Good day, ladies and gentlemen, and welcome to the Urban Outfitters Incorporated third quarter fiscal 2011 earnings call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer section and instructions will follow at that time. (Operator Instructions) The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company’s filings with the Securities and Exchange Commission. I would now like to introduce your host for today’s conference, Mr. Glen Senk, CEO. Sir, you may begin.

Good afternoon and welcome to the URBN quarterly conference call. With me today is Eric Artz, Chief Financial Officer, Oona McCullough, Director of Investor Relations and the majority of our Executive Management team. Earlier this afternoon the Company issued a press release outlining the financial and operating results for the three and nine-month periods ending October 31, 2010 and we were pleased to report 13% revenue and 17% earnings growth for the quarter. Eric will begin today’s call by providing details on our performance. I will continue the prepared commentary with closing remarks; then the group and I will be pleased to answer any questions you may have. As usual, the text of today’s conference call along with detailed management commentary will be posted to our corporate website at www.urbanoutfittersinc.com. I’ll now turn the call over to Eric.

Thank you, Glen. The following summarizes our Third Quarter Fiscal 2011 performance versus the comparable quarter last year: Net sales increased 13% to $574 million. Income from operations grew 9% to $105 million, resulting in an operating margin of 18.3%. Net income increased 17% to $73 million or $0.43 per diluted share. Comparable Retail Segment sales, which include our Direct-to-consumer channel, rose 6% with increases of 5%, 29% and 5% at Anthropologie, Free People and Urban Outfitters respectively. Total comparable store sales increased 1%. Direct-to-consumer comparable sales rose 31% with all three brands posting double-digit increases. Wholesale revenues increased 13% to $34 million. Gross profit margins decreased 39 basis points, largely due to higher shipping expenses associated with an increase in International shipments in our direct-to-consumer channel along with higher occupancy cost due to the timing of increased year-over-year store openings. Selling, general and administrative expense, expressed as a percentage of sales, increased by 27 basis points to 22.9%. Comparable retail segment inventories which include our direct-to-consumer channel were 8% higher at quarters end while comparable retail store inventories increased 1%. Finally, cash, cash equivalents and marketable securities grew by $38 million on a year- over-year basis to $690 million. I’ll now provide more detail on each of our key business metrics for the quarter, starting with sales. New and non-comparable store sales contributed $46 million. The Company opened 13 new stores in the quarter - five Anthropologie stores, including one Accessory and Footwear only store, two Free People stores and six Urban Outfitters stores, including one in Europe bring the Global store count to 355. Within the quarter, total company comparable store sales were strongest in August followed by October. On a two-year basis total company comparable store and retail segment sales improved throughout the quarter with October being…

Thank you, Eric. This quarter as in quarters previous, we have been adapting to a customer who is herself adjusting to the new economy. Today she expects not just fashion but compelling design. She expects not just value but quality and she expects not just customer service but a warm, exciting in store environment and a seamless online experience. On these fronts, assortment, value, operational excellence, customer experience and of course brand authenticity, I believe we have continued to outperform. There's been a considerable amount of discussion around the current fashion shift, which I first referenced during our previous call. Rather than dissect that fashion itself which I will not do because of competitive factors, let me discuss how we intend to respond to this change or better put, this opportunity. Fashion cycles are good for our business. We are early adopt a merchants, selling to early adopt a customers. In fact, the ability to recognize change before the market at large has been one of our company's defining competencies playing a key role in how we've grown our customer base, become a trusted source for fashion and remained relevant throughout our 40-year history. And while it's true that customers may pull back on spending during a period of fashion transition until they're confident, with new trends we have more tools and I believe a more rigorous approach to managing these cycles than in years past. What's different? We have our Direct-to-consumer business which helps us to access, test and size trends with a quantitative fact based approach. We have planning and allocation systems and methodologies which allows us to control and accurately balance our inventory and on order against trends in the business. And we have our nimble supply chain where a significantly compressed calendar enables us to adapt…

Thank you. (Operator Instructions) Our first question comes from Christine Chen of Needham & Company.

Thank you. Congratulations on a good quarter.

Thank you. Christine Chen of Needham & Company: I wanted to ask, it was interesting to me that the Urban Outfitter European stores and mid-Atlantic stores outperformed the rest of the fleet and I was wondering how much of that do you think is attributed to the fact that the fashion shift is being embraced there sooner because it's where the more fashion forward markets are?

