Good day, ladies and gentlemen, and welcome to the UrbanOutfitters third quarter fiscal 2008 earnings call. (Operator Instructions) Thefollowing discussions may include forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. Please note thatactual financial results for the company for the period being discussed maydiffer materially from the financial results projected or implied in theforward-looking statements. Additional information concerning factors thatcould cause actual financial results to differ materially from projectedresults is contained in the company’s annual report on Form 10-K and in otherdocuments filed by the company with the Securities and Exchange Commission. The company disclaims any intent or obligation to updateforward-looking statements. No recording or rebroadcast of this call ispermitted without the company’s express written permission. I would now like to introduce your host for today’sconference, Mr. Glen Senk, CEO. Sir, you may begin.

Thank you and good morning. Welcome to the Urban Outfittersquarterly conference call. Earlier today, the company issued a press releaseoutlining the financial and operating results for the three and nine monthsending October 31, 2007. I will start the call by reading prepared commentsregarding our performance and then the URBN executive team and I will be pleasedto answer any questions you may have. Joining me today from the URBN team are: Dick Hayne, ourChairman; John Kyees, our Chief Financial Officer; Ted Marlow, President of theUrban Outfitters Brand; Meg Hayne, President of the Free People Brand; and oursenior executive staff. The text of today’s conference call can be found at ourcorporate website, www.urbanoutfittersinc.com. There was much to be pleased with in our third quarterperformance. The company achieved a quarterly sales record, increasing totalrevenues by 23% to $379.3 million. Total company comparable stores grew by 8%.Anthropologie and Free People achieved impressive comparable store sales gainsof 17% and 16% respectively, and Urban Outfitters has turned positive. The company’s new and non-comparable store sales generated$34.8 million in sales, a performance nicely favorable to plan. The company’s direct channel grew 30% to $46.8 million. FreePeople's wholesale revenue grew 34% to $26.8 million. The company’s grossmargin grew 128 basis points to 39.5%, reflecting improvements in markdowns andstore occupancy expense. The company earned a record $45.4 million, a 31% increaseover the prior year resulting in earnings per diluted share of $0.27. Finally, the company completed a number of importantinitiatives, several of which I will highlight today. I’ll now go into more detail on each of the metrics of ourbusiness, starting with sales. For the second quarter in a row, all merchandisedivisions were double-digit comp positive at the Anthropologie retail business,with women’s and intimate apparel leading the trend. In the Free People retail business, the core of thebusiness, women’s…

(Operator Instructions) Our first question comes from Betty Chen ofWedbush Morgan Securities.

Thank you. Good morning and again, congratulations on theimprovements in Q3. I was wondering if you can talk a little bit more -- I knowthat I think -- every since Jim had joined the Urban division, he has beenevaluating the holiday merchandise and offering. I was wondering if you canmaybe speak a little bit more about how much he was able to influence that coreset and also how do you feel about the level of markdown inventories headinginto Q4? And then lastly, if you can, related to that, talk about anyearly leads from the new, more aggressive initial markdown strategy for yourclearance inventory? Thanks.

I’ll make a run at the question regarding Jim’s joining ourbusiness. He’s come in and made great headway in essentially less than a 90-dayperiod. We were able to affect product assortment and our planning process forthe fourth quarter. We’ve broadened our style offer by about 20%. We are in theprocess of taking in those receipts now. As a matter of fact, the end ofOctober we had pretty heavy receipts right at the end of the month. And we willcontinue to see receipts flowing in line with that thought process as we gointo fourth quarter, into the middle of the holiday selling period. By increasing the style count by 20%, the one thing I wouldremind is that our intention there is to not get ourselves in anover-assortment situation as our SKU offer remains flat with where we havepreviously been. We are simply broadening the appeal of our offer and I thinkhe has made great headway in that regard.

Our next question comes from Jeff Black of Lehman Brothers.

