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What changed in URBAN OUTFITTERS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of URBAN OUTFITTERS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+263 added−273 removedSource: 10-K (2023-04-03) vs 10-K (2022-04-01)

Top changes in URBAN OUTFITTERS INC's 2023 10-K

263 paragraphs added · 273 removed · 212 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

67 edited+12 added−8 removed50 unchanged
Biggest changeIn addition, the brand offers a catalog in North America that market s select merchandise, most of which is also available in Anthropologie brand stores. The Bhldn brand emphasizes every element that contributes to a wedding. The brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations.
Biggest changeThe brand also has a wedding collection consisting of wedding dresses, bridesmaid dresses, party dresses, bridal accessories and decor. A catalog is offered in North America that markets select merchandise, most of which is also available in Anthropologie brand stores.
We recognize the need for high-quality information to manage merchandise planning, buying, inventory management and control functions and have therefore invested in a retail software package that meets our processing and reporting requirements. We utilize point-of-sale register systems connected by a secure data network to our home offices.
Information Systems. We recognize the need for high-quality information to manage merchandise planning, buying, inventory management and control functions and have therefore invested in a retail software package that meets our processing and reporting requirements. We utilize point-of-sale register systems connected by a secure data network to our home offices.
To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their merchandise, any event causing a disruption of imports, such as the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns (including global pandemics such as COVID-19), acts of terrorism, natural disasters (including as a result of climate change), port security considerations or labor disputes, financial or political instability in any of the countries in which merchandise we purchase is manufactured, the effects of Brexit, changes to U.S. or foreign trade policies, including the enactment of tariffs, border adjustment taxes, or increases in duties or quotas, disruption in the supply of fabrics or raw materials, transportation capacity shortages and delays, increases in the cost of fuel or decreases in the value of the U.S. dollar relative to foreign currencies could adversely affect 5 our business.
To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their merchandise, any event causing a disruption of imports, such as the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns (including global pandemics such as COVID-19), acts of terrorism, natural disasters (including as a result of climate change), port security considerations or labor disputes, financial or political instability in any of the countries in which merchandise we purchase is manufactured, the effects of Brexit, changes to U.S. or foreign trade policies, including the enactment of tariffs, border adjustment taxes, or increases in duties or quotas, disruption in the supply of fabrics or raw materials, transportation capacity shortages and delays, increases in the cost of fuel or decreases in the value of the U.S. dollar relative to foreign currencies could adversely affect our business.
Following our experience with remote work during the COVID-19 pandemic, depending on business needs, individual performance, and other factors, we permit employees to work under a “hybrid” mix of in-person and remote work, fully in-office or fully remote positions as necessary to meet business needs while providing employees flexibility to match their own preferences. 7 Diversity and Inclusion.
Following our experience with remote work during the COVID-19 pandemic, depending on business needs, individual performance, and other factors, we permit employees to work under a “hybrid” mix of in-person and remote work, fully in-office or fully remote positions as necessary to meet business needs while providing employees flexibility to match their own preferences. Diversity and Inclusion.
Seasonality Our business is subject to seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory.
Seasonality Our business is subject to seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory. 8
The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The Anthropologie brand’s unique and eclectic internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and 2 wellness .
The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The Anthropologie brand’s unique and eclectic internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and wellness.
Some of our competitors have substantially greater name recognition as well as financial, marketing and other resources. Our Anthropologie Group and Free People Group stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers.
Some of our competitors have substantially greater name recognition as well as greater access to financial, marketing and other resources. Our Anthropologie Group and Free People Group stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers.
In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. 6 Along with certain Retail segment competitive factors noted above, other key factors for our digital channel include website and mobile application availability, the effectiveness of our customer lists and the speed and accuracy of our merchandise delivery.
In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. Along with certain Retail segment competitive factors noted above, other key factors for our digital channel include website and mobile application availability, the effectiveness of our customer lists and the speed and accuracy of our merchandise delivery.
The Free People Group operates websites and mobile applications in North America, Europe and Asia that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement wholesale offerings.
The Free People Group operates websites and mobile applications in North America and Europe that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement wholesale offerings.
We include diversity and inclusion initiatives as bonus goals for members of the executive team to drive progress to our goals . We have offered bias training to our entire field and home office organization and fulfillment center management.
We include diversity and inclusion initiatives as bonus goals for members of the executive team to drive progress towards our goals. We have offered bias training to our entire field and home office organization and fulfillment center management.
We operate under three reportable segments – Retail, Wholesale and Nuuly. Our Retail segment includes our store and digital channels and consists of our Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands.
We operate under three reportable segments – Retail, Wholesale and Nuuly. Our Retail segment includes our store and digital channels and consists of our Anthropologie, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands.
We also are active in social media and third-party digital platforms. We believe that the traditional method of a one-way communication to customers is no longer enough.
We also are active in social media and third-party digital platforms. We believe that the traditional method of a one-way communication to customers is no longer 4 enough.
We have over 51 years of experience creating and managing retail stores that offer highly differentiated collections of fashion apparel, accessories and home goods, among other things, in inviting and dynamic store settings. Our core strategy is to provide unified environments that establish emotional bonds with the customer, through Company-owned stores and franchisee-owned stores.
We have over 52 years of experience creating and managing retail stores that offer highly differentiated collections of fashion apparel, accessories and home goods, among other things, in inviting and dynamic store settings. Our core strategy is to provide unified environments that establish emotional bonds with the customer, through Company-owned stores and franchisee-owned stores.
Additionally, o ur digital channel competes against numerous websites, mobile applications , catalogs and digital marketplaces , which may have a greater volume of circulation and web traffic or more effective marketing through online media and social networking sites. Our Wholesale segment competes with numerous wholesale companies on the basis of quality, price, performance and fashion of our merchandise offerings.
Additionally, our digital channel competes against numerous websites, mobile applications, catalogs and digital marketplaces, which may have a greater volume of circulation and web traffic or more effective marketing through online media and social networking sites. Our Wholesale segment competes with numerous wholesale companies on the basis of quality, price, performance and fashion of our merchandise offerings.
All available Company-owned Retail segment shopping channels are fully integrated, including stores, websites, mobile applications, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels.
All available Company-owned Retail segment shopping channels are fully integrated, including retail locations, websites, mobile applications, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels.
The COVID-19 pandemic had a negative impact on our results for the fiscal year ended January 31, 2021, and continued to impact our operations for the fiscal year ended January 31, 2022. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations–Overview– Current Trends for further discussion.
The COVID-19 pandemic had a negative impact on our results for the fiscal year ended January 31, 2021 and continued to impact our operations for the fiscal years ended January 31, 2023 and 2022. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations–Overview– Current Trends for further discussion.
Subscribers are also able to purchase the rented product. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s and kids’ apparel, shoes and accessories from any brands.
Subscribers are also able to purchase the rented product. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell any brand of women’s, men’s and kids’ apparel, shoes and accessories from any brands.
Our Wholesale segment net sales accounted for approximately 5.5 % of consolidated net sales for fiscal 202 2 . Nuuly Segment Nuuly. Our Nuuly segment consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift. Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019.
Our Wholesale segment net sales accounted for approximately 5.2% of consolidated net sales for fiscal 2023. Nuuly Segment Our Nuuly segment consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift. Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019.
Milestones in our Company’s growth are as follows: • 1970: First Urban Outfitters store opened near the University of Pennsylvania campus in Philadelphia, Pennsylvania • 1976: Incorporated in the Commonwealth of Pennsylvania • 1984: Free People Wholesale division established 1 • 1992: First Anthropologie store opened in Wayne, Pennsylvania • 1993: Initial public offering of URBN shares on NASDAQ • 1998: First European Urban Outfitters store opened in London; Anthropologie website launched • 1999: Urban Outfitters website launched • 2002: First Free People store opened in the Garden State Plaza Mall in Paramus, New Jersey • 2004: Free People website launched • 2008: First Terrain garden center opened in Glen Mills, Pennsylvania • 2009: First European Anthropologie store opened in London • 2018: Urban Outfitters Wholesale division established; first European Free People store opened in Amsterdam • 2019: Launch of Nuuly Rent, a subscription rental service • 2020: First FP Movement store opened in Los Angeles, California • 2021: Launch of Nuuly Thrift, a peer-to-peer resale marketplace Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience.
