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Segment Reporting
 9 Months Ended
Oct. 31, 2013
Segment Reporting

11. 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 500 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 nine months ended October 31, 2013 and October 31, 2012, respectively. The remaining net sales are derived from the Company’s Wholesale segment that distributes apparel to approximately 1,400 better department and specialty retailers worldwide and to its Retail segment.

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 not available 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 constitutes 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:

 

     October 31,
2013		      January 31,
2013		      October 31,
2012		  
        

Inventories

         

Retail operations

    $ 380,989       $ 265,787       $ 374,865   

Wholesale operations

      25,723         16,624         20,541   
  

 

 

     

 

 

     

 

 

  

Total inventories

    $ 406,712       $ 282,411       $ 395,406   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Retail operations

    $ 780,149       $ 730,489       $ 731,715   

Wholesale operations

      3,513         2,927         3,078   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 783,662       $ 733,416       $ 734,793   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
October 31,		     Nine Months Ended
October 31,		  
     2013     2012     2013     2012  

Net sales

         

Retail operations

    $ 724,066      $ 651,408      $ 2,051,028      $ 1,828,185   

Wholesale operations

      52,928        43,559        136,595        114,837   

Intersegment elimination

      (2,945 )      (2,073 )      (6,873 )      (4,929 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total net sales

    $ 774,049      $ 692,894      $ 2,180,750      $ 1,938,093   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from operations

         

Retail operations

    $ 100,877      $ 90,961      $ 289,861      $ 238,018   

Wholesale operations

      13,337        10,377        33,282        28,124   

Intersegment elimination

      (311 )      (244 )      (692 )      (508 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total segment operating income

      113,903        101,094        322,451        265,634   

General corporate expenses

      (8,444 )      (7,584 )      (24,709 )      (23,271 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 105,459      $ 93,510      $ 297,742      $ 242,363   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

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:

 

     October 31,
2013		      January 31,
2013		      October 31,
2012		  
        

Property and equipment, net

         

Domestic operations

    $ 632,271       $ 586,068       $ 588,348   

Foreign operations

      151,391         147,348         146,445   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 783,662       $ 733,416       $ 734,793   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
October 31,		      Nine Months Ended
October 31,		  
       
     2013      2012      2013      2012  

Net Sales

            

Domestic operations

    $ 677,119       $ 602,810       $ 1,908,172       $ 1,690,638   

Foreign operations

      96,930         90,084         272,578         247,455   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total net sales

    $ 774,049       $ 692,894       $ 2,180,750       $ 1,938,093