Thanks. Let me add my congratulations. We just aren’t seeingmany quarters like the one you just put up. On the SG&A side, I guess forGlen or John, why did we see so little leverage there? You talked aboutcontrolling store expenses, but what really offset that? And looking ahead,what kind of expectations for SG&A leverage are baked into the rest of theyear? Thanks.

The real issue I think with SG&A is that while wethought that last quarter was the [inaudible], we wouldn’t see that increase inthe next quarter. Apparently last year, our [ADR] expenses in the quarterbecause we moved in halfway through the quarter, weren’t as substantial as theywere this year. So I think that we are probably -- we have annualized that nowand I would expect fourth quarter to see SG&A grow somewhere between 20%and 21% instead of 22.5 like we just grew.

Great. Thanks. Good luck.

Our next question comes from Neely Tammingaof Piper Jaffray.

Good morning, you guys. Keep up the good work. A questionfor you, Glen, as you are looking into next year from a sourcing perspective, Imean, clearly across the board we are hearing about pricing going up in China.I would imagine your opportunity for more significant full price selling,particularly on the Urban division, would well offset any sort of pricingincreases, but I would love your perspective as to how we can be thinking aboutthat and China and just raw material costs in general going up.

Neely, first of all, we are quite diversified in terms ofour sourcing. In fact, I would expect the percentage of Chinese product toprobably reduce somewhat relative to the total. But having said that, we arereally not seeing any pressure in first cost pricing for the spring product.

Great. Thank you. Good luck.

Our next question comes from Brian Tunick of J.P. Morgan.

Thanks. Good morning. I was hoping we could talk a littlemore about some of the categories inside the Urban Outfitters division, maybewhat is still dragging down the comp there and what are some of theopportunities you think in the near-term. Thanks very much.

We don’t give a lot of color on that but I will tell youthat as our business has struggled here over the last number of months, wereally haven’t had the balance and the mix of the women’s business that reallyworks on our profit model. We have seen improvement in our cut and sew knit topbusiness, which is a very important category for us, and that, coupled withother categories that have been trending well gives us some room for optimismas we head into the fourth quarter. The women’s accessory business has improved nicely secondquarter to third. The home and men’s business are running positive.

Our next question comes from Michelle Clark from MorganStanley.

Good morning. You spoke about merchandise margins on aconsolidated basis. Can you tell us some more color by division whether theytrended up or down year over year by division? Thank you.

I’ll let John handle that, Michelle.

Urban was down, as we all expected it might be. It had avery strong margin a year ago, over 40, and this year was not as strong, butUrban continued to improve. Each quarter, margins have improved. Last quarterby another couple hundred basis points, so Urban is definitely trending in theright direction. Anthropologie had a very strong margin, as did Free People forthe quarter.

Thank you.

Our next question comes from Gabrielle Kivitzof Deutsche Bank.

Good morning and congratulations to all of you on verystrong performance in Anthropologie and great progress at Urban Outfitters. Aquestion for Glen; you obviously have a whole lot of new initiatives in thepipeline, in addition to an entirely new concept with Terrain. I think you’vealso talked about possibly going into, under the Anthropologie umbrella, a newcategory in stores and another selective, smaller line, I guess, that possiblycould eve wholesale. I guess my question is, I’m expecting that we’ll continue tosee a full pipeline of some of these new opportunities. When you are evaluatingand launching new business opportunities, how are you thinking about themagnitude of the up-front investment for new initiatives? What’s your testingphilosophy and do you have any sort of financial metric criteria for newbusiness opportunities? You don’t have to share specifically what those are,but just generally talk about how you are thinking about these new things. Glen,I know you’re a numbers guy, so I was hoping you could just talk about how yousee these new opportunities fitting into the financial picture, whether it’sfrom a margin or a returns standpoint, beyond them just being incrementalrevenue drivers. Thanks.