Milestones in our Company’s growth are as follows: • 1970: First Urban Outfitters store opened near the University of Pennsylvania campus in Philadelphia, Pennsylvania • 1976: Incorporated in the Commonwealth of Pennsylvania • 1984: Free People Wholesale division established • 1992: First Anthropologie store opened in Wayne, Pennsylvania • 1993: Initial public offering of URBN shares on NASDAQ • 1998: First European Urban Outfitters store opened in London; Anthropologie website launched • 1999: Urban Outfitters website launched • 2002: First Free People store opened in the Garden State Plaza Mall in Paramus, New Jersey • 2004: Free People website launched • 2008: First Terrain garden center opened in Glen Mills, Pennsylvania • 2009: First European Anthropologie store opened in London • 2018: Urban Outfitters Wholesale division established; first European Free People store opened in Amsterdam • 2019: Launch of Nuuly Rent, a subscription rental service • 2020: First FP Movement store opened in Los Angeles, California Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience.
The Urban Outfitters wholesale division, established in 2018, designs and sells the BDG and other own brand apparel collections to select department stores. We display our wholesale products in certain department stores using a shop-within-shop sales model.
The Urban Outfitters wholesale division designs and sells the BDG and other own brand apparel collections to select department stores. We display our wholesale products in certain department stores using a shop-within-shop sales model.
We monitor the styles and products that are popular with our wholesale customers to give us insight into current fashion trends, helping us to better 3 serve our retail customers. W holesale sales and showroom facilities are located in Dallas, New York City , Los Angeles, Chicago and London .
We monitor the styles and products that are popular with our wholesale customers to give us insight into current fashion trends, helping us to better serve our retail customers. Wholesale sales and showroom facilities are located in Dallas, New York City, Los Angeles, Chicago and London.
In exchange for an annual fee, UP provides membership benefits across our entire portfolio of brands, including a gift card, free standard shipping and free returns on all orders, a discount on orders, early access to products and exclusive events and a discount on the monthly Nuuly subscription fee. We plan to expand our test pilot through fiscal 2023.
In exchange for an annual fee, UP provides membership benefits across our entire portfolio of brands, including a gift card, free standard shipping and free returns on all orders, a discount on orders, early access to products and exclusive events and a discount on the monthly Nuuly subscription fee. We plan to continue our test pilot through fiscal 2024.
We plan for our store environment and location strategy to remain consistent over the next several years. Buying and Design Operations Maintaining a constant flow of fresh and fashionable merchandise for our Retail segment is critically important to our ongoing performance.
We plan for our store environment and location strategy to remain consistent over the next several years. 3 Buying and Design Operations Maintaining a constant flow of fresh and fashionable merchandise is critically important to our ongoing performance.
The number of part-time employees fluctuates depending on seasonal needs. Of our total employees, approximately 1% work in the Wholesale segment, 2% work in the Nuuly segment and the remaining 97% work in our Retail segment. Except in certain international locations, our employees are not covered by a collective bargaining agreement.
The number of part-time employees fluctuates depending on seasonal needs. Of our total employees, approximately 1% work in the Wholesale segment, 4% work in the Nuuly segment and the remaining 95% work in our Retail segment. Except in certain international locations, our employees are not covered by a collective bargaining agreement.
Trademarks and Service Marks We are the registered owner in the United States of certain service marks and trademarks, including, but not limited to “Urban Outfitters,” “Anthropologie,” “Free People,” “Bhldn,” “Terrain,” “BDG,” “FP Movement” and “Nuuly.” Each mark is renewable indefinitely, contingent upon continued use at the time of renewal.
Trademarks and Service Marks We are the registered owner in the United States of certain service marks and trademarks, including, but not limited to “Urban Outfitters,” “Anthropologie,” “Free People,” “Bhldn,” “Terrain,” “BDG,” “FP Movement,” “Nuuly” and "URBN." Each mark is renewable indefinitely, contingent upon continued use at the time of renewal.
Item 1. Business General We are a leading lifestyle products and services company that operates a portfolio of global consumer brands comprised of the Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands.
Item 1. B usiness General We are a leading lifestyle products and services company that operates a portfolio of global consumer brands comprised of the Anthropologie, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands.
We plan to open approximately 10 Urban Outfitters stores and close approximately 5 Urban Outfitters stores due to lease expiration, globally, in fiscal 2023. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements.
We plan to open approximately 8 Urban Outfitters stores and close approximately 8 Urban Outfitters stores due to lease expiration, globally, in fiscal 2024. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements.
During fiscal 2022, the Wholesale segment’s range of young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People brand and the BDG and other own brand apparel collections under the Urban Outfitters brand were sold through department and specialty stores worldwide, including Nordstrom, Dillard’s, digital businesses and our Retail segment.
The Wholesale segment’s range of young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People brand and the BDG and other own brand apparel collections under the Urban Outfitters brand are sold through department and specialty stores worldwide, including Nordstrom, Dillard’s, digital businesses and our Retail segment.
The Free People Group also offers catalogs that market select merchandise, most of which is also available in our Free People and FP Movement stores. We plan for future digital channel growth to come from expansion domestically and internationally. The Free People Group’s North American Retail segment net sales accounted for approximately 16.3% for fiscal 2022.
The Free People Group also offers catalogs that market select merchandise, most of which is also available in our Free People and FP Movement stores. We plan for future digital channel growth to come from expansion domestically and internationally. The Free People Group’s North American Retail segment net sales accounted for approximately 17.5% for fiscal 2023.
We host digital and business applications across private cloud infrastructure as well as have our own fully redundant data centers, located at the Philadelphia Navy Yard and at our Reno fulfillment center. All systems are fully redundant and have full disaster recovery plans either within our private cloud or our own data centers.
We host digital and business applications across cloud infrastructure as well as have our own fully redundant data centers, located at our home offices in the Philadelphia Navy Yard and at our Reno fulfillment center. All systems are fully redundant and have full disaster recovery plans either within our cloud providers or our own data centers.
Sellers on Nuuly Thrift can transfer their earnings to their bank account or convert them to “Nuuly Cash,” a gift card with a bonus to be used at any of the Company’s brands. The Company earns a commission based on sales made in the marketplace. Nuuly segment net sales accounted for approximately 1.1% of consolidated net sales for fiscal 2022.
Sellers on Nuuly Thrift can transfer their earnings to their bank account or convert them to “Nuuly Cash,” a gift card with a bonus to be used at any of the Company’s brands. Nuuly Thrift earns a commission based on sales made in the marketplace. Nuuly segment net sales accounted for approximately 2.7% of consolidated net sales for fiscal 2023.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor relations website, www.urbn.com/investor-relations , as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
For example, our fiscal 2023 ended on January 31, 2023. 1 Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor relations website, www.urbn.com/investor-relations , as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
In addition to a store leader, the staff of a typical store includes a combination of some or all of the following positions: a visual merchandising manager, several department managers and full and part-time sales and visual staff.
In addition to a store leader, the staff of a store can include a combination of some or all of the following positions: a visual merchandising manager, several department managers and full and part-time sales and visual staff.
European and Asian Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2022. Menus & Venues. The Menus & Venues brand focuses on a dining experience that provides excellence in food, beverage and service. As of January 31, 2022, we operated 10 restaurants, all of which were located in the United States.
European Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2023. Menus & Venues. The Menus & Venues brand focuses on a dining and event experience that provides excellence in food, beverage and service. As of January 31, 2023, we operated 11 locations, all of which were located in the United States.
We have achieved compounded annual sales growth of approximately 5% over the past five years, with sales of approximately $4.5 billion during the fiscal year ended January 31, 2022.
We have achieved compounded annual sales growth of approximately 6% over the past five years, with sales of approximately $4.8 billion during the fiscal year ended January 31, 2023.
The Wholesale segment sells through department and specialty stores worldwide, digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets apparel, intimates and activewear. Our Nuuly segment, formerly known as the Subscription segment, consists of the Nuuly brand, which offers customers with a more sustainable way to explore fashion.
The Wholesale segment sells through department and specialty stores worldwide, digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets apparel, intimates and activewear. Our Nuuly segment consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift and offers customers a more sustainable way to explore fashion.
I n July 2020 , we created a Diversity & Inclusion Committee that is tasked with reporting and recommending actions aligned to those commitments to our executive team . In 2021, based on a recommendation from the Diversity & Inclusion Committee, we worked with employees to create a suite of Employee Resource Groups (“ERGs”).
We maintain a Diversity & Inclusion Committee which is tasked with reporting and recommending actions aligned to those commitments to our executive team. In 2021, based on a recommendation from the Diversity & Inclusion Committee, we worked with employees to create a suite of Employee Resource Groups (“ERGs”).
During fiscal 202 2 , we purchased merchandise from approximately 4, 0 00 vendors located throughout the world. No single vendor or manufacturer accounted for more than 10% of merchandise purchased during that time. W e do not believe that the loss of any one vendor would have a material adverse effect on our business. Company Operations Distribution.
