Urban Outfitters 2009 Annual Report Download - page 25

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We operate two business segments: A leading lifestyle merchandising retailing segment and a
wholesale apparel segment. Our retailing segment consists of our Urban Outfitters, Anthropologie,
Free People and Terrain brands, whose merchandise is sold directly to our customers through our
stores, catalogs, call centers and web sites. Our wholesale apparel segment consists of our Free People
wholesale division and Leifsdottir, Anthropologie’s recently launched wholesale division. Free People
wholesale designs, develops and markets young women’s contemporary casual apparel. Leifsdottir
designs, develops and markets sophisticated women’s contemporary apparel.
A store is included in comparable store net sales data, as presented in this discussion, if it has
been open at least one full fiscal year prior to fiscal 2009, unless it was materially expanded or
remodeled within that year or was not otherwise operating at its full capacity within that year. Sales
from stores that do not fall within the definition of a comparable store are considered non-comparable.
Furthermore, non-store sales, such as catalog and website related sales and foreign currency translation
adjustments are also considered non-comparable.
Although we have no precise empirical data as it relates to customer traffic or customer
conversion rates in our stores, we believe that, based only on our observations, changes in transaction
volume, as discussed in our results of operations, may correlate to changes in customer traffic.
Transaction volume changes may be caused by a combination of response to our brands’ fashion
offerings, our web advertising, circulation of our catalogs and an overall growth in brand recognition
as we expand our store base.
Our fiscal year ends on January 31. All references in this discussion to our fiscal years refer to the
fiscal years ended on January 31 in those years. For example, our fiscal 2009 ended on January 31,
2009. The comparable store net sales data presented in this discussion is calculated based on the net
sales of all stores open at least 12 full months at the beginning of the period for which such data is
presented.
Our historical and long-term goal is to achieve a net sales compounded annual growth rate of 20%
or better through a combination of opening new stores, growing comparable store sales, continuing the
growth of our direct-to-consumer and wholesale operations and introducing new concepts.
Retail Stores
As of January 31, 2009, we operated 142 Urban Outfitters stores of which 118 are located in the
United States, 7 are located in Canada and 17 are located in Europe. During fiscal 2009, we opened 20
new Urban Outfitters stores, 12 of which are located within the United States, 3 of which are located in
Canada, and 5 of which are located in Europe. Urban Outfitters targets young adults aged 18 to 30
through a unique merchandise mix and compelling store environment. Our product offering includes
women’s and men’s fashion apparel, footwear and accessories, as well as an eclectic mix of apartment
wares and gifts. We plan to open additional stores over the next several years, some of which may be
outside the United States. Urban’s North American and European store sales accounted for
approximately 35.9% and 6.2% of consolidated net sales, respectively, for fiscal 2009.
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