We certainly are very, very cognizant of the financialimpact, or try to be very cognizant of the financial impact of every newinitiative. We do quite a bit of analysis relative to market size, competitivedata, margins. Every new initiative that we launch has a pro forma that wemeasure against, a timeline that we measure against. Obviously we would expecta business like Terrain to have a very different type of economic model than wewould a shoe business, for example, which we intend to launch at Anthropologienext year. So there are multiple models but we would expect in the longterm, all of these new businesses to be neutral or accretive to the totalcompany ROS and ROI objectives.

Okay. Thanks, Glen. Good luck.

Our next question comes from Lauren Levitanof SG Cowen & Company. Lauren Levitan- SG Cowen & Company: Thanks. Good morning. You’ve managed your inventories prettyleanly over the last couple of quarters. I’m wondering if you could give us asense of how you’ll be managing those going forward, particularly for thefourth quarter and particularly as Urban Outfitters turns to positive comps? Howare you managing -- or as you plan for them to, how are you managing thoseinventories? What should we look at by division? Thanks very much.

Our methodology is pretty consistent across all of ourbusinesses. We manage to weeks of supply, so I think very often people ask ushow we plan inventory in terms of percentage over last year. That’s not reallyhow we do it. We try to trend our inventory relative to our business. So when we look at our current inventory, for example, itrelates nicely to the sales increase that we just finished up Q3 with. And thisis something that we look at on a week-by-week-by-week basis and we areconstantly either opening up inventory or diverting inventory away from certaincategories or businesses based on the trends. Having said that, I do think there is an opportunity for usto reduce our weeks on hand moderately over the next several years. That willbe a focus of mine over the next couple of years. Lauren Levitan- SG Cowen & Company: But can you remind us of where the quarter ended in terms oftotal inventories by business?

John, I’ll hand that over to you.

I’ll deal with that. Urban was up 7% on a comp basis, and Iwant you to understand that that was because of early November deliveries,timing of the November inventories. Planned inventories that are [at the endof] are up one. Without those early November deliveries, they would have alsobeen up one at the end the quarter. Anthropologie was up 5, and so the company would have beenup 3 had we not had the timing of the deliveries. So I am really verycomfortable with those inventory levels. I think both brands are on target ininventory.

Again, back to the weeks of supply, Lauren, it’s importantto remember that Urban’s inventory was down comp 15 last year, so they were upseven against a down 15. Lauren Levitan- SG Cowen & Company: And when you say that you are happy with the overall levels,does that mean at the divisional levels also they are running consistent withthe weeks of supply that you would like to have?

Yes. Lauren Levitan- SG Cowen & Company: Great. Thank you very much and good luck for holiday.

Our next question comes from Janet Kloppenburgof JJK Research.

Good morning and congratulations. Ted, I had a questionabout the levergability of the business for the fourth quarter. I believe thatoperating profits may not have improved in the quarter, the third quarter.Perhaps they were down versus last year, and I’m wondering if we see compsaccelerate here, if there would be any obstacles in the way of operating profitincreasing versus fourth quarter last year. In other words, are there some heavy residual markdowns thatwere carried into the fourth quarter that may prevent a positive comp fromdelivering a growth in the operating income line for the brand in the fourthquarter? Thank you.

Janet, John’s got history related to the quarter. I’m goingto let him make a run at that. I can give you some color on that for third, butI don’t have fourth quarter in front of me.

All right, I’ll take the third.

Well, for third quarter, the business on an expense basis,the direct store controllable expenses, I think we did a pretty good jobmanaging that in line with what was going on in sales. I think we have someopportunity that we are not necessarily going to see on a quarterly basis infourth quarter related to occupancy, but if we keep our direct storecontrollable where it needs to be in the quarter and we pick up momentum insales, that would lead me to believe that there is opportunity. Related to LY, I’m not 100% sure. John, do you want to --

Thank you, Ted.

