban Outfitters brand. Sun joined us from Guess, where she served as their Director of Merchandising. I have been impressed with Sun's tenacity and her deep understanding of the women's business. I believe that she will be a great partner to Ted and Jim. I have personally spent a good amount of time visiting numerous Urban Outfitters stores, digging deep into the business, reviewing the product, getting to know the staff and working with Ted. First, let me say that we are all aligned: Ted, his team and I. Second, let me say that I have rarely seen a brand franchise as powerful as Urban Outfitters. The connection Urban Outfitters enjoys with its customer is extraordinary, the energy in the store is palpable, and the brand's fashion leadership is unparalleled in the industry; there's not another brand like it. And I wholeheartedly believe the business will dramatically improve as soon as the assortment improves. This, as I said, is our most important goal, and I am tremendously excited by the opportunity of working with Ted and his team on this objective. All indications are positive that Anthropologie will continue to enjoy healthy business into the fall and holiday seasons. Early fall selling is excellent, even on the sweltering East Coast, and there are numerous trends across categories that the team believes they are positioned to maximize. The management team is focused on sustainability, consistency, new growth strategies and improving profit. The brand has begun to launch the Company's CRM initiative, and we expect the first phase of the project to be complete, in all stores, by the end of the third quarter. The early spring test was extremely encouraging, as have been the results from the beginning of the rollout. Based upon our test results, we anticipate that just under one million customers will sign up for 'Anthro,' that's what we're calling the program, within the first 12 months of the launch; thus, we are extremely optimistic about the potential of the project. Free People's early fall selling at retail and bookings at wholesale, also point to a solid fall season. With annual store sales productivity in excess of $1,000 per selling foot, the brand has begun to modestly accelerate its store opening schedule. The results during the second quarter are helping us to rethink the potential of the brand. Meg and her team are also looking at ways to continue the wholesale... to grow the wholesale business. As previously mentioned, the intimate apparel launch was quite successful in the first half of this year, so we will be expanding the range and number of deliveries in the coming seasons. FRDM, a knit-based, more sporty line, will also launch at the end of the year. Like the intimate launch, we expect the initial range and distribution to be small, but we believe this brand also has excellent long term potential. Our fourth initiative relates to new stores. We believe the Company will achieve its total targeted new store opening number of 38 stores for the year, and we are hard at work to normalize the opening schedule across all quarters in future years. Next is assortment planning. We are continuing to invest in numerous IT projects. One of the most exciting initiatives, which we expect to launch in the third quarter, is an integrated and dynamic assortment planning system. This system will help the planning, buying, and allocation teams more effectively understand, literally, what the assortment will look like in each and every store. Given the complexity of our business, we expect to reap meaningful productivity and margin gains when the system is fully functional. Next is concept to market. One of the Company's highest priorities is our concept to market initiative. This is a multi-year initiative that will cover every aspect of our supply chain, from demand forecasting, to product development, production, logistics, and allocation. Our goal is to have a fully integrated system that allows us to maximize our margin, sales, and return on inventory investment. We have begun to see improvements in the process and concomitant results this past spring, and we expect that we will continue to make progress over the next several seasons. The seventh initiative is Concept IV. As previously announced, we expect to launch our fourth concept in calendar 2008. Dick and his team have made a great deal of progress since the May announcement. First off, they have a name, Terrain. Secondly, they have a team, a managing director, a creative director, a General Merchandize Manager, two buyers and a support staff. The concept, from store design to product contact... content, has taken shape and it's as differentiated and compelling as our other brands. Finally, our eight initiative is to achieve a minimum of 20% income from operations. We remain highly focused on reaching a minimum of 20% income from operations. Many of the accomplishments and initiatives I've discussed today will play a key role in this objective, and we are confident that we will achieve our goal within the next several years. Our overarching plan has not changed in the more than 13 years I have been with the Company: to grow sales at a rate of at least 20% annually, and to grow profit at a faster rate than sales. It is important to stand back and recognize our accomplishments relative to our goals. For the last six years our CAGR on total Company sales and profit has been an exceptional 27% and 49%, respectively. As Dick has expressed on numerous calls... pardon me, I am getting over a cold... we believe the Company has built three of the most recognized, distinct, and compelling brands in the industry: three brands that have consistently inspired a profound level of customer loyalty. Equally exciting, each brand has significant opportunity to grow through multi-channel expansion and brand extensions, and we now have Terrain joining the URBN portfolio to provide another means of growth. The leadership team and I couldn't be more excited about the prospects ahead, and we look forward to continuing to inspire our customers and reward our employees and stakeholders. I will now open the call to questions. But before we begin, in the interest of time, I'd like to ask each of you to limit yourselves to one question. I respectfully apologize in advance; if you ask more than one question, we will respond only to the first query. So, we will now take your questions. Question And Answer