I'll ask Steve to answer that. Steve?

Yes, Christine. I think, as you know we don't really comment on specific fashion trends. I will tell you that we have seen some diversity this year that we haven't seen in previous years between both the West coast and the East coast and actually both coasts and the mid-West so what we're finding is, that we're having to be an awful lot more diligent with regard to our planning and allocation and encompass some regional flavors into that exercise. It's something that actually has been quite a big debate over here but it's something that with our systems and with the way we're organizing buying and merchandising we're quite equipped to deal with. Christine Chen of Needham & Company: And can you just remind us how much overlap there is between Europe and the U.S. from a product perspective?

There's really only about 15 to 20% between Europe and North America, is that the question? Christine Chen of Needham & Company: Yes.

Yes, 15 to 20% is common and the rest, design side, the individual regional design (inaudible). Christine Chen of Needham & Company: Okay, great. Thank you and good luck.

Thank you.

Our next question comes from Kimberly Greenberger of Morgan Stanley.

Great. Thank you. Good evening. Glen, I was hoping you could talk about, Glen or Eric, the liquidity in the inventory, how you're approaching the fourth quarter? It looked to me like the total inventory growth year-over-year was around 23% which looks to be growing a little bit faster than your total sales growth? Is it just recent receipts or higher in transit, how should we think about that?

Yeah. Kimberly let me remind everyone of a couple of facts. Last year the retail inventories were down 14% so this year the retail only inventory is up one against the down 14. Last year the total inventories were down 11% so on a two-year basis we're still down three. The other thing to remember is that we 11 more stores opening in the second half this year than we did a year ago. In fact we have 16 stores opening in the fourth quarter, 14 of which open in this month or the first week in November so as I've said repeatedly over the years we plan to reach the supply. I feel very comfortable with our inventory; our FIFO is virtually identical to a year ago. I looked this morning, we have a considerable amount of open and buy for the first quarter, more than 50% open and buy for the first quarter so I feel very, very good with the way the group has managed their inventories and the way we're going into the fourth quarter.

Excellent. Thanks, Glen.

Thanks.

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

It's Andrea for Brian. Glen or Eric, I was wondering if you could talk about the markdown opportunity in the business? In the past I've think you've talked about being 200 to 300 basis points away from historical levels? Maybe talk about markdown opportunity in terms of gross margin for the fourth quarter and into next year and how do you feel about the level of markdowns in 3Q?

As we've said in our prepared comments the merchandise margins this year were relatively flat to last year. In terms of the markdowns I won't comment on what I expect them to be in the fourth quarter but I will say going forward that I do believe there are several basis points of opportunity and when I say that I mean over the next several years. As we've said in our prepared comments we're making a myriad of investments in systems, many of which I think will help us to reduce markdowns.

Perfect. Thanks so much.

Thanks.

Our next question comes from Michelle Tan of Goldman Sachs.

Great, Thanks. I know you guys called out a little bit of gross margin pressure from International shipping costs, any sense of magnitude you can give us on that and is it something we should think about as an ongoing pressure until you get to scale in Europe or is it more one time because of the D.C. opening?

I'll ask Eric to comment on that.

Michelle, the International shipping costs relate to shipping international orders out of our South Carolina distribution center. I think we would frame this up as a good problem meaning we're seeing increased business in our ecom International business so I would call this just a short-term issue that a, has just come up and b, we'll diligently work on process and methods including delivery cost to manage that going forward.

Okay. Great. Thanks.

Our next question comes from Betty Chen of Wedbush Securities.

Thank you. Congratulation on a great quarter. I was wondering Eric if you can speak to a little bit regarding the fourth quarter outlook? I wanted to make sure that we heard you correctly that going into Q4 we're looking for comps to be similar to the third quarter so it'll be roughly a 6% comps including the Direct business and I guess what is the confidence behind that outlook?

I'll speak to the numbers. To answer your question, yes I was speaking in generally a mid single-digit retail segment comp and in terms of the confidence I'll look to Glen on that one.