Urban has had solid operating profit improvements everyquarter this year, although obviously it started kind of challenging in thefirst quarter. The third quarter was better than any of the other two quartersand very consistent with what we ran actually in the fourth quarter of lastyear. I would think that Urban has an upside opportunity against the last yearoperating profit in the fourth quarter.

It was the gross margin that was down in the third quarter,John, then, not the operating profit?

No, actually the gross profit was up in the third quarteragainst the second quarter, not against last year. You are correct. Againstlast year, they were down.

And what about in the fourth quarter? Is there anopportunity for the gross profit and the operating income of the brand toimprove? And what kind of --

Let me try and answer the question; the problem was largelya markdown problem. Ted and his group did a terrific job controlling theexpenses, and that’s the first answer, [or part of the answer]. The second partof the answer is we do not hold markdowns. We take markdowns when we need totake them, so to the extent that we needed to take markdowns on currentinventory, we went into the quarter, into the fourth quarter with thoseproducts marked down. So if -- and it’s a big if -- every item that came in fromtoday through the end of the quarter sold through at regular price, we would bebrilliantly profitable. I think we are still in a transition mode here. Jim, asTed said, has been on the job for 90 days. He and his group are still learning.I do not expect to go from slightly positive to significantly positive overnight. It’s a very iterative process and it’s going to take time. Hopefully the fourth quarter can be as good, possibly betterthan the third quarter was but we are not going to know until we are into itfor a fair degree.

Okay. Many thanks and good luck for this all to turn. Thankyou.

Our next question comes from Lyn Walther of Wachovia.

Just following up on that, your comment there, you mentionedseeing some improvement at Urban. In the past, you talked about six to ninemonths out. We’re kind of closing in on that. Do you still think we should seesome meaningful improvement at Urban by spring? Or how long will it take untilyou are really comfortable with the assortment? Thanks.

Lyn, as I said, it’s a very iterative process. The buyer mayhave a hunch. He or she will adjust the assortment 10%, 15%. They wait untilthe product is delivered. They wait until the customer reacts to it and thenthey react to the customer reaction. So it’s a multi-month process. I think you can see in the business that we’ve made someprogress between Q2 and Q3. I hope that we’ll continue to make progress intoQ4, but I still stand by what I said on the last conference call, that this isa minimum of six to nine months process. And I really don’t expect to seesubstantive change until then and substantive change meaning sustainable comp,positive sales and historical profit levels.

Thanks. Good luck.

Our next question comes from Adrienne Tennantof Friedman, Billings.

Good morning, everyone and congratulations on a strong quarter. My question isabout the difference between the direct business at Urban Outfitters and theretail business, and if you can give us some historical perspective on -- itseems like the catalogs seem to have that point of view much clearer. It’seasier to get that across, so historical perspective on how long it takes toget that perspective that we’re starting to see in the catalogs and totranslate it into the store level? Thank you.

I think the interesting thing is I remember sitting herewhat, a year-and-a-half ago talking about the very same fact at Anthropologie.And I know both Ted and I have talked about this in prior conference calls --it’s just easier to use, manipulate the website so that it can reflect the bestpart of the assortment and you can minimize the worst part of the assortment.In the retail store, you own what you own and you need to show it, and that’sreally the difference. So if you go to the website or you look at our catalogs,it’s the most current thinking, it’s the best foot forward. And in the retailstores, what’s on the floor is reflective of the total content. And that’sreally the difference.

So is there a time period -- is it two months, three months, from thetranslation of that into the store level?

I would answer the same way I answered the last question;it’s a very iterative process and I think it is going to take six to ninemonths to get this ship turned.

Fair enough. One last, just on the same topic --

I’ll get back to you after the call.

Okay. Thanks.

Our next question comes from Margaret Magerof Goldman Sachs.

Congrats on an exceptional or standout results this quarter.My question is on your comment about your new stores running above your plans.Can you talk about why that’s the case and what you’ve changed in your realestate selection process that’s leading to that? How much above plan are they?Some color around that would be helpful.