During fiscal 2023, we purchased merchandise from approximately 5,000 vendors located throughout the world. No single vendor or manufacturer accounted for more than 10% of merchandise purchased during that time. We do not believe that the loss of any one vendor would have a material adverse effect on our business. Company Operations Distribution.
Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s and kids’ clothes, shoes and accessories from any brands.
Nuuly Rent is a monthly women’s apparel subscription rental service. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell any brand of women’s, men’s and kids’ apparel, shoes and accessories.
Of the 173 Free People Group stores open as of January 31, 2022, 20 were FP Movement stores, all located in the United States. We plan to open approximately 28 new Free People Group stores (including 16 FP Movement stores) and close approximately 1 Free People Group store due to lease expiration, globally, in fiscal 2023.
Of the 188 Free People Group stores open as of January 31, 2023, 31 were FP Movement stores, all located in the United States. We plan to open approximately 17 new Free People Group stores (including 10 FP Movement stores) and close approximately 1 Free People Group store due to lease expiration, globally, in fiscal 2024.
Varying by level, our compensation strategy is built around providing a mix of salary or hourly pay, cash based short-term incentives, and equity based long-term incentives to employees.
Compensation, Benefits and Wellness . We aim to offer competitive compensation and category leading benefits to our employees. Varying by level, our compensation strategy is built around providing a mix of salary or hourly pay, cash based short-term incentives, and equity based long-term incentives to employees.
We plan for future digital channel growth to come from expansion domestically and internationally. The Anthropologie Group’s North American Retail segment net sales accounted for approximately 37.4% of consolidated net sales for fiscal 2022. European and Asian Retail segment net sales accounted for approximately 2.0% of consolidated net sales for fiscal 2022. Free People Group.
We plan for future digital channel growth to come from expansion domestically and internationally. The Anthropologie Group’s North American Retail segment net sales accounted for approximately 39.6% of consolidated net sales for fiscal 2023. European Retail segment net sales accounted for approximately 1.8% of consolidated net sales for fiscal 2023. Free People Group.
As of January 31, 2022, we operated 238 Anthropologie Group stores, of which 206 were located in the United States, 11 were located in Canada and 21 were located in Europe, and sold merchandise through a franchisee-owned store in the United Arab Emirates. Stores average approximately 8,000 square feet of selling space.
As of January 31, 2023, we operated 238 Anthropologie Group stores, of which 207 were located in the United States, 10 were located in Canada and 21 were located in Europe, and sold merchandise through franchisee-owned stores in the Middle East. Stores average approximately 8,000 square feet of selling space.
Construction of the facility began in fiscal 2021 and is expected to be fully operational during fiscal 2024. The facility will support the growth and expansion of our Retail segment business in North America by providing more efficient and faster inventory processing, as well as faster and more consistent delivery times to our stores and digital customers.
The facility will support the growth and expansion of our Retail segment business in North America by providing more efficient and faster inventory processing, as well as faster and more consistent delivery times to our stores and digital customers.
Our talent strategy is focused on attracting the best employees, recognizing and rewarding their performance, and continually developing, engaging and retaining them. The future success of our business initiatives relies heavily on our employees.
Hiring, retaining and developing talented employees is critically important to our operations and the future success of our business. Our talent strategy is focused on attracting the best employees, recognizing and rewarding their performance, and continually developing, engaging and retaining them.
Our stores are located in enclosed malls, upscale street locations and specialty centers. As of January 31, 2022, we operated 173 Free People Group stores, of which 162 were located in the United States, five were located in Canada and six were located in Europe.
Our stores are located in enclosed malls, upscale street locations and specialty centers. 2 As of January 31, 2023, we operated 188 Free People Group stores, of which 174 were located in the United States, 3 were located in Canada and 11 were located in Europe.
Urban Outfitters’ North American Retail segment net sales accounted for approximately 27.5% of consolidated net sales for fiscal 2022. European and Asian Retail segment net sales accounted for approximately 9.1% of consolidated net sales for fiscal 2022. Anthropologie Group. The Anthropologie Group consists of the Anthropologie, Bhldn and Terrain brands.
Urban Outfitters’ North American Retail segment net sales accounted for approximately 23.0% of consolidated net sales for fiscal 2023. European Retail segment net sales accounted for approximately 8.9% of consolidated net sales for fiscal 2023. Anthropologie Group. The Anthropologie Group consists of the Anthropologie and Terrain brands.
To support customer demand until the omni-channel fulfillment center is operational, we signed a short-term lease in fiscal 2022 for an approximately 401,000 square foot fulfillment center located in Kansas City, Missouri. Information Systems.
To support Retail segment customer demand until the omni-channel fulfillment center is operational, we signed a short-term lease in fiscal 2022 for an approximately 401,000 square foot fulfillment center located in Kansas City, Missouri. We operate two fulfillment centers in the United States to conduct our Nuuly Rent operations.
We plan to open approximately 8 Anthropologie Group stores and close approximately 8 Anthropologie Group stores due to lease expiration, globally, in fiscal 2023. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements.
We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into franchise or joint venture agreements.
Private label and exclusive merchandise generally yields higher gross profit margins than third-party branded merchandise, and helps to keep our product offerings current and unique. 4 The ever-changing mix of products available to our customers allows us to adapt our merchandise to prevailing fashion trends, and together with the inviting atmosphere and experience of our stores , social media and third-party digital platforms, websites and mobile applications encourages our core customers to visit our shopping channels frequently.
The ever-changing mix of products available to our customers allows us to adapt our merchandise to prevailing fashion trends, and together with the inviting atmosphere and experience of our stores, social media and third-party digital platforms, websites and mobile applications encourages our core customers to visit our shopping channels frequently.
As of January 31, 2022, we operated 261 Urban Outfitters stores, of which 184 were located in the United States, 18 were located in Canada and 59 were located in Europe, and sold merchandise through franchisee-owned stores in the United Arab Emirates.
As of January 31, 2023, we operated 263 Urban Outfitters stores, of which 183 were located in the United States, 18 were located in Canada and 62 were located in Europe, and sold merchandise through franchisee-owned stores in the Middle East.
Financial Information about Operations We aggregate our operations into three reportable segments, the Retail segment, the Wholesale segment and the Nuuly segment. See Note 17, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
See Note 17, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
The Menus & Venues brand net sales accounted for less than 1.0% of consolidated net sales for fiscal 2022. Wholesale Segment The Wholesale segment consists of the Free People, FP Movement and Urban Outfitters brands.
We plan to open approximately two locations and close approximately one location in fiscal 2024. The Menus & Venues brand net sales accounted for less than 1.0% of consolidated net sales for fiscal 2023. Wholesale Segment The Wholesale segment consists of the Free People, FP Movement and Urban Outfitters brands.
We own a 291,000 square foot distribution center in Gap, Pennsylvania that receives and distributes approximately half of our retail store merchandise in North America. We also lease a 214,500 square foot distribution center located in Reno, Nevada that receives and distributes the remaining half of our retail store merchandise in North America.
We lease a 214,500 square foot distribution center located in Reno, Nevada that receives and distributes the remaining half of our retail store merchandise in North America. We own and operate a 1,000,000 square foot fulfillment center in Gap, Pennsylvania, which performs Retail and Wholesale segment fulfillment services, including inventory warehousing, receiving and customer shipping.
Our Anthropologie brand product offerings include women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and wellness. Our Bhldn brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations.
Our Anthropologie brand product offerings include women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items, beauty and wellness and a wedding collection consisting of wedding dresses, bridesmaid dresses, party dresses, bridal accessories and decor.
Primary operations at the center include Retail and Wholesale segment fulfillment services, including inventory warehousing, receiving and customer shipping. We also own and operate a 463,000 square foot fulfillment center located in Reno, Nevada. This center is used primarily to house and distribute merchandise to our western United States digital customers.
We own and operate a 463,000 square foot fulfillment center located in Reno, Nevada, that is primarily used to house and distribute merchandise to our western United States digital customers.
The Board of Directors, as well as the Compensation and Leadership Development Committee (the “Compensation Committee”), oversee human capital issues. The Compensation Committee has formal oversight over the Company’s policies and strategies relating to its human capital management including policies, processes and strategies relating to employee recruitment, retention and development, workforce diversity and workplace and employment practices.
The Compensation Committee has formal oversight over the Company’s policies and strategies relating to its human capital management including policies, processes and strategies relating to employee recruitment, retention and development, workforce diversity and workplace and employment practices. The Compensation Committee regularly receives reports on talent, succession planning and diversity and inclusion.
This combination allows us to offer fashionable merchandise and to differentiate our product mix from that of traditional department stores, as well as that of other specialty and digital retailers.