Betty, as we said in our prepared comments within the quarter the middle month was the weakest and August and October were stronger. There is a lot of change in what we're selling. I won't comment specifically on what those changes were but I will say that we have very, very clear direction. Free People had a bang-up quarter and there's a lot of learning in those results that the other brands can use. We also had a bang-up Direct-to-consumer quarter and there was a lot of learning in there that the retail businesses can use. So we feel, I think given the fact that we are in the midst of what we would call a fairly significant fashion cycle change I'm thrilled with the group, with the performance of the entire group and I'm very pleased with what I'm seeing in terms of the specifics in each of the businesses.

Great. Thank you and best of luck.

Thank you.

Our next question comes from Sam Pinella of Raymond James.

Okay. Thank you. Eric I believe on the last call when we were talking about deleverage points you indicated that we should be able to see some leverage on SG&A in the back half of the year but to a lesser extent than the first half? So given the deleverage here in the third quarter do we still have that opportunity or should we be thinking about that differently? Thank you.

Yeah. If we go back to the comments from the last quarter I believe we were highlighting some additional investments which for the most part I think came to fruition here in the third quarter. As we look to the fourth quarter or more importantly I guess as we look to next year it will be our continuing goal to grow profits faster than sales which really translates to we will be looking to leverage SG&A in the long-term as we always have. I will add that in terms of the first half of the year we will be challenged a little bit more with those comparisons relative to the investments that we are making internationally and specifically the Rushton, D.C. investment. So I think we'll have more to say to you at the fourth quarter call relative to how we see the phasing occurring over there but I'd just like to state that generally on an annual basis we'll be looking to leverage.

Thank you.

Our next question comes from Janet Kloppenburg of JJK Research

Hi, everybody. Congratulations on a nice quarter.

Thanks, Janet.

I had a question Glen, you know we easily described the last fashion trend of "big over small" and I know you don't want to identify or characterize this new movement but I'm wondering if, it's simply one look that's moving in or if it's a variety of styles and trends? And if in culmination, it's going to be as impactful in driving productivity as "big over small" was?

Janet, I think it's a big cycle so you know most all of you know how business is a series of cycles. There are cycles that occur within six weeks, 12 weeks, a season, a half year and there cycles that occur over a much longer period of time and I think this is a much larger cycle. I think when we first started talking about this we had people concerned because of some of the struggles that we had when we entered the big over little cycle and what we've tried to articulate is that we're a very different company today than we were five years ago and I think we just finished an excellent quarter. And it's a testament to the group’s ability to navigate this change. I will say big over little was not an easy change for the customers to wear, to understand and I think where we're headed is a much more customer friendly and quite frankly much more URBN friendly cycle. So I'm actually very excited about it.

Great. Thanks a lot.

Our next question comes from Edward Yruma of Keybanc Capital Market.

Hi, thanks very much for taking my question. You've historically talked about a 20% plus top line target and I know you've given a framework for low single-digit comps in fiscal '12, will you be able to achieve your 20% plus growth target with online and with your new store growth? Thank you.

Ed, are you talking about 20% growth or 20% profit?

20% growth.

As I said in the prepared comments or as Eric said we have a slight store acceleration. We're looking at 50 to 55 stores next year. Between that and our Direct business and our planned comp I think it is reasonable to assume we can increase our revenue 20%.

Great. Thank you.

Thanks.

Our next question comes from Paul Lejuez of Nomura Securities.

Hey, thanks guys. Just wondering if you could maybe talk a little bit about what sourcing leverage you guys can pull to help offset some of the input cost pressures that you're seeing out there? What haven’t what stones haven't you unturned just yet?

I'm so proud of the work that our team has done and in our prepared comments I was pointed in talking about not only the people who work for us in North America but also our buying offices, our agents and the factories themselves. We’ve been in business with these people a long time. They're our partners and we're working through this together. The group has done a myriad of things. First of all we're dual sourced in many, many product categories. We have a lower percentage of exposure in China than I believe most of our peer group does. It's important to remember that the raw materials comprise the lower part of our comps and most of our peer groups. Cotton for example is a typical product that we sell is less than 10% of the cost. It's also important to remember that we're not in low cost factories for the most part. Our products have a lot of make in them and we tend to be in factories that have higher than average wages and therefore they're less sensitive to the wage changes. We also quite frankly there's a lot more design in most of the products that we sell so I think there's less price sensitivity particularly if we're into a fashion change earlier like I believe we are right now. So as I said in our prepared remarks it's not easy. There's a lot of headwinds. We don't expect a lot of improvement in the short-term but we expect continued improvement.

Okay. Thanks and good luck.

Thank you.

