Urban Outfitters 2011 Annual Report Download - page 27

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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, Terrain, Leifsdottir and BHLDN 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 our Leifsdottir wholesale division. Free People
wholesale designs, develops and markets young women’s contemporary casual apparel. Leifsdottir
wholesale designs, develops and markets sophisticated women’s contemporary apparel.
Our comparable retail segment net sales data includes our comparable store and comparable
direct-to-consumer channels. A store is included in comparable retail segment net sales data, as
presented in this discussion, if it has been open at least one full fiscal year, unless it was materially
expanded or remodeled within that year or was not otherwise operating at its full capacity within that
year. A direct-to-consumer channel is included in comparable retail segment net sales data, as
presented in this discussion, if it has been operational for at least one full fiscal year. Sales from stores
and direct-to-consumer channels that do not fall within the definition of a comparable store or channel
are considered non-comparable. The effects of foreign currency translation 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 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 2011 ended on January 31,
2011.
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 Store
As of January 31, 2011, we operated 176 Urban Outfitters stores of which 144 are located in the
United States, 10 are located in Canada and 22 are located in Europe. During fiscal 2011, we opened
21 new Urban Outfitters stores, 14 of which are located within the United States, 3 of which are
located in Canada and 4 of which are located in Europe. Urban Outfitters targets young adults aged 18
to 28 through a unique merchandise mix and compelling store environment. Urban Outfitters’ 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 Outfitters’ North American and European store sales
accounted for approximately 31.8% and 5.3% of consolidated net sales, respectively, for fiscal 2011.
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