This combination allows us to offer fashionable merchandise and to differentiate our product mix from that of traditional department stores, as well as that of other specialty and digital retailers. Private label and exclusive merchandise generally yields higher gross profit margins than third-party branded merchandise, and helps to keep our product offerings current and unique.
The Compensation Committee regularly receives reports on talent, succession planning and diversity and inclusion. On a quarterly basis, the Compensation Committee receives a talent dashboard with key metrics including employee survey feedback and turnover information. The Compensation Committee engages periodically on compensation program design for employees at various levels.
On a quarterly basis, the Compensation Committee receives a talent dashboard with key metrics including employee survey feedback and turnover information. The Compensation Committee engages periodically on compensation program design for employees at various levels. Talent Acquisition, Development and Retention. The Company aims to be the leading destination for creative and entrepreneurial talent in the specialty fashion market.
In fiscal 202 3 , the Diversity & Inclusion Committee will continue partnering with the Company’s executive leadership to support and engage our diverse employees and expand the pool of available diverse talent in the fashion industry. Human Capital Oversight .
In fiscal 2024, the Diversity & Inclusion Committee will continue partnering with the Company’s executive leadership to support and engage our diverse employees and expand the pool of available diverse talent in the fashion industry. Financial Information about Operations We aggregate our operations into three reportable segments, the Retail segment, the Wholesale segment and the Nuuly segment.
We exited our distribution and fulfillment centers in Rushden, England during fiscal 2022 upon completion of the omni-channel fulfillment center in Peterborough, England. In fiscal 2021, we purchased land in Kansas City, Kansas for the development of an approximately 880,000 square foot omni-channel fulfillment center.
In fiscal 2021, we purchased land in Kansas City, Kansas for the development of an approximately 880,000 square foot omni-channel fulfillment center. Construction of the facility began in fiscal 2021 and is expected to be fully operational during fiscal 2024.
We own and operate an approximately 956,000 square foot fulfillment center in Indiana, Pennsylvania, for which construction was completed in fiscal 2020. The center primarily stores and distributes home products, home furnishings and electronics for the Retail segment. We own and operate a 1,000,000 square foot fulfillment center in Gap, Pennsylvania.
We own and operate an approximately 956,000 square foot fulfillment center in Indiana, Pennsylvania, that primarily stores and distributes home products, home furnishings and electronics for the North American Retail segment. We own and operate an approximately 400,000 square foot omni-channel fulfillment center in Peterborough, England that supports our European Retail and Wholesale segments.
Our ERGs empower employees to share their voices, ideas and passions with the Diversity & Inclusion Committee and the Company community at large.
Our ERGs empower employees to share their voices, ideas and passions with the Diversity & Inclusion Committee and the Company community at large. In addition to the ERGs, the executive team has engaged in the design and implementation of a listening strategy, which includes an all-company engagement survey.
In addition, we offer a comprehensive suite of health and retirement benefits, including medical, dental and prescription drug coverage, as well as paid parental leave, 401(k) matching contributions and a generous employee discount. Our home office in Philadelphia, Pennsylvania includes a state-of-the-art fitness center, walkable river paths, and spacious dog parks, fostering employee health, wellness, and engagement.
Our home office in Philadelphia, Pennsylvania includes a state-of-the-art fitness center, walkable river paths, and spacious dog parks, fostering employee health, wellness, and engagement.
We own and operate an approximately 400,000 square foot omni-channel fulfillment center in Peterborough, England that supports our European stores, digital and wholesale channels. We began construction on the facility during fiscal 2020 and completed the installation of the remaining material handling equipment and became fully operational during fiscal 2022.
We began construction on the facility during fiscal 2020 and completed the installation of the remaining material handling equipment and became fully operational during fiscal 2022. Once the Peterborough facility was fully operational, we exited our existing distribution and fulfillment centers in Rushden, England during fiscal 2022.
Through the alignment of functional expertise, training, mentorship and coaching, we believe we have created an environment that allows our employees to excel. We invest in our employees through accessible resources and structured training programs that offer all employees opportunities for development.
Through our unique culture, competitive compensation and benefits, development, training, coaching and mentorship programs and collaborative recruiting process, we believe we are positioned to attract top talent and drive high levels of performance, engagement and retention. We invest in our employees through accessible 7 resources and structured training programs that offer all employees opportunities for development.
We lease a 309,000 square foot fulfillment center located in Bristol, Pennsylvania, which is used primarily to conduct our Nuuly Rent operations. The lease commenced in fiscal 2020. In addition, this fulfillment center has been recently used to support increased customer demand in the digital channel.
We lease a 309,000 square foot fulfillment center located in Bristol, Pennsylvania, and we also lease a 227,000 square foot warehouse located in Fairless Hills, 5 Pennsylvania. We plan to open a 604,000 square foot fulfillment center located in Raymore, Missouri, which will be used to further support our Nuuly Rent operations. The lease will commence in fiscal 2024.
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For example, our fiscal 2022 ended on January 31, 2022.
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Our stores are located in specialty centers, upscale street locations and enclosed malls. We plan to open approximately 8 Anthropologie Group stores and close approximately 6 Anthropologie Group stores due to lease expiration, globally, in fiscal 2024.
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In addition to individual brand stores, we operate expanded format stores that include multiple Anthropologie Group brands, which allows for the presentation of an expanded assortment of products in certain categories. Our stores are located in specialty centers, upscale street locations and enclosed malls.
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We operate seven distribution and fulfillment centers worldwide to support our Retail and Wholesale segments in the United States, Europe and Canada, including the fulfillment of catalog, website and mobile application orders around the world. We own a 291,000 square foot distribution center in Gap, Pennsylvania, which receives and distributes approximately half of our retail store merchandise in North America.
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We are not aware of any valid claims of infringement or challenges to our right to use any of our marks in the United States. Human Capital The Company strives to build a unique creative culture capable of growing strong, customer-centric brands.
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We are not aware of any valid claims of infringement or challenges to our right to use any of our marks in the United States. 6 Environmental, Social & Governance (ESG) Impact Report "Lead With Creativity... to Make an Impact" describes the Company's strategy to apply our creative thinking and entrepreneurial mindset to responsible business practices that benefit our employees, shareholders, customers and the planet.
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We seek to foster an inclusive environment where our employees unite to communicate with integrity, respect our planet, our world and each other, build our future through creative entrepreneurship and nurture meaningful connections with customers and each other. Employees. As of January 31, 2022, we employed approximately 23,000 people, approximately 42% of whom were full-time employees.
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Our work in this area is organized into six ambitions across two pillars—respecting our planet and respecting our people. Each ambition has specific, actionable objectives. Pillar I - Respect our Planet : The Company strives to operate in a responsible way, consciously choosing our materials and partners.
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We believe that our relations with our employees are excellent. Talent Acquisition, Development and Retention . The Company aims to be the leading destination for creative and entrepreneurial talent in the specialty fashion market. Hiring, retaining and developing talented employees is critically important to our operations.
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The Company is establishing new and growing existing initiatives designed to support our business and maximize our positive impact on the planet. • Invest in Circularity • Reduce Waste • Utilize Better Materials • Increase Cleaner Energy Pillar II - Respect our People : Our people are at the heart of what we do.
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By combining a robust internal pipeline of existing talent through development initiatives and external attraction, we believe we are positioned to drive high levels of performance, engagement and retention. We continue to invest in resources that encourage our employees to be active participants in the navigation of their careers.
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We aim to cultivate a creative entrepreneurial spirit in every employee, empower everyone involved in our supply chain, and always put our customer first. • Cultivate Community • Improve Supply Chain Transparency The Company maintains an Impact Committee, co-chaired by our Chief Sourcing and Chief Administration Officers and reporting to our Nominating and Governance Committee, to set sustainability policies and goals, provide oversight of those policies and track and report progress toward our goals.
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We deliver training to employees through live in-person and virtual classes, pre-recorded self-led written, audio and video courses and curated on demand courses from third-party platforms such as LinkedIn Learning. Compensation, Benefits and Wellness . We aim to offer competitive compensation and category leading benefits to our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther factors and uncertainties include, but are not limited to: • The severity and duration of the pandemic, including future mutations or related variants of the virus in areas in which we operate; • Evolving macroeconomic factors, including general economic uncertainty, inflation, unemployment rates, and recessionary pressures; • Changes in labor markets affecting us and our suppliers; • Unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; • The pace of recovery when the pandemic subsides; • The long-term impact of the pandemic on our business, including consumer behaviors; and • Disruption and volatility within the financial and credit markets.