Our next question comes from Dave Weiner of Deutsche Bank Securities.

Actually, Stephen Gregory of Mandalay Research. A question for you regarding e-commerce. You mentioned one of your top line initiatives is better e-commerce visibility? Can you provide some color on the call today? What is your e-commerce vision going forward and for example how are you going to drive more people to social media that you mentioned, mobile et cetera to your Web site so they have a much better buying experience?

Yes, Steve. I'll ask Oona to take that offline since there's a bit of a confusion. We thought this was Dave so I'll ask Oona to call you back. Thank you.

Thank you. Our next question comes from Richard Jaffe of Stifel Nicolaus. Please check your mute button?

Richard?

One moment please.

Hello?

Richard?

I'm here.

Hey, how are you?

Good, sorry about that.

No problem.

Just a question on square foot growth, if you could or you talked about 50 or 55 stores, could you give us a sense of square footage and then how it might break out by division?

I'll give you a unicount to help you Richard. So for the big brands, Anthropologie and Urban domestically, we'll be planning for mid to high teen store growth next year.

Okay.

On the Free People business somewhere around 12 stores and then for Urban Europe somewhere in the four to six range, AnthroEurope in the two to three range and then we have our new concepts such as Lee starter and Wedding that we're still evaluating.

And just presumably those would come to fruition and would be additional units?

That's correct. Yes.

Great. Thanks very much.

Thanks, Richard.

Next question, please.

Our next question comes from Dana Telsey of Telsey Advisory Group.

Good afternoon, everyone. Can you talk a little bit Glen, about the difference with online in the stores, what you're seeing different in terms of transactions or how, what they're buying different online versus in the stores? And you also mentioned that the learning from Free People have a lot of relevance to the other brands. What are you learning? Thank you.

Yes. Dana, I won't go into the fashion and so I won't tell you the specifics of what we're learning from Free People but the brands. We're not a company where if we have the best seller in one brand I take a sample of it and I run it to another brands building but we are a company that's aware of what’s going on in each of the brands. So certainly, Steve at Urban, Wendy at Anthropologies, Meg at Free People, they're aware of what's going on with the other brands and if there's the kind of positive trend that there is at Free People, everybody's going to be paying attention to it. With regard to Direct-to-consumer it's always easier for us to manipulate the Web site and kind of get to the best product, best message almost immediately. If we have a million dollars of inventory in a store, if we absolutely love half of that inventory and we're just lukewarm on the other half, but we still have to deal with that other half over a six to eight week period. Online we can make it look as if we love everything that we're selling and we can manipulate the visual execution so that we downplay what we don't love. And it's just easier for us to project a more relevant, more compelling message online. So that's really the difference and in terms of you and the rest of the group on the call I would encourage you to go to our Web site and as I always say if it's a regular price then it's front and forward, it's good. If it's been marked down recently or it's in the back of the store or the back of the Web site it's not so good.

And Glen just lastly on new store productivity, any updates on how some of the new stores are performing? Thank you.

You know I love you but that's the second question so I will call you after the call and answer that.

Thank you.

Okay.

Our next question comes from Lorraine Hutchinson of Bank of America.

Thank you. Good afternoon. Last quarter you spoke about brining in some new fashion items throughout the quarter. What was the reaction to some of the newer pieces and do you think that caused the increase in the comp performance from September to October?

Lorraine, I think most of you know that one of the wonderful things about our company and all of our brands is that we receive multiple times a weeks 52 weeks a year so we don't have a floor set. We have an inventory that changes quite quickly and most of you also know we're pretty ruthless when we buy something and it doesn't sell to expectation we move it out quickly so that we constantly work to get high-test fuel into our stores. So yes I think that the improvement that we saw from September to October is in part related to the quality of the inventory content. Some of the new products hit and didn't do well, a good amount of it hit and did quite well, so as a merchant, what I and all of the merchants in the organization look for is, they look for inventory that hits and turns quickly. So they look for an immediate reaction and our stores are so heavily trafficked that we can deliver something and literally within 24 hours, 36 hours we know what we have on our hands. And I want to sound positive on this call because we have clear direction of what people want.

Thank you.

Our next question comes from Liz Dunn of FBR.

Hi, good afternoon. Just to go back to this sort of fashion shift, is there a time period that you can recall or point to where there was similar shift and is there anything you can do from a marketing perspective, to kind of educate the consumer on how to wear the looks, that kind of relevant if she's feeling somewhat confused about it?

