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Urban Outfitters reported depreciated third-quarter earnings on Thursday, but beat Wall Street expectations, causing shares to jump.

For the three months ended Oct. 31, net income dropped 7.3 percent to $34.5 million, or 21 cents a share, from $37.2 million, or 22 cents a share, in the year-ago period. Analysts predicted earnings of 18 cents a share.

Company shares rallied in morning trading, and later closed up 13.3 percent to $21.53.

The company previously reported a 7 percent increase in sales for the quarter to $308.4 million from $288.8 million last year. Total same-store sales fell 10 percent. By brand, comps declined 10 percent at Anthropologie and Urban Outfitters and increased 9 percent at Free People.

For the nine-month period, net income dropped to $80.5 million, or 48 cents a diluted share, from $95.2 million, or 56 cents. Total sales rose to $863.9 million from $773.5 million.

“I see significant opportunity for our brands in the coming quarters. More customers are embracing the new fashion silhouette, we are beginning to anniversary weaker comp-store sales and we continue to make headway on improving our fashion offering,” Richard Hayne, chairman and president, said in a statement.

The company plans to open 32 to 33 new stores by the end of this year, on top of 22 stores already opened in fiscal 2006.

This story first appeared in the November 10, 2006 issue of WWD.  Subscribe Today.