Urban Outfitters 2012 Annual Report Download - page 35

Table of Contents
The increase in net sales attributable to non-comparable and new stores was primarily the result of opening 46 new stores in fiscal 2011 and 33 new
stores in fiscal 2010 that were considered non-comparable during fiscal 2011. Comparable store net sales increases were primarily the result of an increase in
the number of transactions and units sold per transaction, partially offset by a decrease in the average unit sales prices. Direct-to-consumer net sales in fiscal
year 2011 increased over the prior year primarily due to increased traffic to our websites combined with an increase in average order value, which more than
offset a decrease in conversion rate. Catalog circulation across all brands increased by 2.8 million, or 7.7%. The increase in Free People wholesale net sales
was driven by increases in transactions and average unit sale prices. Leifsdottir's wholesale net sales increase was a result of an increase in the number of
transactions that more than offset a decrease in average unit sale prices.
Gross profit rates in fiscal 2011 increased to 41.2% of net sales, or $937 million, from 40.6% of net sales, or $786 million, in fiscal 2010. This increase
was primarily due to improved merchandise margins and leveraging of store occupancy expense driven by positive comparable store sales. Total Company
inventory increased 23.3% to $230 million from $186 million in the prior year. The increase is primarily related to the acquisition of inventory to stock new
stores and our direct-to-consumer channel growth. Comparable retail segment inventory (which includes our direct-to-consumer channel) grew 9.7%, while
comparable store inventories increased 4.4%.
Selling, general and administrative expenses, as a percentage of net sales for fiscal 2011, decreased to 23.0% of net sales versus 23.1% of net sales for
fiscal 2010. The decrease in percentage was primarily due to leveraging of direct store fixed and controllable costs driven by the positive retail segment
comparable sales. In fiscal 2011, selling, general and administrative expenses increased by $75 million, to $522 million, from $447 million in the prior fiscal
year. The dollar increase versus the prior year is primarily related to the operating expenses of new and non-comparable stores.
Income from operations increased to 18.2% of net sales, or $414 million, for fiscal 2011 compared to 17.5% of net sales, or $339 million, for fiscal
2010.
Our annual effective income tax rate for January 31, 2011 decreased to 34.6% of income before income taxes for fiscal 2011 compared to 36.2% of
income before income taxes for fiscal 2010. This decrease was due to the favorable mix of earnings in certain foreign jurisdictions and the federal
rehabilitation credit included in fiscal 2011. See Note 8 "Income Taxes" in our Notes to the Consolidated Financial Statements, for a reconciliation of the
statutory U.S. federal income tax rate to our effective tax rate.
Liquidity and Capital Resources
Cash, cash equivalents and marketable securities were $362 million as of January 31, 2012 as compared to $809 million as of January 31, 2011 and
$745 million as of January 31, 2010. The $447 million decrease in cash, cash equivalents and marketable securities during fiscal 2012 was primarily a result
of $545 million of cash used for repurchases of our common shares and $190 million of cash used for purchases of property and equipment, partially offset by
$283 million of cash provided by operating activities.
Cash provided by operating activities, for fiscal 2012, decreased by $102 million to $283 million from $385 million in fiscal 2011. The decrease was
primarily due to lower net income in fiscal 2012. Our working capital for fiscal years 2012, 2011 and 2010 was $364 million, $593 million and $618
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