Yes. Liz I think that's a great question. These mega shifts tend to happen kind of every five to seven years and it's just a, it's the nature of the apparel business and the clothing business. As I said earlier, I think this particular shift if we're correct, this particular shift is a shift that people aren't going to need a lot of help understanding. It's a shift that's very friendly, that's very flattering. The big over little shift was not a fashion that was friendly to a lot of body types. It was a very dramatic change for people and I think it was much more difficult to understand. Now of course with regard to marketing we have our catalogs, we have our Web sites. We have blogs. We have press so we do everything we can and of course we have our stores. We do everything we can to get the message out in terms of what we believe in and we're doing that. Again if you go to our Web sites, where you look at our most recent catalogs I think you'll see that they're different than they were six months ago.

Okay. Thank you.

Thanks.

Our next question comes from Roxanne Meyer of UBS.

Thanks. Good afternoon.

Hey, Roxanne.

Hi. My questions have to do with international DTC. I guess I'm wondering which countries are feeling the surge that you're seeing, that's leading to the higher shipping costs? How many countries you currently have and how many do you think you can have over time and I guess ultimately how big could that international DTC business be?

Yes. I don't know if we want to give specifics out on our country sales for competitive reasons but we, let me be clear we have multiple Direct-to-consumer businesses. We have Direct-to-consumer businesses in Urban Outfitters and Anthropologie that is run and fulfilled out of Europe. The Direct-to-consumer, the multinational Direct-to-consumer business which caused the relatively minor impact to our margin over this last quarter was international business that was shipped out of North America. And as Eric said, quite frankly it took us by surprise and we've got a little bit smarter on how to deal with it. We got smarter in one brand first and quite frankly we raised the shipping fees. There was absolutely no impact to the demand so we've gotten smarter in our other brands as well. In terms of how large it can be, just as we've said in the rest of our Direct-to-consumer business, we're not going to put a limit on it. The customers going to tell us but right now it's not an insignificant part of our business and we think there's a lot of opportunity there. Steve, do you want to add anything?

No, I think you pretty much said it.

Okay.

I guess the only think I would add Roxanne is that we do operate on a Direct-to-consumer business on all three what I would consider to be International regions so Europe is where you're going to see the bricks and mortar but we also have a little business in Asia and in Latin America and although we haven't invested in bricks and mortar yet we're very encouraged by the fact that the brand has actually been accepted by the consumer over there and as we think about our international expansion going forward it gives us a little bit of a [indiscernible] to get comfortable with the fact that, what I'd call our consumer proposition is exportable.

Great. Thanks for all that color.

Our next question comes from Laura Champine of Cowen & Company.

Good afternoon, guys. First, Eric I just want to make sure that I understand something before I ask the question. The outlook for low single-digit retail segment growth next year on a comparable basis, does that include your direct growth or does that exclude that?

That excludes our direct growth and just to provide some color on that. Historically we have always planned that way. It's our mechanism to control expenses and our mechanism to control our inventory so this is nothing new in terms of the way we plan our business and as Glen mentioned earlier, the goal especially relative to our short lead times is to be able to react to the consumers so no real change from the way we approached things in the past.

Okay. So now that I understand that can you comment on where your SG&A leverage point might be next year? It sounds like you're planning to leverage, if you can achieve that level of sales? If you can give us any more color on that it would be great?

I think at this time it's safe to say with what we provided there in the commentary relative to the overall profitability of the business I think we'll have more insight when we talk to you in the fourth quarter relative to overall spending.

Okay. Thank you.

Our next question comes from Liz Pierce of Roth Capital Partners.

Thanks. Congratulations. Just a quick question for Eric on the tax rate? Is this, should we continue to plan down for next year?

No, you should not. We didn't put it in the commentary but we would generally encourage the planning of a rate in about the 35% range. The difference between what we said in our prepared comments about the 34% range this year and the 35% range next year would be the fact that the federal rehabilitation credit that we experienced in this year does not anniversary. The other items would anniversary.

So Eric was that the main, the biggest component of the lower tax rate this quarter?

I would say it was equally shared.

Between all those three components that were listed?

That's correct.

Okay. Great. Thanks and good luck.

Thanks, Liz.

Our next question comes from Robin Murchison of Suntrust.