Thank you. [Operator Instructions]. Our first question comes from Neely Tamminga of Piper Jaffray. Neely Tamminga - Piper Jaffray: Good morning Glen and congratulations on the turnover at Anthro. Just wondering a little bit about the common on air freight; could you just give a little bit more color. Did they happen towards the end of the quarter in anticipation for the second half or was at the beginning of the quarter, and how should we just be thinking about that pressure from the air freight for the back half? Glen T. Senk - Executive Vice President, and President, Anthropologie: Really, it really started to happen as the business accelerated in the first quarter. It continued throughout the second quarter, and I expect that we will see some continued pressure into the third quarter. And we did not plan for a 14% comps, we never do, as you know; and as you also know, we always plan our inventory to weeks of supply, so we try to stay very, very flexible. I would think it really speaks to the CPM progress that we've made that we are able to manipulate and get deliveries quickly back into the brand. I believe the incremental received relative to the initial plan were in the 25% range for the quarter. Neely Tamminga - Piper Jaffray: It's a high-class problem congrats. Good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you. Thank you so much, Neely.

Our next question is from Betty Chen of Wedbush Morgan. Your question please. Betty Chen - Wedbush Morgan: Great. Thank you again. Congratulations as well. I was wondering if you can elaborate a little bit more about the merchandise changes that you've identified and want to work on over the next couple of quarters, and perhaps what gives you the confidence that those are the changes and maybe just talk a little bit more about how you expect that to develop over the next three to six months? Glen T. Senk - Executive Vice President, and President, Anthropologie: Betty, I assume that the question is directed towards the URBN brand, so I know Ted is anxious to answer the question. Betty Chen - Wedbush Morgan: Yes please. Tedford G. Marlow - President, Urban Retail: Yes, in regard to what is led has there; we obviously... as we came through the second quarter we were expecting more out of the business. When that wasn't occurring we have been involved in a great deal of analysis in regard to what's been going on in the business, not only in regard to content merchandising but in regard to our performance at every level looking at every metric in the business. To make a long story short, we feel like that where we've been on assortment that we are a bit short on style count and breadth of assortment as it relates to style. And we are... we have been merchandising the business too deep at a SKU level. We feel like that the inventory levels we're running the business with are appropriate on a weeks of supply basis. We are inline but we really comeback to the issue of content on those weeks of supply and we think we have opportunity. We've had a lot of internal conversation on that and as Glen alluded, we've made some changes in merchant staff and had further conversation with the new team members, and we are underway on making changes. We feel like we can affect that positively as we progress to fall and continue, and wrap up our merchandising for fourth quarter. Betty Chen - Wedbush Morgan: Thank you. Good luck. Tedford G. Marlow - President, Urban Retail: Thank you.

Our next question is from Kimberly Greenberger of Citigroup. Your question please. Kimberly Greenberger - Citigroup: Great. Thank you. Good morning. Glen I was hoping you could talk about the comments on the recent personnel and specifically the structural realignment made at the URBN division. If you could just elaborate on the changes going on there; how far, you feel like, you are into this sort of restructuring process and when would you expect to see the full benefits of those efforts realized in the in-store assortments? Tedford G. Marlow - President, Urban Retail: Sure, Kimberly, this is Ted. As to where we stand at the moment, we... as Glen mentioned, we have named Jim as the GMM for the business. We all had very good conversations in regard to Jim's observation on the business, and we feel like he can bring some change that we are looking to positively affect our assortment. As well, on the front side of making the move with Jim, earlier in the second quarter, Sun joined us as the Merchandize Manager for the women's theme. So, at a senior level and the buying staff; we feel like, we're where we need to be staff-wise right now. We do have a couple of openings and buying roles but we've done... the talent acquisition group has done a very good job of supplying us with buying candidates as we come through first part of the year. And we are pretty well at staff on the buying side. We do still have openings that we have not found the appropriate candidates to fill in a couple of design roles, and we are looking to make additional investment in the design team. So, from a buying perspective, we feel like we're in a good place right now and we're underway, and on the design side we still have a couple of roles, as I mentioned, that we want to fill. Kimberly Greenberger - Citigroup: And anything on just what you mean by the structural realignment. Tedford G. Marlow - President, Urban Retail: Not so much structural realignment taking place, it really is a change in a couple of roles that is, is what is occurred. Kimberly Greenberger - Citigroup: Terrific. Thanks Ted and good luck for your first... the second half. Tedford G. Marlow - President, Urban Retail: Thank you.

