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Retailer of apparel, footwear and accessories, Urban Outfitters Inc. (URBN - Analyst Report), announced its entry into a multi-year agreement with World Co., Ltd for the distribution and marketing of its specialty clothing brand, Free People in Japan.

As per the agreement, World Co., Ltd will distribute and market the Free People brand throughout Japan from shop-in-shop locations, direct-to-consumer sites and stand-alone stores. Moreover, the firm will distribute merchandise to specialty stores and department stores wholesale accounts.

The company added that the move marks its full-scale entry into the Japanese market and was in line with its plan of solidifying its presence in Asia. The company will commence its operations with the Free People brand's spring 2013 collection.

It is needless to emphasize that only strong and popular brands have the potential to drive growth through the global markets. We believe that the Japanese market provides ample long-term opportunities for the company to enhance its profitability as Free People has strong brand recognition and offers private label branded merchandise that includes apparel, intimates, shoes, accessories and gifts to women aged between 25 and 30 years.  

The brand remains successful in luring consumers which is well evident from its performance. The brand’s top-line registered an escalation of 25.7% year over year to $73.8 million during the recently concluded quarter. Moreover, comparable stores sales augmented by 12% during the period.

Urban Outfitters offers a flexible merchandising strategy and has significant domestic and international presence with rapidly expanding e-commerce activities. It remains committed to improving comparable-store sales performance, adding new brands and optimizing inventory levels.

Currently, we have a long-term “Outperform” recommendation on the stock. Moreover, Urban Outfitters, which competes with Gap Inc. (GPS - Analyst Report) and Abercrombie & Fitch Co. (ANF - Analyst Report), retains a Zacks #1 Rank that translates into a short-term “Strong Buy” rating.

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