Thanks very much, and let me add my congratulations.

Thanks, Robin

This may be similar to Lorraine’s question but I'm going to ask it anyway. You were 50% open to buy at the beginning of the third quarter. October was a good month for you so we can presume October benefited from your product positioning emanating from that 50% open to buy?

I think as I said when there is a fashion shift the buyers are never going to be as accurate with the 10 items that they pick when they're in the throes of a cycle so I don't want to put numbers on this but if they bought 10 items and there's a move in the fashion they're just not going to get the kind of productivity out of those 10 items that they would when they're in the middle of something and they have more clarity. So yes I believe that part of the pickup from month to month was due to better content and, but there might have been some other things going on that I'm not aware of. I think what Eric said in the prepared comments is that we expect, or we're planning for a trend in the fourth quarter similar to the third quarter if the content continues to get better we could improve the trend. If we deliver content that we think is going to be good and it's not then the trend could stay the same or it could possibly go down. I do feel like the merchant teams have clarity as to what's working so I think that's it easier for them to pick good product or design good product today than it was three or six months ago on a go forward basis.

Thank you very much.

Sure.

Our next question comes from Randy Kurnik of Jefferies.

Yes. Great. Thanks. Glen just a quick question. How do you view, do you see any structural changes in how you plan the business from a third party brand side of things versus private label given the sourcing issues we're starting to see out there and then do you think you can get initial margins to move higher into next year? Just curious. Thanks.

Yes. At this point Randy we're so important to our third party suppliers that we tend to work with them the same way that we work with our own vertical manufacturers. When an average buy is 5, 10, 15, 20,000 units you can't just walk into a show room and buy it. You have to plan with them. Also, we tend to take product off delivery cycles. We make adjustments for sizes, colors, what have you. With regard to the IMU as we said earlier do I think it's possible for us to have IMU improvement next year, absolutely. Are we going to count on that? Are we going to plan that? Likely not. I think we can have margin improvement but I think the IMUs going to be tough. On the other hand I'm not expecting IMUs to go down.

Is there any difference, if I could just add on, any difference in your thought process in the first half of next year versus the second half of next year?

No you know what our job as merchants is to figure it out and I'm not going to tell our shareholders that and nor would I allow the organization not to do that. We just have to, as I said in our prepared remarks, we have to control what we can control. I talked about a variety of levers that we have access to. We didn't talk about airfreight. We historically air freight quite a large percentage of our product. If we need to pull back on that we can and there are other things that we can do. Other efficiencies that we can work on in the supply chain. So I also, I think that there is, hysteria might be too strong a word but I think that everybody's jumping on this bandwagon and I certainly don't want our company to jump on the bandwagon and we're not going to let our suppliers jump on the bandwagon. We have to be smarter and more creative.

That's helpful. Thank you.

Thank you.

Our next question comes from Carla White of Jennifer Black & Associates.

Thank you for taking my call and let me add my congratulations as well.

Thanks, Carla. Carla White of Jennifer Black & Associates: Now that you've gone live with your new Merkel database can you discuss any early reads or earnings that you're seeing and do you believe you'll be increasing your catalog circulation as a result? Thank you.

You know we've been live now about two months and again for competitive reasons I don't want to give a ton of information out. I will tell you that we collected data on more than, purchased data on more than five million customers across our three brands. A million and a half of who shopped in multiple channels. I will tell you that the marketing managers and the brands are thrilled to have the information. I will tell you that the circulation that we manage using this new customer insight database was significantly more productive than the circulation we planned with our outside service. So there's a lot of rich data, like everything we do we're going to be very methodical, iterative, evolutionary as opposed to revolutionary. So I don't expect to wake up tomorrow and see huge increases but I think it's one of the more powerful things that this company has done in quite some time and I think it will reap benefits for years to come. Carla White of Jennifer Black & Associates: Thank you.

Our next question comes from Margaret Whitfield of Sterne, Agee & Leach.

Sorry it's back to the sourcing question. You commented you think your gross margins could improve next year but you're not sure whether your IMU will be up? If you could talk about the other factors that could aid you in offsetting some of these sourcing issues?