The really rewarding thing, I was just looking at the datathe other day, and the sales productivity in our new stores virtually match thesales productivity in our comp stores in all three of our brands, and I wasreally, really thrilled to see that. And I think that’s a result of a couple ofthings. Number one, I think we have a much more in-depth real estateselection process. We are using demographic analyses. We’re just using a morerigorous approach. Number two, I think we are designing the stores better, soall in all, the stores are just more productive and more profitable early onthan the classes from several years back. This has been something that we’vebeen very focused on the last several years and I’m pleased to report thatresult. I can’t really comment on the amount over plan that thestores are, but I think I said in my prepared comments, they are nicely aboveplan.

Okay, thanks and all the best going forward.

Our next question comes from Kimberly Greenbergerof Citigroup.

Thank you. It’s nice to see some good numbers out there,certainly in contrast to the rest of retail. Glen or Ted, I was hoping youcould just talk us through to the extent that you are not revealing competitivesecrets, how do you think we could monitor the progress in the Urban Outfittersassortments, just as we’re looking at stores? What are the kind of guidepostswe should be looking at that would indicate that the assortment is movingnicely in the direction that you want? And Glen, the six to nine months, is that the number you puton the Urban turn in August? Is that correct?

That’s the number that I put on in the last call, yes,that’s correct. And in terms of your first question, it’s the same thing I sayto everyone when I walk the store; come and visit our stores regularly, lookfor turn in product. I think if you had visited the Urban store over the lastcouple of weeks, you’d see things in key spots and if you came back two orthree days later, those things wouldn’t be there. That means they are sellingout. Conversely, if you see things there and they migrate to theback of the store on markdown, that means they are not selling. True to ourcompany history, when things don’t sell, we take them quickly and they go tothe back of the store and we do not manage markdowns for profit on markdowns;we manage markdowns to get the product off the selling floor and out of theopen to buy so that we can convert to more productive real estate andinventory. So without giving away competitive secrets, I’d just say goin the store and observe.

Great. Good luck here at holiday.

Our next question comes from Richard Jaffeof Stifel Nicolaus.

Thanks very much. A question about an early comment, whichwas an increase in the style count at Urban. If you would clarify that in termsof style count or number of customer choices and compare that to inventory on aper square foot, should we assume that inventories will be flat but there willbe more SKUs and less depth per style? Or just different kinds of styles butthe same kinds of assortments in terms of units? Any clarification would beuseful. Thank you.

Over the next six months, I think Ted and his group probablyexpect to cut the SKU count, the total SKU count slightly, but they’ll achievethat by increasing the style count and increasing the SKU count within styles.So basically, less color and print choices within a give style, but morestyles. As I said earlier, my mid-term goal over the next couple ofyears is really to get the weeks of supply total inventory lower than it isright now in both of our major brands.

Thanks for the clarification.

Our next question comes from Holly Guthrie of JanneyMontgomery Scott.

Thank you. I was wondering about SG&A. Last year youguys did a really good job of controlling it in the fourth quarter. I thinkthat was basically just controlling the store payroll. Can you just talk alittle bit about your expectation for SG&A in the fourth quarter this year?

Holly, I would still expect SG&A to grow, depending oncomps, to grow 20% to 21% year to year. If the comps happen to be some big, bignumber, then that could change because there are some variable components ofSG&A. But in general, I think the 20% to 21% growth is reasonable.

Thank you.

Our next question comes from Harvey Hottovy of NextGeneration.

Good morning, everyone. Just a quick follow-up question onthe 20% reduction in store construction costs, just what kind of opportunityyou might see to even advance that further in the coming year?

I think that we do have opportunity. It is not nearly thatlevel of magnitude, but we do have opportunity in the next year and probablythe next several years beyond.

Any kind of clarity in terms of magnitude on that?

