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Segment Reporting
 12 Months Ended
Jan. 31, 2016
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 572 stores under the retail names “Urban Outfitters,” “Anthropologie,” “Free People,” “Terrain” and “Bhldn” and includes their direct-to-consumer channels. Urban Outfitters, the Anthropologie Group, and Free People, including their retail stores and direct-to-consumer channels, are each considered an operating segment. Net sales from the Retail segment accounted for approximately 92.4%, 93.2% and 94.2% of total consolidated net sales for the fiscal years ended January 31, 2016, 2015 and 2014, respectively. The remaining net sales are derived from the Company’s Wholesale segment that distributes apparel to its Retail segment and to approximately 1,800 better department and specialty retailers worldwide.

The Company has aggregated its brands into the 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 inventory 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. Direct-to-consumer orders may also be picked up at a store location. Customers may also return certain merchandise purchased through direct-to-consumer channels at retail locations. 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 complete a sale that otherwise may not have occurred 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  
     2016     2015     2014  

Net sales

       

Retail operations

    $ 3,184,955      $ 3,097,274      $ 2,908,981   

Wholesale operations

      273,603        237,491        185,792   

Intersegment elimination

      (13,424 )      (11,688 )      (8,165 ) 
  

 

 

    

 

 

    

 

 

  

Total net sales

    $ 3,445,134      $ 3,323,077      $ 3,086,608   
  

 

 

    

 

 

    

 

 

  

Income from operations

       

Retail operations

    $ 342,885      $ 354,326      $ 414,734   

Wholesale operations

      54,444        55,403        42,191   

Intersegment elimination

      (1,096 )      (1,079 )      (837 ) 
  

 

 

    

 

 

    

 

 

  

Total segment operating income

      396,233        408,650        456,088   

General corporate expenses

      (42,654 )      (43,265 )      (29,257 ) 
  

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 353,579      $ 365,385      $ 426,831   
  

 

 

    

 

 

    

 

 

  

Depreciation expense for property and equipment

       

Retail operations

    $ 137,963      $ 130,383      $ 120,960   

Wholesale operations

      918        1,031        772   
  

 

 

    

 

 

    

 

 

  

Total depreciation expense for property and equipment

    $ 138,881      $ 131,414      $ 121,732   
  

 

 

    

 

 

    

 

 

  

Inventory

       

Retail operations

    $ 289,170      $ 314,940     

Wholesale operations

      41,053        43,297     
  

 

 

    

 

 

    

Total inventory

    $ 330,223      $ 358,237     
  

 

 

    

 

 

    

Property and equipment, net

       

Retail operations

    $ 859,277      $ 885,200     

Wholesale operations

      3,860        4,032     
  

 

 

    

 

 

    

Total property and equipment, net

    $ 863,137      $ 889,232     
  

 

 

    

 

 

    

Cash paid for property and equipment

       

Retail operations

    $ 134,627      $ 228,682      $ 184,255   

Wholesale operations

      323        1,122        1,846   
  

 

 

    

 

 

    

 

 

  

Total cash paid for property and equipment

    $ 134,950      $ 229,804      $ 186,101   
  

 

 

    

 

 

    

 

 

  

 

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  
     2016      2015      2014  

Net Sales

         

Domestic operations

    $ 3,005,595       $ 2,870,140       $ 2,685,042   

Foreign operations

      439,539         452,937         401,566   
  

 

 

     

 

 

     

 

 

  

Total net sales

    $ 3,445,134       $ 3,323,077       $ 3,086,608   
  

 

 

     

 

 

     

 

 

  

Property and equipment, net

         

Domestic operations

    $ 742,171       $ 745,504      

Foreign operations

      120,966         143,728      
  

 

 

     

 

 

     

Total property and equipment, net

    $ 863,137       $ 889,232