Our next question is from Gabrielle Kivitz of Deutsche Bank. Your question please. Gabrielle Kivitz - Deutsche Bank: Hi, everyone. I was hoping that you could quantify your open to buy this year versus last year for the fall and holiday season at both Urban Outfitters and Anthropologie; would be very helpful for us just to assess how much opportunity you have to chase the business and also to mitigate risk this year versus last year at each of the divisions? Thanks. Glen T. Senk - Executive Vice President, and President, Anthropologie: Gabrielle, I am glad you are asking that question, it's Glen, because I think that there is kind of continuing confusion around this question. The philosophy of this Company from the day that I worked here was to always buy to trend, and to buy to weeks of supply number. We certainly start out with a plan at the beginning of the season but as trends accelerate or decelerate, we literary change the plans weakly. So it's a very fluid system. What doesn't change is our targeted weeks of supply. Once the weeks of supply number changes, it changes slightly. As the business accelerates we may take the weeks of supply plan down slightly. Whereas it decelerates we may increase the weeks of supply plan, but it's... so it's a very dynamic fluid system. In the case of Anthropologie as the business improve every week the Head Merchant, the Head of Planning and Allocation and I would sit down and adjust the plans. So, to answer your question specifically; for the second half of the year, all three brands are buying to the current trend. So, Anthropologie is buying to the trend that they've seen in their business over the last six to eight weeks, URBN is buying to its trend, and Free People is buying to its trend. Gabrielle Kivitz - Deutsche Bank: Okay. That's helpful. Thanks Glen. Glen T. Senk - Executive Vice President, and President, Anthropologie: Sure.

Our next question is from Adrienne Tennant of FBR. Your question please. Adrienne Tennant - Friedman, Billings, Ramsey: Good morning everyone, and congratulations on the turn at Anthro as well. On the breakeven con, can you talk a little bit about the de-leverage on the SG&A, and where we should see kind of starting to see leverage. I know we've talked about maybe kind of 3%, 4% go forward. Is that something that we should to see back in the Q3 and then also the gross margin piece of it? John E. Kyees - Chief Financial Officer: Yes. Adrienne, this is John. The leverage point is still around 3.5% on SG&A, the third... second quarter had the usual impact of the intellectual property litigation and, of course, it was the first quarter of this year that... the second quarter of this year that we've had, for Navy Yard expenses in the SG&A, by the time we hit the third quarter we were operating in the Navy Yard for a portion of the third quarter. So a degree of that de-leverage goes away and we should be back pretty close to that 3.5% leverage point. Adrienne Tennant - Friedman, Billings, Ramsey: Okay. And then on the gross margin side; where are you levering on the fix components of COGS. John E. Kyees - Chief Financial Officer: That's going to be a little bit higher than that, it will probably be closer to five on a leverage point. Adrienne Tennant - Friedman, Billings, Ramsey: Okay. Great. Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: That will... that number will continue to come down as we reduce our store construction cost this year and next year. Adrienne Tennant - Friedman, Billings, Ramsey: So, we should start to see that probably in fourth quarter coming down? John E. Kyees - Chief Financial Officer: I would think, you'll start seeing that come down toward the fourth quarter. Adrienne Tennant - Friedman, Billings, Ramsey: Okay. Thank you very much. Good luck.

Our next question is from Roxanne Meyer of CIBC. Your question please. Roxanne Meyer - CIBC World Markets: Great. Thanks. Let me add my congratulations on the turn. I was just wondering if, Glen, you can discuss perhaps some of the changes you might be looking to make in terms of process that whether or call it best practices from Anthro into URBN in order to make the appropriate changes there and get it back on track? Glen T. Senk - Executive Vice President, and President, Anthropologie: Yes, I think that one of the beauties of our company is that there is a pretty thick and tall and wide firewall between each of the brands and it's really up to each of the brands to develop their own strategies. Having said that, Meg, Ted, and I certainly share successes and failures with one another and we can borrow as we see fit. I think that, and Dick certainly talked about this... we all talked about this last year. When we first really understood what was happening in the business at Anthropologie back in 2006, really at the end of 2005, Dick and the Board asked both Ted and I to go through what we internally refer to as a renewal process. And we really looked at every part of our business and I think that we took... at Anthropologie we began to implement this renewal process in a very meaningful way in the second half of last year. And there were... Dick has certainly alluded to this in prior calls; there was significant investment both in the merchandizing and the design part of the organization. We thought about the way we manage the design and assortment process differently. We added some steps to it. We changed the relationship between the direct merchants and the retail merchants. And it's... really, I can spend an hour talking about this... but we really, the entire team went through this effort, and I think it was a very powerful part of why the Anthropologie business has turned. The great thing is that with Jim being an important part of the team that went through that result, he can share with Ted from his perspective what worked and what didn't worked, and then Ted, Jim and the rest of their group will use what they see fit. I do think that there are some learnings and there are learnings from Free People as well which has different... a slightly different structure and process. Roxanne Meyer - CIBC World Markets: Thank you very much. Glen T. Senk - Executive Vice President, and President, Anthropologie: Sure.

