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Segment Reporting
 6 Months Ended
Jul. 31, 2012
Segment Reporting

10. Segment Reporting

The Company is a global retailer of lifestyle-oriented general merchandise with two reporting segments—”Retail” and “Wholesale.” The Company’s Retail segment consists of the aggregation of its five brands operating through 456 stores under the retail names “Urban Outfitters,” “Anthropologie,” “Free People,” “Terrain” and “BHLDN” and includes their direct–to-consumer channels, which consist of five catalogs and nine web sites as of July 31, 2012. Our retail stores and direct-to-consumer channels are considered one operating segment. Net sales from the Retail segment accounted for more than 94% of total consolidated net sales for the three and six months ended July 31, 2012 and July 31, 2011, respectively. The remaining net sales are derived from the Company’s Wholesale segment that distributes apparel to its Retail segment and to approximately 1,400 better department and specialty retailers worldwide.

The Company has aggregated its retail stores and direct-to-consumer channels into a Retail segment based upon their shared management, customer base and economic characteristics. Reporting in this format provides management with the financial information necessary to evaluate the success of the segments and the overall business. The Company evaluates the performance of the segments based on the net sales and pre-tax income from operations (excluding inter-company charges) of the segment. Corporate expenses include expenses incurred and directed by the corporate office that are not allocated to segments. The principal identifiable assets for each operating segment are inventories and property and equipment. Other assets are comprised primarily of general corporate assets, which principally consist of cash and cash equivalents, marketable securities, deferred taxes and prepaid expenses which are typically not allocated to the Company’s segments. The Company accounts for inter-segment sales and transfers as if the sales and transfers were made to third parties making similar volume purchases.

The accounting policies of the operating segments are the same as the policies described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2012. Both the Retail and Wholesale segments are highly diversified. No one customer comprises more than 10% of the Company’s total consolidated net sales. A summary of the information about the Company’s operations by segment is as follows:

 

     July 31,
2012		      January 31,
2012		      July 31,
2011		  

Inventories

         

Retail operations

    $ 303,886       $ 237,825       $ 288,989   

Wholesale operations

      18,937         12,248         14,170   
  

 

 

     

 

 

     

 

 

  

Total inventories

    $ 322,823       $ 250,073       $ 303,159   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Retail operations

    $ 718,911       $ 681,501       $ 622,695   

Wholesale operations

      3,147         3,478         3,493   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 722,058       $ 684,979       $ 626,188   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
July 31,		     Six Months Ended
July 31,		  
     2012     2011     2012     2011  

Net sales

         

Retail operations

    $ 639,031      $ 577,282      $ 1,176,777      $ 1,070,744   

Wholesale operations

      38,699        35,194        71,278        66,777   

Intersegment elimination

      (1,461 )      (3,295 )      (2,856 )      (4,321 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total net sales

    $ 676,269      $ 609,181      $ 1,245,199      $ 1,133,200   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from operations

         

Retail operations

    $ 94,150      $ 88,182      $ 147,057      $ 151,150   

Wholesale operations(1)

      9,753        7,278        17,747        10,236   

Intersegment elimination

      (118 )      (607 )      (264 )      (678 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total segment operating income

      103,785        94,853        164,540        160,708   

General corporate expenses

      (7,847 )      (6,858 )      (15,687 )      (13,877 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 95,938      $ 87,995      $ 148,853      $ 146,831   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) 

Increase in Wholesale segment income from operations for the six months ended July 31, 2012 as compared to the prior year comparable period was principally due to one-time charges included in the six months ended July 31, 2011 resulting from the discontinuation of wholesale distribution of the Leifsdottir brand, which began in the first quarter of fiscal 2012 and was principally completed by the end of the second quarter of fiscal 2012.

 

The Company has foreign operations in Europe and Canada. Revenues and long-lived assets, based upon the Company’s domestic and foreign operations, are as follows:

 

     July 31,
2012		      January 31,
2012		      July 31,
2011		  

Property and equipment, net

         

Domestic operations

    $ 582,859       $ 557,512       $ 517,430   

Foreign operations

      139,199         127,467         108,758   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 722,058       $ 684,979       $ 626,188   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
July 31,		      Six Months Ended
July 31,		  
     2012      2011      2012      2011  

Net sales

            

Domestic operations

    $ 587,221       $ 535,055       $ 1,087,829       $ 1,001,906   

Foreign operations

      89,048         74,126         157,370         131,294   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total net sales

    $ 676,269       $ 609,181       $ 1,245,199       $ 1,133,200