Margaret I mean the two principal components of the gross margin from a merchandise margin standpoint is markup and markdown and that of course is occupancy expense, delivery expense and so on. So as I've said I think we have opportunities in mark down reductions and so I think we have yet to finalize our plans for the New Year. I think we'll be able to talk about that on our next call and we'll talk specifically to or relatively specifically to what we're planning but right now I wouldn't anticipate the kind of IMU improvement that we've had the last couple of years. I'm not giving up. I'm just not ready to talk about it yet and I certainly feel like we could improve markdowns and I certainly also feel we can improve occupancy rates.

How about pricing increases?

I think we always develop our pricing structure based on supply and demand. We never base it on the cost of products. That's a dangerous thing so if we have something that we have a loan in the market and there's a high demand then we can charge a lot for it. If we have something that's kind of towards the middle or the end of the product life cycle and it's ubiquitous in the market then we have to be more competitively priced so it's really a function of economics and not product costs.

And mix you said footwear and accessories were best at Free People and Urban Outfitters? That might help too, right?

Each brand has a different margin structure so by division I can't really say that but, and again I can't really talk to how mix might impact margin. We don't manage margin. The customer manages margin. We manage input cost. We manage inventory. The customer ultimately dictates our average selling prices, our sell throughs, our mark down rates. The better we can do developing a compelling assortment and the more consumer insight we have the better our marketing messages are, the more we control inventory the better our maintained margins can be. And those, we're focused on that which we can control.

Thank you.

Okay.

Our next question comes from Eric Beder of Brean Murray, Carret & Co.

Good evening and congratulations.

Thank you, Eric.

In terms of your store rollout next year what is the thinking process behind the high streets versus malls that kind of evolving and secondly when are you going to open the store here in New York City on Fifth Avenue?

I'll let Steve answer both those questions because I think the methodology Steve uses at Urban is used across the company.

Yes, Eric. We've been doing quite a lot of work on that the last six months. The way that we looked at our stores was actually in five segments. We look at them as Metro center stores or traditional malls, Lifestyle stores, lifestyle centers or college campuses and we're basically doing a lot of work with our real estate partner here, the [indiscernible] company to try to outline what our optimum mix is and really you're going to see is [indiscernible] metro centers of which the Fifth Avenue store is obviously one and the traditional malls. And we've delivered a ratio that we think is more or less in keeping with our existing fleet and there's is too most important segments within the portfolio. With regard to Fifth Avenue we're working right now. We've got about eight or nine people from the store design development side really making sure that we open before the holiday period, the Christmas period I should say and that's going to be a biggie for us.

Great. Congratulations.

And I would say for the other brands the approach is the same. The portfolio mix might be a little different but the approach is the same and another benefit to our new consumer insight database is site selection because there's quite a bit of richness there as well.

Okay, thank you.

Our next question comes from Marie Driscoll of Standard & Poor's.

Thank you. Good quarter. I was hoping you could give us some clarity on your wedding concept, beholden? How you look at that and how you'll be going to market next year? What the opportunity is? That kind of thing.

Yes. Marie as we mentioned earlier the concept will launch with the Web site. We're targeting Valentines Day 2011 for the launch. We will have our first brick and mortar store in the third quarter of next year. We have not released the location yet but we are about to sign the lease so I think once that lease gets signed we'll probably release that information. We intend to sell everything that a bride needs from wedding dresses, innerwear, outerwear, jewelry, shoes, accessories, honeymoon wear. We intend to sell special occasion dresses, decorations, invitations and the site and the store will also have quite a bit of content so it'll be much more than just a place to buy the things you need to get married. It'll be a community for brides and for other people that attend the bridal parties and that's what I can say right now. I think we'll start communicating with the press community in the next three months and we'll start to have some visual materials to hand out on the next three months as well.

Great. Thanks.

Thanks.

Our final question comes from Simeon Siegel of Janney Capital Market.

Hi guys, this is Simeon calling in for Adrian. I just had a quick question. You mentioned the business in Asia; could you give us any color on the strategy you might be taking towards the Asia market?

What we said was that we were on a due diligence phase. I think it is highly likely that we will have our first store open within the next. We're looking at Japan as an entry point but we are not looking at Japan exclusively. We're looking at multiple parts of the region. We believe all three of our businesses; all three of our major brands have opportunity there. It's likely that we'll go first with Anthropologie but I wouldn't exclude the other two brands opening there as well.

Great. Thanks. Good luck.

Thanks. All right, everyone. Thanks so much for your questions and support and we'll talk to you again in a few months. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone have a great evening.