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Segment Reporting
 3 Months Ended
Apr. 30, 2013
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 482 stores under the retail names “Urban Outfitters,” “Anthropologie,” “Free People,” “Terrain” and “BHLDN” and includes their direct-to-consumer channels, which consisted of five catalogs and ten websites as of April 30, 2013. The Company’s 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 months ended April 30, 2013 and April 30, 2012, 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 intercompany 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 reporting 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 intersegment sales and transfers as if the sales and transfers were made to third parties making similar volume purchases.

The Company’s omni-channel strategy enhances its customers’ brand experience by providing a seamless approach to the customer shopping experience. The Company seeks to integrate all available shopping channels including stores, websites and catalogs (online and through mobile devices). Store sales are primarily fulfilled from that store’s inventory, but may also be shipped from any of our fulfillment centers or from a different store location if an item is out-of-stock at the original store. Direct-to-consumer orders are primarily shipped to our customers through our fulfillment centers but may also be shipped from any store or a combination of fulfillment center and store depending on the availability of a particular item. These capabilities allow us to better serve customers and helps us to fill orders that otherwise may have been canceled due to out-of-stock positions.

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, 2013. 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:

 

     April 30,
2013		      January 31,
2013		      April 30,
2012		  

Inventories

         

Retail operations

    $ 309,277       $ 265,787       $ 285,562   

Wholesale operations

      16,194         16,624         14,188   
  

 

 

     

 

 

     

 

 

  

Total inventories

    $ 325,471       $ 282,411       $ 299,750   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Retail operations

    $ 719,505       $ 730,489       $ 708,635   

Wholesale operations

      2,367         2,927         3,297   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 721,872       $ 733,416       $ 711,932   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
April 30,		  
     2013     2012  

Net sales

     

Retail operations

    $ 611,971      $ 537,746   

Wholesale operations

      37,789        32,579   

Intersegment elimination

      (1,583 )      (1,395 ) 
  

 

 

    

 

 

  

Total net sales

    $ 648,177      $ 568,930   
  

 

 

    

 

 

  

Income from operations

     

Retail operations

    $ 72,412      $ 52,907   

Wholesale operations

      8,332        7,994   

Intersegment elimination

      (168 )      (146 ) 
  

 

 

    

 

 

  

Total segment operating income

      80,576        60,755   

General corporate expenses

      (7,610 )      (7,840 ) 
  

 

 

    

 

 

  

Total income from operations

    $ 72,966      $ 52,915   
  

 

 

    

 

 

  

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:

 

     April 30,
2013		      January 31,
2013		      April 30,
2012		  

Property and equipment, net

         

Domestic operations

    $ 579,644       $ 586,068       $ 570,663   

Foreign operations

      142,228         147,348         141,269   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 721,872       $ 733,416       $ 711,932   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
April 30,		  
     2013      2012  

Net sales

      

Domestic operations

    $ 569,567       $ 500,608   

Foreign operations

      78,610         68,322   
  

 

 

     

 

 

  

Total net sales

    $ 648,177       $ 568,930