Our next question is from Margaret Mager of Goldman Sachs. Your question please. Margaret Mager - Goldman Sachs: Hi. I just wanted to ask about your comments on gross margin being below your plan and expectations. It was actually above what we were estimating, but can you talk about your view of IMU by brand as you look into 3Q and 4Q; and the thoughts around how gross margins might shake out over the balance of this year? I know you said one question, but Free People doing very well, could you describe the concepts on positioning merchandize-wise versus Urban Outfitters, because when I look at your catalogues they have a flavor that feels very similar, and I know it's women's only but any thoughts there would be helpful? Thanks. Glen T. Senk - Executive Vice President, and President, Anthropologie: Okay, Margaret, I will get back to you after the call on your second question, because I don't want to ignore but I want to kind of follow the rules. Margaret Mager - Goldman Sachs: Okay. Glen T. Senk - Executive Vice President, and President, Anthropologie: With respect to the first question, the bulk of the problem in the second quarter relative to our internal plan and expectation related to markdowns; and related to markdowns primarily taken at the Urban Outfitters North American division. There was certainly opportunity in IMU, there is certainly opportunity in occupancy, but I think the IMU is not... it was a very... each business had specific issues, in Anthropologie it was air freight; at Free People it was a lower than expected average unit retail on close out sales; on... and in URBN it was largely mix. I don't... personally, I'm still involved in the... quite a bit in the buying, I don't see any cost pressures from our suppliers either domestically or internationally, and I don't see any hurdles towards achieving our long term IMU objectives over the next several years. In fact I think that... I feel very, very confident that we will be able achieve them. The markdowns: We will at the URBN brand continue to take mark down until we get the assortment right. And I've said many, many times to many of you, that I luckily have worked for a man for thirteen years who always tells me to do what's right for the long term of the business and for the customer. So, we don't manage markdowns to a quarter, we manage our inventory to weak of supply number and if the product isn't selling the way we bought it, we mark it down and we mark it down in the quarter that we bought it. That's what happened in the second quarter, and as Ted and his team have continued issue in the third quarter they'll do the same. We certainly don't plan to do that. And I see no reason over a relatively short period of time, some time between 6 to maybe 15 months we can't get back to our historic low markdown rates. Margaret Mager - Goldman Sachs: Okay. Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: Okay. On the occupancy, again, I want to call out Dave Ziel's tremendous work, and I think we will get back to historical lows with probably within 24 months, but John can give you historic lows on occupancy... at least on depreciation, and John can give you more detail on a one-and-one on that. Margaret Mager - Goldman Sachs: Okay, thanks. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thanks.

Our next question is from Christine Chen of Needham. Your question please. Christine Chen - Needham & Company LLC: I would like to add my congratulations on the Anthro turn. Wanted to talk a little bit about the home business at both concepts; at URBN is it currently running positive, and at Anthro is the mix where you like to see it; I've noticed a lot of beauty products growing space in the stores? Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: Christine, the home business in both brands is positive. And I am really pleased at Anthropologie with the assortment. I think it is working well, the customers love it, getting a lot of critical acclaim, and I think it is doing exactly what we wanted to do in the stores. Ted, do you want to add anything? Okay.

