William Blair & Company Initiates Coverage of Urban Outfitters, Inc. With Outperform Rating

Business Wire, Feb 6, 2008

CHICAGO -- William Blair & Company initiated research coverage of Urban Outfitters, Inc. (Nasdaq:URBN) ($26.67), one of the fastest-growing publicly traded apparel retailers, with an Outperform rating and a Core Growth company profile. Founded in 1970 by Chairman and President Dick Hayne, Urban Outfitters operates three brand platforms: Urban Outfitters, Anthropologie, and Free People.

Analyst Sharon Zackfia estimated the company would earn $0.91 per share in the fiscal year ending January 2008 (up 32%), $1.20 per share in fiscal 2009 (up 32%), and $1.50 in fiscal 2010 (up 26%).

"With its distinctively designed stores, exclusive product assortment, and visually stimulating vignette-inspired displays, Urban Outfitters has created a compelling shopping experience in each of its three concepts that yields both lengthy customer visits and above-average sales productivity, as evidenced by estimated 2007 sales per square foot of $570 at Urban Outfitters, $755 at Anthropologie, and $1,100 at Free People--all above peer averages of $400 to $500," Zackfia said.

"Urban Outfitters' EPS has grown at a compounded annual rate of 38% over the past five years, and we see the potential for 25% annual earnings growth over the next three years," Zackfia continued. "Given its relatively small store base, we expect unit expansion will continue to be Urban Outfitters' primary source of growth, and believe the company should be able to maintain high-teens to 20% unit growth over the next three years through its current concepts. We look for solid same-store sales growth at a reinvigorated Urban Outfitters combined with continued strength in the Anthropologie and Free People businesses to yield sales growth of 25% in 2008, 21% in 2009, and 19% in 2010."

William Blair & Company, L.L.C. has received compensation for investment banking services from the company within the past 12 months, or expects to receive or intends to seek compensation for investment banking services in the next 3 months.

William Blair & Company, L.L.C. is a market maker in the security of this company and may have a long or short position.

For important disclosures and information regarding the firm's rating system, valuation methods and potential conflicts of interest, please visit: http://www.williamblair.com/Pages/news_story_dept.asp?uid=1331&depID=4

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