This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Urban Outfitters, Inc. (URBN: chart) on March 6, 2008.

Management:

Chief Executive Officer, Director: Glen T. Senk
Chief Financial Officer: John E. Kyees
Chairman of the Board, President: Richard A. Hayne
President of Urban Brand, Worldwide: Tedford G. Marlow
President, Free People Brand: Meg Hayne

Key Investors Issues

- EPS were 32 cents a share compared to 21 cents a share last year.
- Net income was $53.6 million compared to $35.7 million a year ago.
- Net sales rose about 29% to $465.4 million.

Fourth Quarter Highlights

Total company sales increased by 29% to $465.4 million.

- Total company comparable store sales grew by 11%.
- Anthropologie and Free People achieved impressive double-digit comparable store sales increases of 18% and 19% respectively, and Urban Outfitters achieved a 6% comparable store sales, signaling an exciting recovery in the business.

- Direct-to-consumer sales surged by 39% with all three brands contributing meaningfully to the result. Free People wholesale revenues increased by an impressive 34%.
- Operating income grew by 66% to $80.3 million or 17.3% of sales, just below fourth quarter record in fiscal 2004 and better than the rate in the fourth quarter of fiscal 2006, when the company achieved an annual operating margin of 19% for the year.
- The company earned $53.6 million, a 50% increase from the prior year resulting in earnings per share of 32 cents.

New and non-comparable store sales accounted for $46.6 million of the sales growth, or 45% of total quarterly growth.

- The company opened 15 new stores - 8 Anthropologie stores, 2 Free People stores, and 5 Urban Outfitters stores, bringing the total new store count for the year to 38.
- The company’s comparable store performance was strongest in January and relatively similar in November and December. At Anthropologie, 84 out of the 87 stores were comparable store sales positive. All regions and store types experienced double-digit growth.

- At Urban Outfitters, comparable store performance was positive in all regions and strongest in the South and Northeast; by type, all venues performed equally well with the exception of lifestyle centers, which were positive but chased the group.
- The increase in comparable store sales was driven largely by transactions which increased by 10% in total, with gains of 11%, 14% and 9% at Anthropologie, Free People and Urban Outfitters respectively.

- The company’s average transaction value was up 2%, up 6% at Anthropologie, up 5% at Free People, and down 3% at Urban Outfitters. Similarly, the company’s average unit selling price increased 2% in total, up 6% at Anthropologie, up 8% at Free People, and down 2% at Urban Outfitters.
- At Anthropologie and Free People, all major merchandise divisions were double-digit comparable store sales positive. At Urban Outfitters, all merchandise divisions were at least single-digit comparable store sales positive for the first time since fall 2005.

The company has hired 32 new team members, 14 in Design and 18 in Buying.

- The team increased the retail style count by 20% from the second quarter to the fourth quarter while keeping the SKU count flat, resulting in a more balanced, less duplicative assortment.
- The company is managing the business, including receipt flow, on a tighter calendar, resulting in fresher inventory flow.
- The company is managing markdowns more effectively, resulting in a better sell through, a higher penetration of regular price sales, and an average January-ending per-store markdown inventory that is 44% lower than the prior year.

- The company has started to use design concepts to synchronize the design and buying process, resulting in a more cohesive, balanced and compelling assortment.
- The company has increased the penetration of own brand product from 15% in the third quarter to 18% in the fourth quarter, and positioned 30% of the first quarter’s women’s buy into own brand product; equally important, own brand product is selling through at a faster rate and at better margins when compared to the women’s assortment in total.

Direct sales increased by 39% to $72.9 million, driven by a circulation increase of just 19%.

- The penetration of direct sales to total company sales increased yet again to 15.7% from 14.6% a year ago.
- The websites in all of brands continue to gain traction. Site visits were up 36% to nearly 16 million visits. That is a gain of 4 million visits over the same period last year.
- Free People wholesale continued its tremendous sales momentum, increasing quarterly sales by 34%. The increase was driven purely by an increase in units, with specialty stores growing slightly faster than department stores.

Total company gross margin increased 287 basis points to 39.6%.

- This performance, while nicely favorable to last year, was below plan, driven largely by markdowns taken at the Urban Outfitters brand to clear seasonal product.
- Urban stores ended the quarter with an average of 44% less clearance inventory than a year ago and higher penetration of regular price selling.
- Total company comparable inventory was down 3% at the quarter’s end, with an 8% increase at Anthropologie and a 14% reduction at Urban Outfitters. As is custom, the company plans and manages inventory to weeks-of-supply as opposed to a set percent.
- Store occupancy leveraged 67 basis points with contributions across all brands.