Urban Outfitters 2009 Annual Report Download - page 27

Urban Outfitters also operates a web site that accepts orders directly from customers. The web
site, www.urbanoutfitters.com, was launched in May 2000. The web site captures the spirit of the store
by offering a similar selection of merchandise as found in the stores. As with the Urban Outfitters
catalog, we believe the web site increases the reputation and recognition of the brand with its target
customers, as well as helps to support the strength of Urban Outfitters’ store operations.
In August 2006, Urban Outfitters launched a web site targeting our European customers. The web
site, www.urbanoutfitters.co.uk, captures the spirit of our European stores by offering a similar
selection of merchandise as found in our stores. Fulfillment is provided from a third-party distribution
center located in the United Kingdom. We believe the web site increases the reputation and recognition
of the brand with our European customers as well as helps to support our Urban Outfitters’ European
store operations.
In October 2005, Free People introduced a direct-to-consumer catalog offering select merchandise
most of which is also available in our Free People stores. During fiscal 2009, Free People circulated
approximately 6.7 million catalogs. We believe this catalog has expanded our distribution channels
and increased brand awareness. We plan to expand catalog circulation to approximately 7.4 million
catalogs during fiscal 2010 and intend to increase the level of catalog circulation over the next few
years.
Free People also operates a web site that accepts orders directly from customers. The web site,
www.freepeople.com, was launched in September 2004. The web site exposes consumers to the
product assortment found at Free People retail stores as well as all of the Free People wholesale
offerings. As with our catalog, we believe that the web site increases Free People’s reputation and
brand recognition with its target customers and helps support the traffic of Free People’s store
operations.
Direct-to-consumer sales were approximately 14.9% of consolidated net sales for fiscal 2009.
Wholesale
The Free People wholesale division designs, develops and markets young women’s contemporary
casual apparel. Free People’s range of tops, bottoms, sweaters and dresses were sold worldwide
through approximately 1,800 better department and specialty stores, including Bloomingdale’s,
Nordstrom, Lord & Taylor, Belk, Urban Outfitters and our own Free People stores. Free People
wholesale sales accounted for approximately 5.8% of consolidated net sales for fiscal 2009.
During the second quarter of fiscal 2009, we launched Leifsdottir, the Anthropologie brand’s
wholesale division. Leifsdottir designs, develops and markets sophisticated women’s contemporary
apparel including dresses, tops and bottoms. Leifsdottir is sold through luxury department stores
including Bloomingdale’s, Nordstrom, Neiman Marcus and Bergdorf Goodman, select specialty stores
and our own Anthropologie stores. Leifsdottir wholesale sales accounted for less than 1% of total
consolidated net sales for fiscal 2009.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. These generally accepted accounting principles
require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of net sales and expenses during the reporting period.
25