Biggest changeOther effects and future uncertainties include, but are not limited to: • Evolving macroeconomic factors, including general economic uncertainty, inflation, unemployment rates, and recessionary pressures; • Changes in labor markets affecting us and our suppliers; • Any preventative or protective actions that governments may implement, or we may implement to protect the health and safety of our employees and customers; • The long-term impact of the pandemic on our business, including consumer behaviors; and • Disruption and volatility within the financial and credit markets.
The continuing impacts of the COVID-19 pandemic are highly unpredictable and volatile and are affecting certain business operations, demand for our products and services, in-stock positions, costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, and our financial performance, among other things.
The continuing impacts of the COVID-19 pandemic are highly unpredictable and volatile and are affecting certain of our business operations, demand for our products and services, in-stock positions, costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, and our financial performance, among other things.
Any of our rights to indemnification from sellers to us, even if obtained, may not be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business or property acquired. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business and financial condition.
Any of our rights to indemnification from sellers to us, even if obtained, may not be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business 13 or property acquired. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business and financial condition.
The regulatory environment surrounding information security and privacy is demanding, with the frequent imposition of new and changing requirements, such as the GDPR and CCPA. With a heightened degree of public awareness and scrutiny regarding information security and privacy, customers have a high expectation that companies will adequately protect their personal information from cyber attack or other security breaches.
The regulatory environment surrounding information security and privacy is demanding, with the frequent imposition of new and changing requirements, such as the GDPR and CCPA. With a heightened degree of public awareness and scrutiny regarding information 14 security and privacy, customers have a high expectation that companies will adequately protect their personal information from cyber attack or other security breaches.
The recovery we receive under any insurance we maintain for these purposes may be delayed or may be insufficient to fully offset potential losses. 9 We rely heavily on our ability to identify changes in fashion. Customer tastes and fashion trends are volatile and can change rapidly.
The recovery we receive under any insurance we maintain for these purposes may be delayed or may be insufficient to fully offset potential losses. We rely heavily on our ability to identify changes in fashion. Customer tastes and fashion trends are volatile and can change rapidly.
Violations of these laws could subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results. The United Kingdom recently withdrew as a member of the European Union, commonly referred to as “Brexit,” effective January 31, 2020.
Violations of these laws could subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results. The United Kingdom withdrew as a member of the European Union, commonly referred to as “Brexit,” effective January 31, 2020.
Also, others may assert rights in, or ownership of, our trademarks and other intellectual property, and we may not be able to successfully resolve these types of conflicts to our satisfaction. In addition, we face additional risks as we continue to expand our business outside the United States.
Also, others may assert rights 15 in, or ownership of, our trademarks and other intellectual property, and we may not be able to successfully resolve these types of conflicts to our satisfaction. In addition, we face additional risks as we continue to expand our business outside the United States.
Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our profitability may decline. 14 Damage or disruption to our distribution or fulfillment centers could have material adverse effects on our operations.
Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our profitability may decline. Damage or disruption to our distribution or fulfillment centers could have material adverse effects on our operations.
Our inability to meet our staffing requirements in the future could impair our ability to increase revenue and could otherwise harm our business. Increases in labor costs, including wages, could adversely impact our operational results, financial condition and results of operations.
Our inability to meet our staffing requirements in the future could impair our ability to increase revenue and could otherwise harm our business. Increases in labor costs, including wages, and labor shortages could adversely impact our operational results, financial condition and results of operations.
To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their products, the following risks may adversely impact our business: • Any event causing a disruption of imports, including the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns (including COVID-19), acts of terrorism, natural disasters and port security considerations or labor disputes; • New initiatives may be proposed that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, could increase the cost of products purchased from suppliers in such countries or restrict the importation of products from such countries; • Changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes, changes resulting from Brexit or increases in duties or quotas applicable to the products we sell that could increase the cost and reduce the supply of products available to us; • Changes resulting from the Russian invasion of Ukraine in February 2022 and from the related sanctions imposed by the United States, the European Union and others; • Changes resulting from the United States-Mexico-Canada Agreement (USMCA); • Significant labor issues, such as strikes or shortage of workers to manage inbound vessels at any of our ports in the United States, which could make it difficult or impossible for us to bring foreign-sourced products into the United States; • Financial or political instability in any of the countries in which the products we purchase are manufactured, if the instability affects the production or export of merchandise from those countries; • A significant disruption in the supply of the fabrics or raw materials used by our vendors in the manufacture of our products, as our vendors may not be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all; • Fluctuation in the prices of raw materials, such as cotton and synthetic fabrics, as increases in such costs can increase the cost of merchandise and potentially lead to reduced consumer demand or reduced margins; • The shortage of transportation capacity (such as the availability of inbound ocean containers and vessels, cargo space for inbound airplanes, and trucks to transport products from ports to our distribution facilities) can result in transportation cost premiums and also delay delivery of merchandise to our distribution facilities leading to an increase in markdowns both of which can adversely affect our gross profit; • The cost of fuel is a significant component in transportation costs; therefore, increases in petroleum prices can adversely affect our gross profit; • Increased regulation related to environmental costs, such as carbon taxes and emissions management systems, which could adversely affect our costs of doing business, including utility, transportation and logistics costs; and • Decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.
To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their products, the following risks may adversely impact our business: • Any event causing a disruption of imports, including the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns (including COVID-19), acts of terrorism, natural disasters and port security considerations or labor disputes; • New initiatives may be proposed that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, could increase the cost of products purchased from suppliers in such countries or restrict the importation of products from such countries; • Changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes, changes resulting from Brexit or increases in duties or quotas applicable to the products we sell that could increase the cost and reduce the supply of products available to us; • Impacts of the war between Russia and Ukraine and from the related sanctions imposed by the United States, the European Union, United Kingdom and others; • Changes resulting from the United States-Mexico-Canada Agreement (USMCA); • Significant labor issues, such as strikes or shortage of workers to manage inbound vessels at any of our ports in the United States, which could make it difficult or impossible for us to bring foreign-sourced products into the United States; • Financial or political instability in any of the countries in which the products we purchase are manufactured, if the instability affects the production or export of merchandise from those countries; • A significant disruption in the supply of the fabrics or raw materials used by our vendors in the manufacture of our products, as our vendors may not be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all; • Fluctuation in the prices of raw materials, such as cotton and synthetic fabrics, as increases in such costs can increase the cost of merchandise and potentially lead to reduced consumer demand or reduced margins; • The shortage of transportation capacity (such as the availability of inbound ocean containers and vessels, cargo space for inbound airplanes, and trucks to transport products from ports to our distribution facilities) can result in transportation cost 10 premiums and also delay delivery of merchandise to our distribution facilities leading to an increase in markdowns both of which can adversely affect our gross profit; • The cost of fuel is a significant component in transportation costs; therefore, increases in petroleum prices can adversely affect our gross profit; • Increased regulation related to environmental costs, such as carbon taxes and emissions management systems, which could adversely affect our costs of doing business, including utility, transportation and logistics costs; and • Decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.
Brexit could also result in similar referendums or votes in other European countries in which we do business. The United Kingdom’s withdrawal could adversely impact consumer and investor confidence, particularly in the United Kingdom, and the level of consumer purchases of discretionary items and retail products, including our products.
Brexit could also result in similar referenda or votes in other European countries in which we do business. The United Kingdom’s withdrawal could adversely impact consumer and investor confidence, particularly in the United Kingdom, and the level of consumer purchases of discretionary items and retail products, including our products.
In addition, various governmental authorities in jurisdictions in which we do business regulate the quality and safety of the merchandise we sell.
In addition, various governmental authorities in 16 jurisdictions in which we do business regulate the quality and safety of the merchandise we sell.
Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations. Our business depends on effective marketing and high customer traffic.
Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations. Our business depends on effective marketing to drive high customer traffic.
Merchandise purchased for our wholesale operations is managed by our fulfillment centers in Gap, Pennsylvania and Peterborough, England. The merchandise purchased for our Europe retail and digital operations is managed by our omni-channel fulfillment center in Peterborough, England. Merchandise purchased for our Nuuly Rent business is managed by our fulfillment center in Bristol, Pennsylvania.
Merchandise purchased for our wholesale operations is managed by our fulfillment centers in Gap, Pennsylvania and Peterborough, England. The merchandise purchased for our Europe retail and digital operations is managed by our omni-channel fulfillment center in Peterborough, England.
If our third-party vendors fail to comply with our social compliance program, our reputation may be adversely affected. We maintain an Impact Committee (which reports to our Audit Committee and is co-chaired by our Chief Sourcing Officer and Chief Administrative Officer) to set sustainability policies and goals, provide oversight of those policies, and track and report progress toward our goals.