Our next question is from Brian Tunick of JP Morgan. Your question please. Brian Tunick - JP Morgan: Yes, thanks. My question, I guess, is; you talked a little about the SKU increase at the Urban Outfitters' division in the second half; maybe just talk about how you guys view the risk reward having that increase; I mean what kind of guardrails do you have in place that we don't have to worry that we are going to have massive merchandize margin erosion situation in that business? Thanks very much. Glen T. Senk - Executive Vice President, and President, Anthropologie: Yes, Brian, if anything, I think it's the opposite. I think it can only be margin positive. And many of you have heard how we mange our business. We have exceptional ability to bucket our inventory by attribute. So, at any one time I can tell you what we are selling, what we own, and what we have on order 5% of neckline, novelty, fabric type, print, color, price point, delivery; and we manage our inventory the same way the portfolio managers manage their stocks. We look at the rate of return on every part of our inventory, and we can get very... we can go up, scale up and scale down on our views. And it's a very complex way to manage what is, admittedly, a complex assortment. But I think what Ted is really talking about is expanding the style choices; and the analogy for our portfolio managers would be diversifying a portfolio. So, I think the way to think about it in portfolio terms is that the portfolio is too narrowly assorted right now. We have to diversify the portfolio. And every experience that we've had in the... since the day Dick opened the first store, tells us that this is the way we make money, this is the way we achieve our historic highs and profits. We are in a collective business within a collective assortment. Brian Tunick - JP Morgan: So, you're hearing from your customers that the reason they're not buying right now is there is not enough choices in Urban Outfitters. Glen T. Senk - Executive Vice President, and President, Anthropologie: Brian, I'll call you, also after the call. I want to follow the second question enrolled. Brian Tunick - JP Morgan: Hey. Thanks. Good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: All right. Thank you.

Our next question is from Janet Kloppenburg of JJK Research. Your question please. Janet Kloppenburg - JJK Research: Good morning everyone. Congrats on a good quarter. My question is, given everything you've told us about air freight at Anthropologie and continued assortment issues at Urban Outfitters is should we be modeling an improvement in operating margin at the company in the third and fourth quarter? And in terms of modeling if John could just direct us on tax rate for the third and fourth quarter as well? Thank you. John E. Kyees - Chief Financial Officer: Yes. In terms of the operating margin going forward, obviously, no promises there but we didn't have the strongest operating margins in our history last year, so we do think there is opportunity. We think there is merchandize margin opportunity, and we think there is operating margin opportunity. In terms of tax rates we have been guiding you at 36, I would continue to model 36 even though this quarter came in a little bit better than that, and I would hope the next two quarters might as well, but I think modeling right now at 36 is the appropriate way to do it. Janet Kloppenburg - JJK Research: Thanks guys. Good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you.

Our next question is from Liz Dunn of Thomas Weisel. Your question please. Liz Dunn - Thomas Weisel: Hi. Let me add my congratulations on the turn at Anthropologie. I guess, we've heard a lot of different numbers, John, now you said 20% operating margin in the next several years, 6 to 15 months to get to the historic low markdown at URBN. I think I've heard 6 to 9 months before, URBN comping consistently positively rate, but then it also sounds like there is some ability to turn the business a little bit quicker because you can chase what categories you feel you're missing. So, I guess what I'm trying to get at is just some sense of how quickly URBN can turn and quickly we can get back to a 20% operating margin? Glen T. Senk - Executive Vice President, and President, Anthropologie: I mean, Liz, without... outstanding forecast because I really don't feel this way. If I had a crystal ball I probably wouldn't be sitting here, and that's the issue. I mean... when we talked about Anthropologie a year ago, when as it kind of hit its meter entering the second quarter, I think I felt fairly confident about our ability to turn the business within 6 to 9 months and that happened. I think that we all... I think we are very confident as to what we need to do at URBN. I think we have a newer staff at URBN. We had a pretty mature and tenured staff at Anthropologie when we went through this... the speed bump there. And I just don't... I just don't want to commit, I mean, I think that there are things that we can do in the short-term; and I know Ted feels wholeheartedly about this, that we believe we will impact... positively impact the business. But it's just too soon for us to tell you when there is going to be, what I would call a true turnaround which to me means sustainable, predictable, and historically profitable, at historic profit rates. And I think we... I have been saying 6 to 9 months, I think that's probably around the right timeframe, but I don't want to make that promise at this point. Ted, you want to add anything. Tedford G. Marlow - President, Urban Retail: Like it's all said. Glen T. Senk - Executive Vice President, and President, Anthropologie: Okay. I am sorry, I can't be more exact, but most important I have to tell you the truth. Liz Dunn - Thomas Weisel: Okay, and 20% operating margin is multi year? Glen T. Senk - Executive Vice President, and President, Anthropologie: Yes, 20% operating margin... I mean, that's in our objective for years, and since the day that I joined the company... and I was a lot younger and lot greener; you know I stood next to Dick since, literally, since probably the first week I joined the company. Dick has said, since the day we went public, sales of 20% or higher and earnings in excess of sales on an annual basis. We almost hit 20% a couple of years ago, just shy of it. And I think all of us sitting around this table, don't see any reason why we can't achieve that and hopefully exceed that in the future. And again, I can't give you a timeframe, a lot of it has to do with the turnaround of Urban Outfitters but all of the initiatives that we've been speaking about, for everything conveys tremendous success with reducing construction cost to Bob Ross, our Head of Productions to the tremendous improvement you've made in sourcing thus far, follow the improvement, we expect to make over the next several years. Calvin Hollinger and his team are giving the merchants, the stores folks, tremendous tools to better manage the inventory, to reduce the risk, to cut the lead times. I mean, every part of our business, all of the shared service areas, are focused on improving productivity efficiently and ultimately margin and return on investment. We are a smart group, and I feel very confident that we'll accomplish our objective. Liz Dunn - Thomas Weisel: Okay. Great. Thank you.