I don’t really want to quantify it at this point. I think aswe work on our stores next year, we’ll be able to give more color probablywithin two conference calls.

Thank you.

Our next question comes from Roxanne Meyerof CIBC.

Good afternoon, and let me add my congratulations. Myquestion is on Free People. Free People has been firing on all cylinders, bothin wholesale and in retail, and it just seems like the opportunity there couldbe much bigger. I just wanted to get an update on your thinking regarding howbig the wholesale business could be, how many stores Free People can reallyhave, whether you are going to maybe accelerate openings next year, and anyother product extensions or growth initiatives you may have for Free People.Thank you.

Thank you. We are so thrilled with the progress that FreePeople has made. I think I’ll repeat this, just for those of you who may nothave heard it; we won vendor of the year at Nordstrom last year. I was actuallyin Seattle on Monday to meet with them. As I mentioned in my prepared comments,I believe we are their most profitable resource on the contemporary floor. Ibelieve that’s true at Bloomingdales as well. We do not intend to add any major doors at this point, sothe bulk of our department store distribution is at Bloomingdales, Nordstrom’s,Macy’s West, and a spattering of other doors. We also have a very, very healthyspecialty store business which we expect to continue to grow. Ideally, we’dlike to grow both equally. So we will continue to grow our wholesale business. I thinkthe rate at which it grows will slow over time but we’ll continue to grow itthrough the collection, through several other initiatives. We’ve spoken aboutthe intimate apparel launch. We tested it this year. It was very, verysuccessful. We’ll deliver it 12 times next year and I think that could be avery meaningful business for us. On the last call, I spoke about a line that we have name Wethe Free. This is a fairly extensive contemporary, knit-based line that’slaunching at Nordstrom, Bloomingdales, and select other specialty accounts.That will be in a test phase next year and provided that’s successful, thatwould roll out in 2010 -- or 2009, excuse me. With regard to the retail stores, I expect we’ll open 12 to15 stores next year. Those of you who have been following us for several yearsremember when we used to say there could be maybe 35 Anthros and 50 UrbanOutfitters, so you know that that’s been a very iterative process over time. I think right now, we are saying there could be at least 100Free People stores, but based on the success that we’ve had on both coasts, ina multitude of venues, I think that number is probably much, much larger. So weare very, very excited about the prospects at Free People, particularly givenproductivity in excess of $1,000 a foot.

Our next question comes from Elizabeth Pierceof Roth Capital Partners.

Good morning. I guess it doesn’t hurt to add anothercongratulations. I was just wondering if John, perhaps or Glen, I don’t knowwhich one wants to answer this, what you are seeing on the Reno DC. I think youmentioned second quarter you’d seen improved productivity. But particularly aswe’re heading into the holiday season, what kind of contribution do you thinkwe can see from that? Thanks.

The Reno DC is functioning really well. We are very excitedabout it. Previously our third party out there, the best they had done was like120,000 units a day. This week, they’ll process average 120,000 units a day, andyesterday actually hit 200,000. So the building is functioning really well. Ithink it’s going to reduce costs. We’re still early in the process, still hadthe start-up part of the operation but I’m very excited about the speed and theefficiency that they are developing out there.

Great. Thank you.

Our next question comes from Marni Shapiroof The Retail Tracker.

Congratulations. Back to Urban Outfitters for just one morefollow-up here on the style question, I do see as you walk through the stores,it seems to me the sell-out items, for example, they seem to be smaller,tighter buys of those items. Sort of a buy it or miss it kind of feel aboutthat, and a couple more obscure brands. And that seems to be better balancedwith bigger investments in more core items, whether it’s knits or denim cords. Is this the intention, and will we start to see -- continueto see this going forward? Is that what you were talking about with the styles? And then on the same conversation, as you gain moreconfidence with the fashion at Urban, will those small, tight buys in theseitems that are selling out start to gain a little bit more meat in the stores?

