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Segment Reporting
 3 Months Ended
Apr. 30, 2014
Segment Reporting

11. 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 516 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 93% of total consolidated net sales for the three months ended April 30, 2014 and 2013, 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 has substantially integrated all available shopping channels, including stores, websites (online and through mobile devices) and catalogs. 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,” 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, 2014. 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:

 

     April 30,
2014		      January 31,
2014		      April 30,
2013		  

Inventories

         

Retail operations

    $ 320,961       $ 282,590       $ 309,277   

Wholesale operations

      28,084         28,617         16,194   
  

 

 

     

 

 

     

 

 

  

Total inventories

    $ 349,045       $ 311,207       $ 325,471   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Retail operations

    $ 831,854       $ 802,965       $ 719,505   

Wholesale operations

      4,390         3,944         2,367   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 836,244       $ 806,909       $ 721,872   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
April 30,		  
     2014     2013  

Net sales

     

Retail operations

    $ 640,430      $ 611,971   

Wholesale operations

      48,290        37,789   

Intersegment elimination

      (2,410 )      (1,583 ) 
  

 

 

    

 

 

  

Total net sales

    $ 686,310      $ 648,177   
  

 

 

    

 

 

  

Income from operations

     

Retail operations

    $ 60,649      $ 72,412   

Wholesale operations

      9,991        8,332   

Intersegment elimination

      (240 )      (168 ) 
  

 

 

    

 

 

  

Total segment operating income

      70,400        80,576   

General corporate expenses

      (10,579 )      (7,610 ) 
  

 

 

    

 

 

  

Total income from operations

    $ 59,821      $ 72,966   
  

 

 

    

 

 

  

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,
2014		      January 31,
2014		      April 30,
2013		  

Property and equipment, net

         

Domestic operations

    $ 685,195       $ 655,866       $ 579,644   

Foreign operations

      151,049         151,043         142,228   
  

 

 

     

 

 

     

 

 

  

Total property and equipment, net

    $ 836,244       $ 806,909       $ 721,872   
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
April 30,		  
     2014      2013  

Net Sales

      

Domestic operations

    $ 600,913       $ 569,567   

Foreign operations

      85,397         78,610   
  

 

 

     

 

 

  

Total net sales

    $ 686,310       $ 648,177