Our next question is from Lyn Walther of Wachovia. Your question please. Lyn Walther - Wachovia Securities: Thanks. A question for you guys on URBN. In the past you talked about the merchandize residing better on the Coast than in the middle of the country; is that still the case and what's the new plan in allocation systems, do you have the ability to merchandize these stores differently? Thanks. Tedford G. Marlow - President, Urban Retail: Yes, Lyn, this is Ted. And in regard to second quarter performance, our business on the East Coast, DC North was the strongest area for the quarter; the Southeast also treat us pretty well; Midwest improved in the second quarter as we had on our conference call, some conversation about more depth in some of our mainstream product, and I think that did help comp performance in the Midwest in the quarter. Our performance on the West Coast... in the North West was pretty good, Southern California was softer for us then had planned. As well the hot climbs of Arizona were less than planned. We do have a bit of comp bogey in Vegas, in that we opened the second store in the market. We knew that it would cannibalize the existing business there. So, it's really that comp does go into talking about business in the West. Our main concern right now is just getting the strength of business that we need out of southern California. And it's not to say that overall Southern California is weak for us. We do have stores that are performing very well for us in Southern California, but what we're used to in Southern California is all of our stores performing very well for us. Glen T. Senk - Executive Vice President, and President, Anthropologie: And Lyn we will get back to you after the call on the assortment planning question. Lyn Walther - Wachovia Securities: Okay. Thanks. Good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: Sure.

Our next question is from Holly Guthrie of Janney Montgomery Scott. Your question. Holly Guthrie - Janney Montgomery Scott: Thank you. I'm just wondering if you could give me some sort of estimate on when you feel like your style count will be at the level that you are looking at; I don't know what mix you are looking at to move away from the current look that you are looking for, but if you have an idea of when that might happen? Tedford G. Marlow - President, Urban Retail: Sure, Holly, it's Ted again. We have... in regard to this analysis that's going on, we've also put some new tools in the business in regard to managing the buy, giving us more visibility on style count and SKUs to backup style; that is in place and women's apparel and women's accessory business, and it is a tool that we are using in the buys that we're placing for the balance of the year. We still have the ability, obviously, to effect what is going on in fourth quarter. And the flows of product that we've got coming in to the month of October, November, and December; we will be managing accordingly. Holly Guthrie - Janney Montgomery Scott: Thank you.

Our next question is from Lauren Levitan with Cowen and Company. Your question please. Lauren Levitan - Cowen and Company: Thanks. Good morning everyone. Glen, I was hoping you could give us a little bit more thought on the 20% operating margin target; I fully understand that that's marked your target, and I understand some of drivers behind it. But should we assume there are any meaningful different targets embedded for Urban Outfitters versus Anthropologie; is there are reason to believe why one of those should, assuming they are both trending well on comp, that either one of those should have substantially higher or lower than that target margin; just looking to get some sense of mix of business in terms of private label versus branded and then mix across the different categories and what implications that might have for the contribution to the 20% target? Thanks very much. Glen T. Senk - Executive Vice President, and President, Anthropologie: Lauren, we've consistently said that we believe that Anthropologie can be slightly more profitable than Urban Outfitters, largely based on the significantly higher average unit retails at Anthropologie. It depends upon the years, and by the way when we say slightly more profitable, they're, both brands are very profitable and have the potential to be very profitable. So, I'm talking about a relatively small delta. Historically there have been years when URBN has been more profitable than Anthropologie, and there have been years when Anthropologie has been more profitable than URBN. Certainly for the first half of this year Anthropologie leads the way. But in terms of your modeling efforts, I think that both of the brands in the long-term should be accretive to our 20% objective. And we're always going to make investments in our business that will take away from that what Anthropologie and URBN do, which of course, we believe in the long-term will also likely be accretive. That answers your question? Lauren Levitan - Cowen and Company: It does. Thank you and good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thanks.