I don’t think Ted or I could have said it better, so that’s-- what you are observing is exactly what we are trying to do. We love sellingout of product. It creates a regular price business. It creates a frenzy in thestores and that’s kind of always been how we run our businesses. So what you are seeing is exactly what we are trying toaccomplish, and yes, you’ll see more of it.

Thanks, guys.

Our next question comes from Michelle Tan of UBS.

Congratulations, everyone. Most of my questions have beenasked already. I just had a couple of little things. One of them was I wascurious what your perspective was on why there might have been a morepronounced regional difference at the Urban Outfitters division.

We’re just -- John is kind of whispering the -- San Diego,the fires in San Diego I think definitely hurt Urban more than they hurtAnthropologie. And the difference is, I forget exactly how I -- what adjectiveI used but they were fairly insignificant, particularly if you take some of theout-layers out of the group clusters.

Okay, perfect. And then also, just a question on the taxrate going forward. Obviously you’ve been outside of --

Michelle, I’ll ask John to call you back after the call.

Okay, no problem.

Our next question comes from Crystal Kallikof D.A. Davidson.

Good morning, everyone. Once again, congratulations. I guessthis is probably a question, a combination for Ted and Glen; with UrbanOutfitters and the progress you are making, and certainly the change in themerchants, et cetera, how will back-to-school be different next year versus howyou executed this year?

That requires a bit of clairvoyance. Number one, it ties toour approach on product assortment right now. I think that we definitely willbe further down the road in regard to breadth of assortment regarding customertype that we serve with our business. I would think off the top of my head,that will be the most pronounced difference. Aesthetically and how they room is going to look and how ourmarketing is going to look, we are still working on pre-holiday so we reallyhaven’t gotten that far down the road. We are just wrapping up stuff related tothis year at this point.

Great. Thank you.

Our next question comes from Margaret Whitfield of Sterne,Agee, I believe. Margaret Whitfield -Sterne, Agee & Leach: Good morning and congratulations. A question oninternational, if you could give us an update. I take it Urban Europe struggleda bit, although it was certainly strong earlier, and I wondered if there’s anysense of a fashion change coming in Europe. Also, if you could elaborate onyour plans for Anthropologie outside this country.

Just in regard to the Urban piece of the question, the compsin Europe, in particular in the U.K.,did soften for us in the quarter. They were, however, going up against mid-20%comps LY. So in regard to the performance of the business, the business wasstill in a very good place in regard to bottom line profitability to plan. Butthey did struggle on the top line in the quarter.

We are thinking about opening the first Anthropologie storein Europe in 2010. Infact, the real estate group is leaving to do their initial exploration nextweek. Margaret Whitfield -Sterne, Agee & Leach: Any sense of fashion direction change coming out of Europe?

Why don’t we -- we’ll call you back on that. Thank you. Margaret Whitfield -Sterne, Agee & Leach: Okay, good.

Our next question comes from Samantha Panellaof Raymond James.

Good morning, and I’m sure you guys don’t mind hearinganother congratulations. Just going back to SG&A in the quarter, Iunderstand that with Navy Yard, that the anniversarying of that is in thefourth quarter, but was there anything else unusual? I believe that you filed alawsuit against Forever 21 inthe quarter. Anything else in SG&A?

No, nothing unusual.

Okay. Thank you.

(Operator Instructions) Our next question comes from Marc Bettinger of Stanford Group.

Marc, I think I’ll ask John to call you after the call. Wedo not monitor traffic in our stores, although as I said in my preparedcomments, when -- my anecdotal sense is it is quite good because we’ve gottenterrific sell-throughs on product in the last couple of months, you know, 20%and 30% sell-throughs, which tells me people are just waiting for a productthat appeals to them to hit the stores. But we do not have traffic counters, soI can’t give you specifics on that.

Marc, we do know that transactions were up 4% at Urban forthe quarter.

I’m sorry, John, what was that?

Transactions were up 4%.