If our third-party vendors fail to comply with our social compliance program, our reputation may be adversely affected. We maintain an Impact Committee, co-chaired by our Chief Sourcing Officer and Chief Administrative Officer and reporting to our Nominating and Governance Committee, to set sustainability policies and goals, provide oversight of those policies, and track and report progress toward our goals.
Further, because many of our corporate and showroom employees are working hybrid office and remote schedules in light of COVID-19, our business may be more vulnerable to cybersecurity breach attempts due to offsite working by employees, increased use of public Wi-Fi and use of office equipment off premises .
Further, because many of our corporate and showroom employees are maintaining hybrid office and remote work schedules, our business may be more vulnerable to cybersecurity breach attempts due to offsite working by employees, increased use of public Wi-Fi and use of office equipment off premises.
In December 2020, the United Kingdom and the European Union entered into an agreement that defines their future 12 relationship, including terms of trade, which will result in new tariffs on goods imported to the United Kingdom from the European Union that were manufactured elsewhere, as well as require additional administrative effort to import and export goods, adding friction and cost to transportation.
In December 2020, the United Kingdom and the European Union entered into an agreement that defines their future relationship, including terms of trade, which resulted in new tariffs on goods imported to the United Kingdom from the European Union that were manufactured elsewhere, and required additional administrative effort to import and export goods, adding friction and cost to transportation.
Customer demand for certain products has and may continue to fluctuate as the pandemic progresses and customer behaviors change, which may challenge our ability to anticipate and/or adjust inventory levels to meet that 8 demand.
Further, customer demand for certain products has and may continue to fluctuate as customer behaviors change as a result of the pandemic, which may challenge our ability to anticipate and/or adjust inventory levels to meet that demand.
The merchandise purchased for our United States and Canadian retail store operations is managed by our distribution centers in Gap, Pennsylvania; Reno, Nevada; and Kansas City, Missouri. Merchandise purchased for our digital operations is managed by our fulfillment centers in Gap, Pennsylvania; Reno, Nevada; and Indiana, Pennsylvania.
The merchandise purchased for our United States and Canadian Retail segment operations is managed by our distribution centers in Gap, Pennsylvania and Reno, Nevada, our fulfillment centers in Gap, Pennsylvania, Reno, Nevada and Indiana, Pennsylvania, and our Retail segment omni-channel fulfillment center in Kansas City, Missouri.
A substantial portion of our merchandise is imported from other countries, see “ We rely significantly on international sources of production. ” If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution and fulfillment centers and stores, as well as fulfilling catalog, website and mobile application orders. 11 Our stores are located in public areas where large numbers of people typically gather.
A substantial portion of our merchandise is imported from other countries, see “ We rely significantly on international sources of production. ” If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution and fulfillment centers and stores, as well as fulfilling catalog, website and mobile application orders.
To the extent that COVID-19 continues to adversely affect the U.S. and global economy, our business, results of operations, cash flows, or financial condition, it may also heighten other risk factors included elsewhere within this “Risk Factors” section of our Form 10-K.
To the extent that COVID-19 continues to adversely affect the U.S. and global economy, our business, results of operations, cash flows, or financial condition, it may also heighten other risk factors included elsewhere within this “Risk Factors” section of our Form 10-K. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Current Trends for further discussion.
Unresolved Staff Comments We have no outstanding comments with the staff of the SEC.
Unre solved Staff Comments We have no outstanding comments with the staff of the SEC.
If any of these events were to occur, we may be required to suspend operations in some or all of our stores in the impacted areas, as the COVID-19 pandemic required us to do, which could have a material adverse impact on our business, financial condition and results of operations.
If any of these events were to occur, we may be required to suspend operations in some or all of our stores in the impacted areas, which could have a material adverse impact on our business, financial condition and results of operations. Fluctuations in foreign currency exchange rates could have a material adverse impact on our business.
The working group is comprised of operational management representatives and is responsible for recommending policies and goals to the Impact Committee, implementing policies established by the Impact Committee, and tracking and reporting to the Impact Committee on progress towards goals falling within the working group’s remit.
The working group is comprised of operational management representatives and is responsible for recommending policies and goals to the Impact Committee, implementing policies established by the Impact Committee, and tracking and reporting to the Impact Committee on progress towards goals falling within the working group’s ambit. These policies and goals and their status are published in the Company's Impact Report.
Labor shortages and increased employee turnover could also increase our labor costs. This in turn could lead us to increase prices, which could adversely impact our sales. We are also subject to risks related to other store and distribution and fulfillment center expenses and operational costs.
Labor shortages and increased employee turnover could also increase our labor costs. This in turn could lead us to increase prices, and if customers respond negatively to such price increases, could adversely impact our sales, gross margin and operating income. We are also subject to risks related to other store and distribution and fulfillment center expenses and operational costs.
War, terrorism, civil unrest, other violence, or public health crises may negatively impact availability of merchandise and/or otherwise adversely impact our business. In the event of war (including the recent invasion of Ukraine by Russia), terrorism, civil unrest or other violence, our ability to obtain merchandise available for sale in our stores or on our websites may be negatively impacted.
In the event of war (including the war between Russia and Ukraine), terrorism, civil unrest or other violence, our ability to obtain merchandise available for sale in our stores or on our websites may be negatively impacted.
Our Nuuly Rent business operates in an evolving apparel subscription rental market in which our competitors offer varying types of subscription rental models and products that may have greater appeal to consumers. Our Nuuly Thrift business operates in a developing apparel and accessories resale market in which our competitors have sellers and products that may have greater appeal to consumers.
Our Nuuly Thrift business operates in a developing apparel and accessories resale market in which our competitors have sellers and products that may have greater appeal to consumers.
Although we have not experienced any interruptions or shutdowns of our systems for any material length of time for the reasons described above, such disruptions could lead to delays in our business operations and, if significant, affect our sales and profitability. 13 If we are unable to safeguard against security breaches with respect to our information technology systems, our business and our reputation may be adversely affected.
Although we have not experienced any interruptions or shutdowns of our systems for any material length of time for the reasons described above, such disruptions could lead to delays in our business operations and, if significant, affect our sales and profitability.
If our stores fail to achieve, or are unable to sustain, acceptable revenue, profitability and cash flow levels, we may incur additional store asset impairment charges, significant costs associated with closing those stores or both, which could adversely affect our results of operations and financial condition.
If our stores fail to achieve, or are unable to sustain, acceptable revenue, profitability and cash flow levels, we may incur additional store asset impairment charges, significant costs associated with closing those stores or both, which could adversely affect our results of operations and financial condition. 12 We may not be successful expanding our business internationally and our ability to conduct business in international markets may be adversely affected by legal, regulatory, political, economic, and public health risks.
There is no assurance that we will be able to continue to successfully maintain or expand our digital sales channels and respond to shifting consumer traffic patterns and digital buying trends. Our inability to adequately respond to these risks and uncertainties or successfully maintain and expand our digital business could have an adverse impact on our results of operations.
There is no assurance that we will be able to continue to successfully maintain or expand our digital sales channels and respond to shifting consumer traffic patterns and digital buying trends.
Consumer purchases and rentals of discretionary retail items and specialty retail products, including our products, may decline during recessionary periods and also may decline at other times when disposable income is lower.
Consumer purchases and rentals of discretionary retail items and specialty retail products, including our products, may decline during recessionary periods and also may decline at other times when disposable income is lower. A prolonged economic downturn could have a material adverse impact on our business, financial condition or results of operations.
During the course of business, we obtain and transmit confidential customer, employee, vendor and Company information through our information technology systems. The protection of customer, employee, vendor and Company data is critical.
If we are unable to safeguard against security breaches with respect to our information technology systems, our business and our reputation may be adversely affected. During the course of business, we obtain and transmit confidential customer, employee, vendor and Company information through our information technology systems. The protection of customer, employee, vendor and Company data is critical.
It is difficult to predict near term and/or future economic, capital and credit market conditions and what impact they will have on our business.
The economic conditions may also affect department stores and specialty retail businesses and impact their ability to purchase merchandise from our Wholesale segment. It is difficult to predict near term and/or future economic, capital and credit market conditions and what impact they will have on our business.
The pandemic has resulted in widespread and continuing impacts on the global economy and on our employees, customers, suppliers and other people and entities with which we do business.
Since 2020, the COVID-19 pandemic has resulted in widespread and continuing impacts on the global economy and on our employees, customers, suppliers and other people and entities with which we do business. The pandemic has and may continue to impact the global supply chain, which would negatively affect the flow or availability of our products.