Our next question is from Liz Pierce of Roth Capital Partners. Your question. Elizabeth Pierce - Roth Capital Partners: Good morning. Congratulations Glen and Meg. Good job. And, Glen, can you give us an update on your replacement and as well as who is taking over for Jim; if you mention that, I didn't catch it. Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: Yes. Liz. We had a terrific response to the search for the Anthropologie President, Bill Cody and the internal Talent; these teams have just done a wonderful job. I think, I personally probably met with a least 35 people in the last several months, and we had several good candidates. And we are towards the tail-end of the process, and I'm hopeful that we can come to resolution on this in the relatively near future. The same is true with Jim's replacement; we had some internal candidates we have some external candidates. We are earlier in the stage on that, but I would think that we should be able to get that position filled within two to three months thanks to Wendy and Jim's stewardship we have a lot of stability underneath Jim, and I really don't have any concerns in terms of our ability to run the business in the short-term without Jim there. Elizabeth Pierce - Roth Capital Partners: Okay. Good luck you guys. Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you.

Our next question is from Margaret Whitfield of Stern Agee. Your question please. Margaret Whitfield - Stern Agee: Going back to your gross margins, and recognizing that there were issues in each of the three brands. I wondered if we can get some point of differentiation between the gross margins in URBN, Anthro, and Free People; with the idea, I guess, at Free People and Anthro, what pressures that will be short lived in nature? Glen T. Senk - Executive Vice President, and President, Anthropologie: Yes, Margaret, we... this is Glen and I'll ask John to elaborate. But historically most of you probably know we never talk about margin performances within the brands. I mean, what we did say in the call and what we certainly said is that the bulk of the issue relative... relative to the short fall against plans came from markdown that were taken at the Urban Outfitters North American retail brand. John, would you like to elaborate? John E. Kyees - Chief Financial Officer: I think the key, Margaret, is that Anthro has recovered its margins performance, not to its historic highs but certainly to pretty... to getting back to that level and URBN is the one that's running below, and soon as they get close to that historic high, we see dramatic improvement in margin coming. Margaret Whitfield - Stern Agee: Would you say the GAAP in Q2 would be the same as it's ever been between the two brands? John E. Kyees - Chief Financial Officer: No, I wouldn't necessarily say that. Margaret Whitfield - Stern Agee: Okay. Thanks again. Glen T. Senk - Executive Vice President, and President, Anthropologie: Sure.

Our next question is from R.J. Hottovy of Next Generation. Your question please. R.J. Hottovy - Next Generation: Good morning everyone. Just a quick question on the comment you made about normalizing the store opening schedule in future years. Just it looks like a lot of the store openings for this year kind of back loaded, and just wanted to see if there was anything behind that, if real estate developments are taking longer to get in place or just a little bit more color behind that. Glen T. Senk - Executive Vice President, and President, Anthropologie: No, again, that was a big, we are not happy about it. It puts an undue level of stress, particularly on the store operations team, individual team. I mean, it was a big focus with the real estate group in the middle and end of the last year. And I expect we will have dramatic improvements going into next year. We've invested into demographic programs, mapping programs; we've changed the method by which we review potential sites; we've changed our hurdles in terms of how many sites we feel we need to have in order to get down to our target rate; and we are in excellent shape for our calendar 2008. But you are absolutely right it's too back-end weighted this year and we are going to work hard to not repeat that performance. R.J. Hottovy - Next Generation: Okay. Thank you. And good luck, going into the third quarter. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you.

Our next question is from Samantha Panella of Raymond James. Your question please. Samantha Panella - Raymond James: Hey, thank you. I notice that you are opening the Free People store in Manhattan that's going to be much larger side store, I am just wondering how you feel about the size of the average; next if you are planning on the new stores being a larger box, given this success? Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: I'll ask Meg to answer that question. Meg Hayne - President, Free People Brand: Hi, this is Meg. We like to vary the store sizes. New York will probably be one of the largest stores that we open. We go anywhere from 800 square feet selling to 2,000 square feet selling. We feel that the smaller spaces are very efficient, and we like the boutique feel of them. Samantha Panella - Raymond James: Okay. Thank you.

Our next question is from Barbara Wyckoff from Buckingham Research. Your question please. Barbara Wyckoff - Buckingham Research: Ted, can you talk about the levels of markdown, selling versus last year and was there any impact over the later back-to-school in Florida and Texas in Urban Outfitters? Tedford G. Marlow - President, Urban Retail: Sure Barbara. Markdown selling for the season and the quarter has... I mean, we managed, to Glen's point earlier, our markdown for selling on a weeks of supply basis, just as we do our entire inventory. But in regard to contribution to comp, obviously, our markdowns were not where we wanted them as we came through this spring, but they were lower than they were last year. And as a result our markdown on a comp basis, our markdown sales were down considerably to last year just based on the content of this year to last year in markdown. In regard to early back-to-school selling, the main thing is... that's taking place really on the Texas and Florida market, really, is in Texas a shift on tax free shopping, which is occurred here in first... the end of July and the first part of August, but that's the main piece of the equation that's involved in those markets at this point. Barbara Wyckoff - Buckingham Research: Okay. Thanks.

