XML 21 R9.htm IDEA: XBRL DOCUMENT
v3.20.2

Impact of the Coronavirus Pandemic | 6 Months Ended
--- | ---
Jul. 31, 2020
Extraordinary And Unusual Items [Abstract] |
Impact of the Coronavirus Pandemic | 2. Impact of the Coronavirus Pandemic On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide, causing public health officials to recommend precautions to mitigate the spread of the virus, including warning against congregating in heavily populated areas, such as malls and shopping centers. On March 14, 2020, the Company announced that it temporarily closed all stores globally; however, the Company continued to fulfill digital orders from its stores where permitted by local authorities. The Company’s distribution and fulfillment centers remained open to support the digital business and the Wholesale segment operations but have done so with additional safety procedures and enhanced cleaning to protect the health of employees. The Company closed its offices and showrooms globally with the exception of location dependent employees. All other corporate and showroom employees are working remotely. The coronavirus pandemic continues to materially impact the Company’s operations in the United States and globally, and related government and private sector responsive actions have and will continue to affect its business operations. Because it is impossible to predict the effect and ultimate impact of the coronavirus pandemic, current financial information may not be necessarily indicative of future operating results and the Company’s plans as described below may change. In response to the coronavirus pandemic, the Company has taken many additional measures to protect its financial position and increase financial flexibility during this challenging time period. Those include:
| • | Furloughing a substantial number of store, wholesale and home office associates through July 31, 2020, with some furloughs resulting in layoffs as of the same date,
| • | Limiting all new hiring commensurate with the operational needs of the Company,
| • | Suspending all performance bonuses for fiscal 2021 and delaying merit increases until September 2020,
| • | Borrowing $220,000, and subsequently repaying $100,000 on June 17, 2020, under its Amended Credit Facility (as defined herein) to further protect its cash reserves (see Note 6, “Debt”),
| • | Reducing capital budget by over $45,000 from approximately $260,000 to approximately $215,000 by delaying or cancelling projects,
| • | Adjusting inventory levels by cancelling or delaying many orders, asking for price concessions on those remaining and overall tighter management of inventory as stores reopened,
| • | Reducing all non-payroll expenses, including creative, marketing and travel, among others,
| • | Extending payment terms for both merchandise and non-merchandise vendor invoices by 30 days,
| • | Reducing certain occupancy and occupancy related expenses,
| • | Reducing investments in two Company growth initiatives: Nuuly and expansion into China,
| • | Reducing senior leadership compensation for the duration of the furlough time period and extending until the merit increases were approved in September 2020,
| • | Eliminating Board of Directors’ cash compensation through the date of the 2021 Annual Meeting of Shareholders, and
| • | Temporarily suspending share repurchases (see Note 9, “Shareholders’ Equity”).
As a result of the coronavirus pandemic, during the six months ended July 31, 2020, the Company recorded certain additional reserves and non-cash charges. The Company assessed the value of its inventory in the Retail and Wholesale segments and recorded an increase in inventory obsolescence reserves during the three months ended April 30, 2020. As a result of disciplined inventory control and better than planned product performance, during the three months ended July 31, 2020, the Company reduced its inventory obsolescence reserves. During the three months ended April 30, 2020, the Company recorded an increase in allowance for doubtful accounts for Wholesale segment customer accounts receivables as a result of the significant disruption and uncertainty in the wholesale macro environment. During the three months ended July 31, 2020, the Company reduced the allowance for doubtful accounts due to the collection of certain outstanding accounts receivables. Finally, during the three months ended April 30, 2020, the Company determined that certain long-lived assets at the Company’s retail locations were unable to recover their carrying value primarily due to the impact of the mandated store closures and anticipated reduced store net sales during the remainder of fiscal 2021 as a result of the coronavirus pandemic. These assets were written down to their fair value resulting in impairment charges across 39 retail locations. There were no store impairment charges during the three months ended July 31, 2020. The following is a summary of net charges recorded during fiscal 2021:
|  | Three Months Ended |  |  | Three Months Ended |  |  | Six Months Ended |
|  | April 30, 2020 |  |  | July 31, 2020 |  |  | July 31, 2020 |
Inventory obsolescence reserves |  | $ | 43,327 |  |  | $ | (21,673 | ) |  | $ | 21,654 |
Allowance for doubtful accounts |  |  | 5,800 |  |  |  | (2,200 | ) |  |  | 3,600 |
Store impairment |  |  | 14,528 |  |  |  | — |  |  |  | 14,528 |
As a result of the global coronavirus pandemic, governments in the United States, United Kingdom (“U.K.”), Canada and various other jurisdictions have implemented programs to encourage companies to retain and pay employees that are unable to work or are limited in the work that they can perform in light of closures or a significant decline in sales. As such, the Company qualified for certain of these programs, which partially offset related expenses, and recorded the cumulative benefit in selling, general and administrative expenses during the three months ended July 31, 2020. The Company continued to pay all employees through at least April 1, 2020. On March 31, 2020, the Company announced it furloughed a substantial number of store, wholesale and home office employees beginning April 1, 2020. The furlough period continued through July 31, 2020, with some furloughs resulting in layoffs as of the same date. Impacted employees continued to receive enrolled benefits during the furlough period. Beginning April 25, 2020, the Company started to reopen stores in select states and countries in accordance with local government guidelines. As of July 31, 2020, the Company reopened substantially all of its stores globally as states and countries permitted the reopening of retail operations. A summary of the number of stores open by brand and geography was as follows:
|  | April 30, |  |  | May 31, |  |  | June 30, |  |  | July 31, |
|  | 2020 |  |  | 2020 |  |  | 2020 |  |  | 2020 |
Urban Outfitters |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  |  | 2 |  |  |  | 108 |  |  |  | 182 |  |  |  | 186 |
Europe |  |  | 5 |  |  |  | 24 |  |  |  | 54 |  |  |  | 55 |
Urban Outfitters Global Total |  |  | 7 |  |  |  | 132 |  |  |  | 236 |  |  |  | 241 |
Anthropologie Group |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  |  | 5 |  |  |  | 122 |  |  |  | 209 |  |  |  | 209 |
Europe |  |  | — |  |  |  | 5 |  |  |  | 21 |  |  |  | 21 |
Anthropologie Group Global Total |  |  | 5 |  |  |  | 127 |  |  |  | 230 |  |  |  | 230 |
Free People |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  |  | 2 |  |  |  | 72 |  |  |  | 135 |  |  |  | 135 |
Europe |  |  | — |  |  |  | 2 |  |  |  | 4 |  |  |  | 4 |
Free People Global Total |  |  | 2 |  |  |  | 74 |  |  |  | 139 |  |  |  | 139 |
Total |  |  | 14 |  |  |  | 333 |  |  |  | 605 |  |  |  | 610 |

X
- References No definition available. + Details
Name: | us-gaap_ExtraordinaryAndUnusualItemsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for an event or transaction that is unusual in nature or infrequent in occurrence, or both. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 220 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=114868817 + Details
Name: | us-gaap_UnusualOrInfrequentItemsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration