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Segment Reporting
 6 Months Ended
Jul. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting

13. Segment Reporting

The Company offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands. The Company operates three reportable segments – “Retail,” “Wholesale” and “Subscription.”

The Company’s Retail segment consists of the Anthropologie, Bhldn, Free People, Terrain, Urban Outfitters and Menus & Venues brands. 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’s Retail segment omni-channel strategy enhances its customers’ brand experience by providing a seamless approach to the customer shopping experience. All available Company-owned Retail segment shopping channels are fully integrated, including stores, websites, mobile applications, catalogs and customer contact centers.

The Company’s Wholesale segment consists of the Free People, Anthropologie and Urban Outfitters brands. The Wholesale segment sells through department and specialty stores worldwide, digital businesses and the Retail segment. The Company plans for the Anthropologie brand to exit the wholesale business by the end of the third quarter of fiscal 2021.

The Subscription segment consists of the Nuuly brand, which is a monthly women’s apparel subscription rental service that launched on July 30, 2019. Prior year expenses related to the Subscription segment that were classified as “Retail operations” and “General corporate expenses” have been reclassified to the Subscription segment as a result of the establishment of the Subscription segment in the first quarter of fiscal 2020. Property and equipment related to the Subscription segment have also been reclassified from the Retail segment.

The Company evaluates the performance of each segment based on the net sales and pre-tax income from operations (excluding intercompany charges) of the segment. The Company accounts for intersegment sales and transfers as if the sales and transfers were made to third parties making similar volume purchases. Corporate expenses include expenses incurred and directed by the corporate office that are not allocated to segments. The principal identifiable assets for the Retail and Wholesale segments are inventory and property and equipment. The principal identifiable assets for the Subscription segment are rental product and property and equipment.

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, 2020. All of the Company’s 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:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

July 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

757,471

 

 

$

878,693

 

 

$

1,318,703

 

 

$

1,661,256

 

Wholesale operations

 

 

49,877

 

 

 

86,153

 

 

 

75,589

 

 

 

170,518

 

Subscription operations

 

 

4,672

 

 

 

—

 

 

 

10,942

 

 

 

—

 

Intersegment elimination

 

 

(8,754

)

 

 

(2,517

)

 

 

(13,485

)

 

 

(5,032

)

Total net sales

 

$

803,266

 

 

$

962,329

 

 

$

1,391,749

 

 

$

1,826,742

 

Income (loss) from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

58,405

 

 

$

78,997

 

 

$

(77,096

)

 

$

113,691

 

Wholesale operations

 

 

14,161

 

 

 

15,354

 

 

 

(31,467

)

 

 

32,115

 

Subscription operations

 

 

(4,611

)

 

 

(3,536

)

 

 

(10,575

)

 

 

(5,637

)

Intersegment elimination

 

 

(84

)

 

 

312

 

 

 

(494

)

 

 

249

 

Total segment operating income (loss)

 

 

67,871

 

 

 

91,127

 

 

 

(119,632

)

 

 

140,418

 

General corporate expenses (1)

 

 

1,548

 

 

 

(13,066

)

 

 

(9,684

)

 

 

(22,337

)

Total income (loss) from operations

 

$

69,419

 

 

$

78,061

 

 

$

(129,316

)

 

$

118,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) General corporate expenses during the three and six months ended July 31, 2020 benefitted from the recognition of coronavirus related government relief packages in the three months ended July 31, 2020.

 

 

 

 

July 31,

 

 

January 31,

 

 

July 31,

 

 

 

2020

 

 

2020

 

 

2019

 

Inventory

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

321,885

 

 

$

347,837

 

 

$

376,050

 

Wholesale operations

 

 

29,886

 

 

 

61,697

 

 

 

64,037

 

Total inventory

 

$

351,771

 

 

$

409,534

 

 

$

440,087

 

Rental product, net (1)

 

 

 

 

 

 

 

 

 

 

 

 

Subscription operations

 

$

15,764

 

 

$

16,447

 

 

$

2,913

 

Total rental product, net

 

$

15,764

 

 

$

16,447

 

 

$

2,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Rental product, net is included in "Deferred income taxes and other assets" in the Condensed Consolidated Balance Sheets.

 

 

Property and equipment, net

 

 

 

 

 

 

 

 

 

 

 

 

Retail operations

 

$

859,188

 

 

$

859,918

 

 

$

841,013

 

Wholesale operations

 

 

2,375

 

 

 

2,577

 

 

 

2,637

 

Subscription operations

 

 

27,563

 

 

 

27,537

 

 

 

23,784

 

Total property and equipment, net

 

$

889,126

 

 

$

890,032

 

 

$

867,434

 

The following tables summarize net sales and percentage of net sales from contracts with customers by merchandise category:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

July 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apparel (1)

 

$

507,930

 

 

$

642,914

 

 

$

878,277

 

 

$

1,231,640

 

Home (2)

 

 

156,621

 

 

 

144,962

 

 

 

266,420

 

 

 

269,510

 

Accessories (3)

 

 

89,751

 

 

 

116,613

 

 

 

159,944

 

 

 

216,881

 

Other (4)

 

 

48,964

 

 

 

57,840

 

 

 

87,108

 

 

 

108,711

 

Total net sales

 

$

803,266

 

 

$

962,329

 

 

$

1,391,749

 

 

$

1,826,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apparel (1)

 

 

63

%

 

 

67

%

 

 

63

%

 

 

67

%

Home (2)

 

 

19

%

 

 

15

%

 

 

19

%

 

 

15

%

Accessories (3)

 

 

12

%

 

 

12

%

 

 

12

%

 

 

12

%

Other (4)

 

 

6

%

 

 

6

%

 

 

6

%

 

 

6

%

Total net sales

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)   Apparel includes intimates and activewear

 

(2)   Home includes home furnishings, electronics, gifts and decorative items

 

(3)   Accessories includes footwear, jewelry and handbags

 

(4)   Other includes beauty, shipping and handling, the Menus & Venues brand and the Subscription segment

 

 

Apparel, Home, and Accessories are sold through both the Retail and Wholesale segments. Revenue recognized from the Other category is primarily attributable to the Retail segment.

The Company has foreign operations primarily in Europe and Canada. Revenues and long-lived assets, based upon the Company’s domestic and foreign operations, are as follows:

 

 

 

July 31,

 

 

January 31,

 

 

July 31,

 

 

 

2020

 

 

2020

 

 

2019

 

Property and equipment, net

 

 

 

 

 

 

 

 

 

 

 

 

Domestic operations

 

$

722,934

 

 

$

763,411

 

 

$

774,378

 

Foreign operations

 

 

166,192

 

 

 

126,621

 

 

 

93,056

 

Total property and equipment, net

 

$

889,126

 

 

$

890,032

 

 

$

867,434

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 31,

 

 

July 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic operations

 

$

709,697

 

 

$

840,316

 

 

$

1,233,253

 

 

$

1,603,405

 

Foreign operations

 

 

93,569

 

 

 

122,013

 

 

 

158,496

 

 

 

223,337

 

Total net sales

 

$

803,266

 

 

$

962,329

 

 

$

1,391,749

 

 

$

1,826,742