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Segment Reporting
 6 Months Ended
Jul. 31, 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 491 stores under the retail names “Urban Outfitters,” “Anthropologie,” “Free People,” “Terrain” and “BHLDN” and includes their direct-to-consumer channels. Each of the Company’s brands, which include the retail stores and direct-to-consumer channels, are considered an operating segment. Net sales from the Retail segment accounted for approximately 94% of total consolidated net sales for the three and six months ended July 31, 2013 and July 31, 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 brands 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 the Company’s 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:

 

     July 31,
2013		      January 31,
2013		      July 31,
2012		  

Inventories

         

Retail operations.

    $ 324,007       $ 265,787       $ 303,886   

Wholesale operations

      23,057         16,624         18,937   
  

 

 

     

 

 

     

 

 

  

Total inventories

    $ 347,064       $ 282,411       $ 322,823   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Retail operations

    $ 728,597       $ 730,489       $ 718,911   

Wholesale operations

      2,824         2,927         3,147   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 731,421       $ 733,416       $ 722,058   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
July 31,		     Six Months Ended
July 31,		  
     2013     2012     2013     2012  

Net sales

         

Retail operations.

    $ 714,991      $ 639,031      $ 1,326,962      $ 1,176,777   

Wholesale operations

      45,877        38,699        83,666        71,278   

Intersegment elimination

      (2,344 )      (1,461 )      (3,927 )      (2,856 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total net sales

    $ 758,524      $ 676,269      $ 1,406,701      $ 1,245,199   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from operations

         

Retail operations.

    $ 116,572      $ 94,150      $ 188,983      $ 147,057   

Wholesale operations

      11,612        9,753        19,945        17,747   

Intersegment elimination

      (212 )      (118 )      (380 )      (264 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total segment operating income

      127,972        103,785        208,548        164,540   

General corporate expenses

      (8,655 )      (7,847 )      (16,265 )      (15,687 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 119,317      $ 95,938      $ 192,283      $ 148,853   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

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,
2013		      January 31,
2013		      July 31,
2012		  

Property and equipment, net

         

Domestic operations

    $ 589,834       $ 586,068       $ 582,859   

Foreign operations

      141,587         147,348         139,199   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 731,421       $ 733,416       $ 722,058   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
July 31,		      Six Months Ended
July 31,		  
     2013      2012      2013      2012  

Net Sales

            

Domestic operations

    $ 661,486       $ 587,221       $ 1,231,053       $ 1,087,829   

Foreign operations

      97,038         89,048         175,648         157,370   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total net sales

    $ 758,524       $ 676,269       $ 1,406,701       $ 1,245,199