Terrorist attacks, threats of terrorist attacks, civil unrest, or health epidemics and pandemics (such as COVID-19) involving public areas could cause people not to visit areas where our stores are located. In addition, other types of violence in malls or in other public areas could lead to lower customer traffic in areas in which we operate stores.
Our stores are located in public areas where large numbers of people typically gather. Terrorist attacks, threats of terrorist attacks, civil unrest, or health epidemics and pandemics involving public areas could cause people not to visit areas where our stores are located.
In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. Our Wholesale segment competes with numerous wholesale companies, many of whose products have a wider distribution, based on the quality, fashion and price of its product offerings.
Our Wholesale segment competes with numerous wholesale companies, many of whose products have a wider distribution, based on the quality, fashion and price of its product offerings. Our Nuuly Rent business operates in an evolving apparel subscription rental market in which our competitors offer varying types of subscription rental models and products that may have greater appeal to consumers.
Further, consumer concerns with COVID-19 may continue, which will likely continue to adversely affect foot traffic to our stores. 10 We rely significantly on international sources of production. We receive a substantial portion of our apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources.
We rely significantly on international sources of production. We receive a substantial portion of our apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources. The majority of these purchases are settled in U.S. dollars.
See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview— Current Trends for further discussion. Our reportable segments are sensitive to economic conditions (including inflation), market disruptions and other factors that affect consumer confidence and discretionary spending.
Item 1A. Ris k Factors Macroeconomic and Industry Risks Our reportable segments are sensitive to economic conditions, inflation, market disruptions and other factors that affect consumer confidence and discretionary spending.
If we do not demonstrate progress towards the environmental, social and governance ideals of our customers or such actions are not perceived to be adequate, our reputation and value of our brands could be harmed, which could adversely affect our business, financial performance, and growth. 15 Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
These factors may affect consumer purchases and rentals of our merchandise and adversely impact our results of operations and continued growth. The economic conditions may also affect department stores and specialty retail businesses and impact their ability to purchase merchandise from our Wholesale segment.
These factors may affect consumer purchases and rentals of our merchandise and adversely impact our results of operations and continued growth. The impacts of inflation could lead us to increase prices, and if customers respond negatively to such price increases, could adversely impact our sales, gross margin and operating income.
Item 1A. Risk Factors Macroeconomic and Industry Risks The Coronavirus pandemic has and will continue to materially and adversely affect our business operations globally.
Any such loss or lack of timely access to these funds could adversely impact our short-term liquidity and operations. 11 The Coronavirus pandemic has and may continue to materially and adversely affect our business operations globally.
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There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business and government shutdowns.
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Our inability to adequately respond to these risks and uncertainties or successfully maintain and expand our digital business could have an adverse impact on our results of operations. 9 In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors.
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The pandemic and any preventative or protective actions that governments may implement, or we may take to protect the health and safety of our employees and customers, may result in business disruption, reduced customer traffic and reduced sales in certain merchandise categories, and increased operating expenses.
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War, terrorism, civil unrest, other violence, or public health crises may negatively impact availability of our merchandise, customer traffic to our stores or otherwise adversely impact our business.
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The pandemic continues to impact the global supply chain, with restrictions and limitations on business activities causing disruption and delay, which have strained certain domestic and international supply chains, and could continue to negatively affect the flow or availability of certain products.
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In addition, other types of violence in malls or in other public areas could lead to lower customer traffic in areas in which we operate stores.
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Similarly, increased demand for online purchases of products has impacted our fulfillment operations, resulting in delays in deliveries and lost sales from being out of stock for certain SKUs.
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Due to our international operations, we are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and liabilities denominated in currencies other than the U.S. dollar. In addition, certain of our subsidiaries transact in currencies other than their functional currency, including intercompany transactions, which results in foreign currency transaction gains or losses.
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Failure to appropriately respond, or the perception of an inadequate response to evolving events around the pandemic could cause reputational harm to our brand and subject us to lost sales, as well as claims from employees, customers, suppliers, regulators or other parties.
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As a result, our sales, gross profit and gross profit rate from international operations will be negatively impacted during periods of a strengthened U.S. dollar relative to the functional currencies of our foreign subsidiaries.
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Additionally, a future outbreak of confirmed cases of COVID-19 in our facilities could result in temporary or sustained workforce shortages or facility closures, which would negatively impact our business and results of operations. Some jurisdictions have taken measures intended to expand the availability of workers compensation or to change the presumptions applicable to workers compensation measures.
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Fluctuations in foreign currency exchange rates could adversely impact consumer spending, delay or prevent successful penetration into new markets or adversely affect the profitability of our international operations.
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These actions may increase our exposure to claims and increase our costs.
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Certain events, such as the uncertainty as to the on-going hostilities in Ukraine, the ultimate scope and duration of COVID-19, and uncertainty with respect to trade policies, tariffs and government regulations affecting trade between the U.S. and other countries, have increased global economic and political uncertainty in recent years and could result in volatility of foreign currency exchange rates as these events develop.
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A prolonged economic downturn, including any such downturn occurring as a result of COVID-19, could have a material adverse impact on our business, financial condition or results of operations.
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We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts, and our liquidity and operations could be adversely affected if a financial institution holding such funds fails. We hold a portion of our cash and cash equivalents in deposit accounts at multiple financial institutions.
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The majority of these purchases are settled in U.S. dollars.
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The balance held in these accounts typically exceeds the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000 per depositor and per institution.
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We may not be successful expanding our business internationally and our ability to conduct business in international markets may be adversely affected by legal, regulatory, political, economic, and public health risks.
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If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of our funds.
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The extent to which the coronavirus pandemic will continue to impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including the resurgence of the coronavirus and its related variants, the efficacy of the vaccine and related vaccination efforts and regulatory actions taken to mitigate the impacts of the coronavirus pandemic.
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Merchandise purchased for our Nuuly Rent business is managed by our fulfillment center in Bristol, Pennsylvania and at a facility in Fairless Hills, Pennsylvania.
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Our distribution and fulfillment centers utilize computer-controller and automated equipment, which means the operations are complicated and may be subject to a number of risks related to security or computer viruses or malware, the proper operation of software and hardware, power interruptions or other system failures.
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There can be no assurances that our policies, goals or actions will be perceived as adequate. Any failure or perceived failure to achieve our goals or demonstrate progress towards the environmental, social and governance ideals of our customers and investors could harm our reputation and value of our brands, which could adversely affect our business, financial performance, and growth.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTotal estimated selling square feet for stores open, under lease as of January 31, 2022, by Urban Outfitters, the Anthropologie Group and the Free People Group was approximately 2,264,000, 1,813,000, and 367,000, respectively. The average store selling square feet is approximately 9,000 for Urban Outfitters, 8,000 for the Anthropologie Group and 2,000 for the Free People Group.
Biggest changeOur retail locations are typically leased for a term of ten years with renewal options for an additional five to ten years. Total estimated selling square feet for 17 locations open, under lease as of January 31, 2023, by Urban Outfitters, the Anthropologie Group and the Free People Group was approximately 2,272,000, 1,812,000, and 392,000, respectively.
In addition to the stores listed above, the Wholesale segment operates sales and showroom facilities in Dallas, New York City, Los Angeles, Chicago and London that are leased through 2022, 2023, 2024, 2028 and 2029, respectively.
Wholesale Showrooms. In addition to the stores listed above, the Wholesale segment operates sales and showroom facilities in Dallas, New York City, Los Angeles, Chicago and London that are leased through 2023, 2023, 2024, 2028 and 2029, respectively.
To support customer demand until the omni-channel fulfillment center is operational, we signed a lease in fiscal 2022 for an approximately 401,000 square foot fulfillment center located in Kansas City, Missouri. The term of this lease is set to expire in November 2023, and we have options to renew through fiscal 2027.
To support Retail segment customer demand until the omni-channel fulfillment center is operational, we signed a short-term lease in fiscal 2022 for an approximately 401,000 square foot fulfillment center located in Kansas City, Missouri. The term of this lease is set to expire in November 2023, and we have options to renew through fiscal 2027.
We lease a 309,000 square foot fulfillment center located in Bristol, Pennsylvania, which is primarily used to conduct our Nuuly Rent operations. The lease commenced in fiscal 2020 and is set to expire in July 2034 with options to renew for up to an additional ten years.
We operate two fulfillment centers in the United States to conduct our Nuuly Rent operations. We lease a 309,000 square foot fulfillment center located in Bristol, Pennsylvania. The lease commenced in fiscal 2020 and is set to expire in July 2034 with options to renew for up to an additional ten years.
We began construction on the facility during fiscal 2020 and completed the installation of the remaining material handling equipment and became fully operational during fiscal 2022. We exited our distribution and fulfillment centers in Rushden, England during fiscal 2022 upon completion of the omni-channel fulfillment center in Peterborough, England.
