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Urban Outfitters’ Richard Hayne Talks International

Company's chairman, president and ceo believes things are just getting started in the global arena.

PHILADELPHIA — Richard Hayne believes Urban Outfitters Inc. is just getting started on the international front.

“There’s an extraordinary opportunity there,” the firm’s chairman, president and chief executive officer told shareholders at its annual meeting at corporate headquarters here Tuesday. “North America accounts for 90 percent of sales and Europe, 9 percent. International sales, including direct-to-consumer, grew 23 percent [last year].

“We have extraordinary opportunity to expand offerings worldwide,” he added.

The retailer also plans to add product categories, product extensions and new sizes and colors. Hayne said Anthropologie could do petites and electronics in the home area.

“If we do acquire a new concept, we want that concept to fit nicely with the current concepts,” he said.

Hayne expects the globalization trend to continue and accelerate as localization grows at the same time. “We continue to add stores geographically,” he said. “We expect to open Free People and Urban Outfitters stores in Asia in the next two years.

“Today, Web penetration is 85 percent in North America but, in the next five years, it will be almost 20 percent outside the U.S.”

Brick-and-mortar constitutes 74 percent of the company’s sales, or $1.84 billion.

Hayne said, “Success is due to increased product assortment, a focus on Web marketing or paid search and social media like Pinterest that drive traffic. Social media efforts have been profound. The Free People blog has 648,000 followers.”

Hayne addressed about 75 people in the industrial minimalist meeting room that has the original shipping hoists and hooks dangling from the ceiling.

He discussed some of 2012’s financial highlights, which included $2.5 billion in sales, a 9 percent increase over fiscal 2011. Operating profits were $284.7 million, with $500 million in direct-to-consumer sales, a 15 percent hike. There were 57 new stores opened during the fiscal year, including 10 outside the U.S.

Hayne said the third quarter was the weakest, while the fourth quarter showed an increase due to promotions and markdowns.

During the fiscal year, Anthropologie opened its first store in Scotland on upscale George Street in Edinburgh; Urban Outfitters unveiled units in Frankfurt and Berlin; a BHLDN bridal location opened in Houston, and a prime space for Free People was found in Center City, Philadelphia, next to Urban Outfitters. Free People opened its biggest store, a 7,000-square-foot unit, in New York’s Rockefeller Center and will begin shipping the intimates collection Intimately Free to more stores and wholesale accounts.

Urban grew its wholesale revenues by 11 percent in the 2012 fiscal year.

Five proposals were put to shareholders for a vote. Two involved the election of directors, Hayne and Harry S. Cherken Jr. There was a proposal to ratify the auditors Deloitte & Touche. Shareholder proposals included diversifying Urban’s board and ensuring women and minority candidates are in the nominating pool. A proposition involved changing the standard with which directors are chosen, from a plurality vote to a majority vote. The last proposal suggested directors stand for election once a year. The votes will be counted this week.