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Segment Reporting
 12 Months Ended
Jan. 31, 2014
Segment Reporting

15. Segment Reporting

The Company is a global retailer of lifestyle-oriented general merchandise with two reportable segments—“Retail” and “Wholesale.” The Company’s Retail segment consists of the aggregation of its five brands operating through 511 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 more than 94% of total consolidated net sales for the fiscal years ended January 31, 2014, 2013 and 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 has substantially integrated all available shopping channels, including stores, websites and catalogs (online and through mobile devices). The Company’s investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the omni-channel and not the separate store or direct-to-consumer channels. Store sales are primarily fulfilled from that store’s inventory, but may also be shipped from any of the Company’s 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 the Company’s customers through its fulfillment centers, but may also be shipped from any store, or a combination of fulfillment centers and stores depending on the availability of a particular item. As the Company’s customers continue to shop across multiple channels, the Company has adapted its approach towards meeting this demand. Due to the availability of like product in a variety of shopping channels, the Company now sources these products utilizing single stock keeping units based on the omni-channel demand rather than the demand of the separate channels. These and other technological capabilities allow the Company to better serve its customers and help it to fill orders that otherwise may have been cancelled due to out-of-stock positions. As a result of changing customer behavior and the substantial integration of the operations of the Company’s store and direct-to-consumer channels, the Company manages and analyzes its performance based on a single omni-channel rather than separate channels and believes that the omni-channel results present the most meaningful and appropriate measure of the Company’s performance.

 

The accounting policies of the reportable segments are the same as the policies described in Note 2, “Summary of Significant Accounting Policies.” 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:

 

     Fiscal Year  
     2014     2013     2012  

Net sales

       

Retail operations

    $ 2,908,981      $ 2,646,284      $ 2,340,794   

Wholesale operations

      185,792        154,957        140,657   

Intersegment elimination

      (8,165 )      (6,316 )      (7,650 ) 
  

 

 

    

 

 

    

 

 

  

Total net sales

    $ 3,086,608      $ 2,794,925      $ 2,473,801   
  

 

 

    

 

 

    

 

 

  

Income from operations

       

Retail operations

    $ 414,734      $ 366,139      $ 276,581   

Wholesale operations

      42,191        35,783        26,919   

Intersegment elimination

      (837 )      (610 )      (709 ) 
  

 

 

    

 

 

    

 

 

  

Total segment operating income

      456,088        401,312        302,791   

General corporate expenses

      (29,257 )      (27,027 )      (18,066 ) 
  

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 426,831      $ 374,285      $ 284,725   
  

 

 

    

 

 

    

 

 

  

Depreciation expense for property and equipment

       

Retail operations

    $ 120,960      $ 112,645      $ 99,645   

Wholesale operations

      772        743        1,094   
  

 

 

    

 

 

    

 

 

  

Total depreciation expense for property and equipment

    $ 121,732      $ 113,388      $ 100,739   
  

 

 

    

 

 

    

 

 

  

Inventories

       

Retail operations

    $ 282,590      $ 265,787     

Wholesale operations

      28,617        16,624     
  

 

 

    

 

 

    

Total inventories

    $ 311,207      $ 282,411     
  

 

 

    

 

 

    

Property and equipment, net

       

Retail operations

    $ 802,965      $ 730,489     

Wholesale operations

      3,944        2,927     
  

 

 

    

 

 

    

Total property and equipment, net

    $ 806,909      $ 733,416     
  

 

 

    

 

 

    

Cash paid for property and equipment

       

Retail operations

    $ 184,255      $ 168,530      $ 189,311   

Wholesale operations

      1,846        345        699   
  

 

 

    

 

 

    

 

 

  

Total cash paid for property and equipment

    $ 186,101      $ 168,875      $ 190,010   
  

 

 

    

 

 

    

 

 

  

 

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:

 

     Fiscal Year  
     2014      2013      2012  

Net Sales

         

Domestic operations

    $ 2,685,042       $ 2,423,155       $ 2,169,976   

Foreign operations

      401,566         371,770         303,825   
  

 

 

     

 

 

     

 

 

  

Total net sales

    $ 3,086,608       $ 2,794,925       $ 2,473,801   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Domestic operations

    $ 655,866       $ 586,068      

Foreign operations

      151,043         147,348      
  

 

 

     

 

 

     

Total property and equipment, net

    $ 806,909       $ 733,416