PHILADELPHIA-Clothing retailer Urban Outfitters Inc., marked its 13th consecutive quarter of record sales and profits with a 36% increase in net sales and a 63% rise in net income during the first quarter of 2005 compared to the same period a year earlier.

The Philadelphia-based clothier, which operates under the Urban Outfitters, Anthropologie and Free People brands, saw its profits grow to $27.4 million, or 32 cents per share, and its revenue rise to $231.3 million during the three months ending April 30, 2005. During the first quarter of 2004, earnings were $16.9 million.

“Both sales and profits set new quarter records,” said Richard Hayne, the firm’s president, in announcing the firm’s financials at a conference call to investors Thursday.

Hayne said the higher than expected sales figures, which analysts had projected at $228.2 million or 30 cents per share, was due to an 11% increase in comparable store sales, a 29% increase in the number of stores in operation and a 54% increase in the company’s catalogue and website business. Also contributing to the rising sales dollars was a surge in the company’s newest branded stores, Free People, where sales shot up 69%. Operating margins also improved significantly during the quarter, growing by 268 basis points to 19.4% of net sales.

The outlook for future growth remains strong, said Hayne, projecting that sales will continue to improve by about 20% annually over the next several years. Helping spur the chain’s sales growth will be the openings of between 30 and 32 new stores this year, he said. The company opened two Urban Outfitters and two Anthropologie stores during the first quarter and anticipates adding to its two Free People outlets. It presently operates 77 Urban Outfitter stores in North America and Europe but anticipates that number will grow to about 250 stores in the future. The Anthropologie brand, which currently has 67 outlets, is expected to increase to around 250 stores nationally.

Catalogue distribution also is expected to add to the bottom line with distribution expected to grow by 15%, Hayne said. The company currently is planning to open a 450,000 sf distribution and direct fulfillment center in South Carolina by the end of the third quarter.

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