Our next question is Robin Murchison of SunTrust. Your question please. Robin Murchison - SunTrust Robinson Humphrey: Thank you my questions has been asked and answered.

Our next question is from Jeff Black of Lehman Brothers. Your question please.

Hi, thanks, this Josh Goldman on for Jeff. I was just hoping you could discuss a little bit how much CapEx and incremental spending we could expect to see next year from initiatives you spoke to and including the new Terrain concept? And if you could quantify different inning try, can you quantify [ph] that? Thanks. John E. Kyees - Chief Financial Officer: Well CapEx this year, we've said in our K was going to be a $100 million to $120 million; next year that number probably will be relatively consistent to that maybe slightly higher because of Concept IV and additional new stores. So, we still feel comfortable that we will have pretty nice free cash flow going forward for the next several years and our CapEx will in no way inhibit that cash growth.

Our next question is from Jennifer Black of Jennifer Black & Associates. Your question please. Jennifer Black - Jennifer Black & Associates: Good morning and congratulations. I wondered if you could speak to your denim assortment. I noticed that they are more widely jeans at Anthropology, and more of an emphasis on skinny at Urban; and if you could just talk about skinny versus wide and high waist versus low waist? Glen T. Senk - Executive Vice President, and President, Anthropologie: Jennifer, as you know we don't speak to fashion on the calls, but I think that what you are talking about is exactly the point that Ted and I were trying to make that in a store the size of Anthropologie or URBN, they should have all of the above, and obviously the inventory investment should relate to the selling, but there's absolutely customer for skinny, there's absolutely a customer for high waist fit and there's absolutely a customer for wide leg. Jennifer Black - Jennifer Black & Associates: Okay. Thank you. Good luck. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you.

Our next question is from Crystal Kallik of D.A. Davidson. Your question please. Crystal Kallik - D.A. Davidson: Good morning. I was hoping, if you could talk a little bit and give us some more color on the marketing plans, circulation etcetera, for all three different brands, going into the second half? Glen T. Senk - Executive Vice President, and President, Anthropologie: I'll ask John to do that. John E. Kyees - Chief Financial Officer: Our projected catalogues for the third and fourth quarters: URBN would be up 41% in third quarter and up 14% in the fourth quarter; Anthropologie will be down 15% in the third quarter and up 12% in the fourth quarter; Free People will be up 25% in the third quarter and flat in fourth quarter. So, it takes us to a total company of up 4% in Q3 and up 11% in Q4. Crystal Kallik - D.A. Davidson: Thank you. John E. Kyees - Chief Financial Officer: Sure.

[Operator Instructions]. Our next question is from Dana Telsey of Telsey Advisory Group. Your question please. Dana Telsey - Telsey Advisory Group: Good morning everyone. Can you talk a little bit about the response to the catalogue at Urban Outfitters given the strength you've seen on the web from URBN, what do you think the difference is between the two, and also a little bit more color on the real estate strategy for each of the different businesses: Urban, Anthro, and the new Terrain concept; what are you seeing out there in the real estate market: lifestyle, versus mall, versus street? Thank you. Glen T. Senk - Executive Vice President, and President, Anthropologie: Dana, I'll ask Ted to address the question regarding URBN catalogue and I'll follow-up with a phone call to you on the other question. Ted, go ahead. Tedford G. Marlow - President, Urban Retail: Sure Dana. In regard to the... I guess, just for... to fragment, the first half on flat circulation, our catalogue business was up very high double-digit comp positive. As a result that John called out a little earlier, we've put a couple of additional books into the... to the back half of the year. We are trying a couple of new format and those will be coming out as we go through the end of August and into September. One of the things that we spoke about earlier in the call was the breadth of assortment. We've taken breadth of assortment up pretty dramatically in our web business in response to the success and strength of business in direct. And as well is that's providing some clues in regard to opportunity in retail. But we are feeling very bullish about our opportunities in the direct side, and as a result we are taking our circ up as we go into the back half of the year. Dana Telsey - Telsey Advisory Group: Thank you.

At this time, I'm showing no further questions. Glen T. Senk - Executive Vice President, and President, Anthropologie: Thank you everyone.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Good day.