Okay. All right. Thank you.

Our next question comes from Christine Chenof Needham & Company. Christine Chen- Needham & Company: Thank you. Congratulations on a greatquarter. I wanted to see if you could expand on some details on the potentialfor Anthropologie's wholesale business, if you could share that with us, Glen.

We are launching a brand next yearcalled [Leaves Dotter]. We have presold it at this point to roughly 40 doors.It will -- we’ll be able to give more color on it probably in the nextconference call after the market, but it will sit along lines like Tracy Reiss,Tibi, Nanette Lepore, and it will be sold in a limited number of doors outsideof our own and roughly half of our own doors. Christine Chen- Needham & Company: Great. Thank you and good luck for the holidays.

Our next question comes from Barbara Wyckoff of BuckinghamResearch.

Good morning, everyone. Good job. I just have a question forMeg; are you seeing different sell-throughs in your own stores versus thedepartment stores and the specialty stores? And what are you doing to managethe momentum in Free People?

No, we’re not seeing a difference in selling in categories.The same categories are strong both at retail and at wholesale. And in terms ofthe momentum, the momentum is high. We have a lot of energy. There’s a lot ofenthusiasm for the success of the brand, so we are very happy and optimisticabout the holiday season.

Thank you.

Our next question comes from Liz Dunnof Thomas Weisel.

Thank you and let me add my congratulations. I wanted to geta sense of your SG&A opportunity over time. I mean, do you expect tocontinue to grow SG&A at a 20% to 21% rate? It seems a little high relativeto your square footage growth, and what does that imply about leverage? Thanks.

That’s a good question. We would hope to bring that down atsome point in the future, but right now that’s where it’s running and we arecomfortable with that. Remember, we’ve been building infrastructure and we’llcontinue to do that.

We have always planned our business around low single digitcomp and we’ve always expected to leverage with low single digit comps. Andgenerally speaking, we have.

Okay, thanks.

Our next question comes from Randy Konikof Bear Stearns.

A quick question for Glen; Glen, your new broader role asCEO, could you just talk a little bit about what your focus is on to get more,even more sustainability and consistency in the overall business and thenacross the two brands? Thanks -- particularly at the home office. Thanks.

Well, Randy, it’s three brands, plus Terrain, and they areall certainly important to the company. I guess my number one priority, Randy,is people -- to make sure that we have the right people in the right place,that we have the right structures in all of our businesses and that people arebeing developed and trained properly and motivated properly. So as CEO, peopleis my absolute number one priority. I certainly work with each of the brand leads and the shareservice leads on strategy. We are just about finished with our next majorstrategic plan, which has been a very, very exciting and motivating process. I don’t see myself as the chief merchant in any one brand.If anyone wants my opinion, I’m there to give it but that’s not what my roleis. It’s more strategic and more people-oriented.

Thank you.

Our final question comes from Robin Murchisonof SunTrust Robinson.

Okay, any update on the executive search? And is 34% closerto where we ought to be using the tax rate next year? Thanks very much.

The executive search continues. I have seen many people.There continues to be a high degree of interest in the job. We do have somegood candidates but we haven’t found the candidate yet and we’ll continue topursue this until we do. In terms of the tax rate, John.

Even though it’s your second question, Robin, we’re going tolet you because we’d like to answer this once rather than 30 times today, soit’s a great question. The real answer is that the tax rate this year is 34%.We would expect you to probably model 35% to 36%. Not that we couldn’t get to34%, but so many issues come up in taxes in terms of states and changes thereand a variety of other things. We’d rather not someday miss an earnings numberbecause the tax rate was planned too conservatively.

The end. Thanks.

I’m not showing any further questions at this time. Wouldyou like to continue with any closing remarks?

No. Thank you so much, everyone.

Thank you. Ladies and gentlemen, thank you for participatingin today’s conference. This concludes the program. You may all disconnect.Everyone have a great day.