McIntire Investment Institute

April 9, 2002

Potential Long Investment:

URBAN OUTFITTERS INC.

NASDAQ - URBN

URBAN OUTFITTERS IS A BUY!

� Will diversify the MII portfolio by adding Retail

� Not as susceptible to economic downturns as other retail corporations due to its unique niches in the marketplacein the marketplace

� Has not saturated the market, leaving plenty of room for future growth both nationally and internationally

� Well-run corporation with reputable management

� Fashion leader, instead of follower!

CORPORATION CONSISTS OF:

� 2 SPECIALTY RETAIL STORES:

Urban Outfitters and Anthropology

� WHOLESALE DIVISION:

Free People

• operates 49 stores in large metropolitan areas and university communities

What is URBAN RETAIL?What is URBAN RETAIL?What is URBAN RETAIL?What is URBAN RETAIL?

and university communities

• targets style conscious 16-30 year old age group (Generation Y)

• product offerings include women’s and men’s fashion apparel, footwear and accessories, and an eclectic mix of apartment wares and gifts

• accounted for 54% of total sales during the past fiscal year

What is Anthropology?

-tailored to sophisticated and contemporary women aged 30-45

-product offerings include women’s casual apparel/ -product offerings include women’s casual apparel/ accessories, home furnishings and a diverse array of gifts and decorative items

-operates 33 stores in specialty retail centers, upscale street locations and enclosed malls

-accounted for 41% of total sales during the past fiscal year

Catalog and Websites

URBAN RETAIL

� Website launched in May 2000

ANTHROPOLOGY

� Direct-to-consumer catalog launched in March 1998� Direct-to-consumer catalog launched in March 1998

� Website debuted in December 1998

� Accept orders directly from consumers

� Capture the spirit of retail stores by offering a similar array of products

� Increase brand recognition with target customers

Wholesale division, which designs, develops and markets young women’s casual apparel

�sold worldwide through 1,100 better department and specialty better department and specialty stores, including Bloomingdale's and Nordstrom (helps minimize production lots)�yields higher gross profit margins than brand name merchandise�helps keep product offerings fresh

and unique

KEY STRATEGY = STORE ENVIRONMENT

� Urban Outfitters store average 10,000 selling square feet and Anthropology store average 8,500 selling square feet8,500 selling square feet

� Large square footage encourages target customers to linger and spend time exploring stores and product offerings

� Creatively designed, retail space incorporates a mosaic of fixtures, finishes, and architectural details to create a lifestyle

PORTER’S 5 FORCES

Threat of New Entrants= Low, Hard to imitate the distinct lifestyle that Urban Retail and Anthropology create

Bargaining Power of Suppliers = Low, No one supplier accounts for more than 10% of the company’s merchandise

Threat of Substitutes= Low, There is no substitute for the industry. Threat of Substitutes= Low, There is no substitute for the industry. People who shop in Urban Outfitters and Anthropology desire a different look and experience than the average retail chain

Bargaining Power of Customers= Medium, Customers can go elsewhere to find better deals on the product offerings similar to Urban Retail and Anthropology, but it would be very difficult for both target customers to find the same array of product offerings at other stores

Porter’s 5 Forces (continued)

**Competition within Industry**

Retail is a competitive industryFF

However, this corporation has unique retail operations that are distinct from the retail chains operations that are distinct from the retail chains that Wall Street considers its competitors

Urban Outfitters: no direct competitor with economies of scale, customers who go to Urban believe that they “set the trend”

Anthropology: cannot find same mix of such diverse merchandise at any one retailer

REPUTABLE MANAGEMENT

Richard Hayne: President and Board of Directors since incorporation in 1976, co-founded Urban Outfitters in 1970

Stephen A Feldman: CFOStephen A Feldman: CFO

Glen T. Senk: President, Anthropology, Inc.

Tedford G. Marlow: President, Urban Outfitters Retail Division

David C. Frankel: President, Free People

In our current financial markets, it is reassuring to see that Urban Retail hasF.

� Minimal Activity in Insider Trading � Minimal Activity in Insider Trading

� No Corrupt Backgrounds or Poor Reputations of Managers and Directors

� Fair, but not outrageous compensation for executives

STRONG FINANCIAL MEASURES

CURRENT RATIO: 2.01

WORKING CAPITAL: $41.319 M

LT DEBT TO EQUITY: 0

GROSS MARGIN: 32.57GROSS MARGIN: 32.57

ROA (Fiscal 2002): 14%

ROA (5 Year Average): 20.99%

ROE:13.9%

INVENTORY TURNOVER: 5.36

CASH AVAILABLE AT THE END OF FISCAL 2002: $21.251 M

Minimal Long Term Debt!!

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URBN BKE AEOS WTSLA PSUN ANF GADZ Industry

Company

URBAN OUTFITTERS ADDS VALUE

Return on Invested Capital:23.5%

Weighted Average Cost of Capital:13.9%

Spread between ROIC and WACC shows that Urban Outfitters has the ability to create value!

URBN vs. S&P 500 in the last year:

Why should the MII Invest in Urban Outfitters?

� Mid Cap Corporation-easier to gain an edge and do Value-Added-Research!

� Not susceptible to great media attention and change in stock price is not so volatile

� Anthropology is first beginning to catch on and will cause � Anthropology is first beginning to catch on and will cause substantial growth in the corporation as it becomes a household name in the affluent society

� Urban Outfitters is a long term fad that has continually been able to keep up with its target customer for over 30 years

� Free People is at a low in percentage of the corporation’s revenue and with Urban Retails future plans to expand the brand name, it will contribute to even more growth in the corporation

VALUE ADDED RESEARCH

URBAN OUTFITTERS:Customers say:

• No Direct Competitors, “Nothing is exactly like Urban Outfitters in my mind” , “I think Urban Outfitters is just different from other stores. Whenever I am in an area Outfitters in my mind” , “I think Urban Outfitters is just different from other stores. Whenever I am in an area with an Urban Outfitters, I always find myself in there buying something different.”

• “Urban sets the trend. I know when I go into Urban Outfitters, I can always count on getting the most fashionable clothes at good prices.”

• “I have never gone into Urban without wanting something.”

VALUE ADDED RESEARCH

ANTHROPOLOGY:

• Manager says customers come for all over the metropolitan area to visit the Long Island, NY store

• He says the catalog has helped to generate greater He says the catalog has helped to generate greater interest in the products and attract new customers

• Customer says, “ This store has such interesting merchandise. I can really see the store growing in the future as more people realize what great things they sell.”

• “ This is basically eclectic. It is different. It’s not the usual thing.”

ANY QUESTIONS???