We began construction on the facility during fiscal 2020 and completed the installation of the remaining material handling equipment and became fully operational during fiscal 2022. Once fully operational, we exited our existing distribution and fulfillment centers in Rushden, England during fiscal 2022.
The following table shows the location of each of our existing retail locations, as of January 31, 2022: Urban Outfitters Anthropologie Group Free People Group Menus & Venues Total United States 184 206 162 10 562 Canada 18 11 5 — 34 Europe 59 21 6 — 86 Total Company-Owned Stores 261 238 173 10 682 Franchisee-Owned Stores (1) 2 1 — — 3 Total URBN 263 239 173 10 685 (1) Located in the United Arab Emirates.
The following table shows the location of each of our existing retail locations, as of January 31, 2023: Urban Outfitters Anthropologie Group Free People Group Menus & Venues Total United States 183 207 174 11 575 Canada 18 10 3 — 31 Europe 62 21 11 — 94 Total Company-Owned Stores 263 238 188 11 700 Franchisee-Owned Stores (1) 6 2 — — 8 Total URBN 269 240 188 11 708 (1) Located in the Middle East.
Item 2. Properties Since 2006, our North American home office has been located in several buildings on one campus in the historic core of the Philadelphia, Pennsylvania Navy Yard. The consolidated offices at the Navy Yard campus allow for an efficient operation of our Philadelphia-based offices and will help to support our growth needs for the foreseeable future.
Item 2. Pr operties Home Offices. Since 2006, our North American home office has been located in several buildings on one campus in the historic core of the Philadelphia, Pennsylvania Navy Yard.
Selling square feet can sometimes change due to factors such as floor moves, use of staircases and cash register configuration.
The average store selling square feet is approximately 9,000 for Urban Outfitters, 8,000 for the Anthropologie Group and 2,000 for the Free People Group. Selling square feet can sometimes change due to factors such as floor moves, use of staircases and cash register configuration.
Improvements in recent years, as described in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources, were necessary to adequately support our growth. For more information on our distribution center properties, see Item 1: Business—Company Operations— Distribution . We believe that our centers are well maintained and in good operating condition.
For more information on our distribution center properties, see Item 1: Business—Company Operations— Distribution . We believe that our centers are well maintained and in good operating condition. Retail Locations. All of our retail locations are leased, well maintained and in good operating condition.
The office is approximately 70,000 square feet and houses all of our brand and shared leadership teams as well as a wholesale showroom and photo studio. The term of this lease is set to expire in July 2029, and we have the option to renew for up to an additional 10 years.
The term of this lease is set to expire in July 2029, and we have the option to renew for up to an additional 10 years. Distribution .
Our North American home offices are approximately 575,000 square feet, and we own or have options to purchase adjacent buildings that would allow for additional expansion if necessary. Our three European home offices were consolidated into one location on the former Truman Brewery Site in London, England during fiscal 2020.
The consolidated offices at the Navy Yard campus allow for an efficient operation of our Philadelphia-based offices and will help to support our growth needs for the foreseeable future. Our North American home offices are approximately 575,000 square feet, and we own or have options to purchase adjacent buildings that would allow for additional expansion if necessary.
The center primarily stores and distributes certain home products, home furnishings and electronics for the Retail segment and includes a customer contact center. 16 We own and operate a 1,000,000 square foot fulfillment center in Gap, Pennsylvania. The center primarily fulfills Retail and Wholesale segment customer orders.
We own and operate an approximately 956,000 square foot fulfillment center in Indiana, Pennsylvania, that primarily stores and distributes home products, home furnishings and electronics for the North American Retail segment. We own and operate an approximately 400,000 square foot omni-channel fulfillment center in Peterborough, England that supports our European Retail and Wholesale segments.
We own and operate a 463,000 square foot fulfillment center in Reno, Nevada that is used primarily to house and distribute merchandise to our western United States digital customers. We lease a 40,000 square foot customer contact center in Martinez, Georgia. The lease term expires in fiscal 2024 with two five-year renewal options.
We own and operate a 1,000,000 square foot fulfillment center in Gap, Pennsylvania, which performs Retail and Wholesale segment fulfillment services, including inventory warehousing, receiving and customer shipping. We own and operate a 463,000 square foot fulfillment center located in Reno, Nevada, which is primarily used to house and distribute merchandise to our western United States digital customers.
The term of this lease is set to expire in June 2027, and we have the option to renew for up to an additional twenty years. We own and operate an approximately 956,000 square foot fulfillment center in Indiana, Pennsylvania, for which construction was completed in fiscal 2020.
We lease a 214,500 square foot distribution center located in Reno, Nevada that receives and distributes the remaining half of our retail store merchandise in North America. The term of this lease is set to expire in June 2027, and we have the option to renew for up to an additional twenty years.
Our North American retail stores are supported by two distribution centers. We own a 291,000 square foot distribution center in Gap, Pennsylvania, which supports approximately half of our retail store merchandise. We lease a 214,500 square foot distribution center in Reno, Nevada that supports the remaining half of our retail store merchandise.
We operate seven distribution and fulfillment centers worldwide to support our Retail and Wholesale segments in the United States, Europe and Canada, including the fulfillment of catalog, website and mobile application orders around the world. We own a 291,000 square foot distribution center in Gap, Pennsylvania that receives and distributes approximately half of our retail store merchandise in North America.
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In addition, this fulfillment center has been recently used to support increased customer demand in the digital channel. We own and operate an approximately 400,000 square foot omni-channel fulfillment center in Peterborough, England that supports our European stores, digital and wholesale channels.
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Our European home office occupies approximately 70,000 square feet at the former Truman Brewery Site in London, England. The office houses all of our brand and shared leadership teams as well as a wholesale showroom and photo studio.
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All of our stores are leased, well maintained and in good operating condition. Our retail stores are typically leased for a term of ten years with renewal options for an additional five to ten years.
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We also lease a 227,000 square foot warehouse located in Fairless Hills, Pennsylvania. The lease commenced in fiscal 2023. We plan to open a 604,000 square foot fulfillment center located in Raymore, Missouri, which will be used to further support our Nuuly Rent operations.
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The 15-year lease will commence in fiscal 2024 and includes options to renew for up to an additional ten years. Improvements in recent years, as described in Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources, were necessary to adequately support our growth.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are party to various legal proceedings arising from normal business activities. Management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 17 PART II
Biggest changeItem 3. Legal Proceedings We are party to various legal proceedings arising from normal business activities. Management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows. Item 4. Mine Saf ety Disclosures Not applicable. 18 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Our common shares are traded on the NASDAQ Global Select Market under the symbol “URBN.” Holders of Record On March 25, 2022, there were 90 holders of record of our common shares.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Sha reholder Matters and Issuer Purchases of Equity Securities Market Information Our common shares are traded on the NASDAQ Global Select Market under the symbol “URBN.” Holders of Record On March 27, 2023, there were 83 holders of record of our common shares.
Stock Performance The following graph and table compares the cumulative total shareholder return on our common shares with the cumulative total return on the Standard and Poor’s 500 Composite Stock Index and the Standard and Poor’s 500 Apparel Retail Index for the period beginning January 31, 2017 and ending January 31, 2022, assuming the reinvestment of any dividends and assuming an initial investment of $100 in each.
Stock Performance The following graph and table compares the cumulative total shareholder return on our common shares with the cumulative total return on the Standard and Poor’s 500 Composite Stock Index and the Standard and Poor’s 500 Apparel Retail Index for the period beginning January 31, 2018 and ending January 31, 2023, assuming the reinvestment of any dividends and assuming an initial investment of $100 in each.
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Base Period Jan-17 INDEXED RETURNS Years Ended Company/Market/Peer Group Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Urban Outfitters, Inc. $ 100.00 $ 128.52 $ 121.70 $ 96.46 $ 103.35 $ 108.21 S&P 500 $ 100.00 $ 126.41 $ 123.48 $ 150.26 $ 176.18 $ 217.21 S&P 500 Apparel Retail $ 100.00 $ 121.77 $ 132.71 $ 143.41 $ 157.17 $ 168.91 18 A summary of the repurchase of our common shares under the Company’s share repurchase programs for the quarter ended January 31, 2022 is as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) November 1, 2021 through November 30, 2021 — $ — — 25,351,954 December 1, 2021 through December 31, 2021 639,135 $ 28.55 639,135 24,712,819 January 1, 2022 through January 31, 2022 820,024 $ 27.60 820,024 23,892,795 Total Fiscal 2022 Fourth Quarter 1,459,159 1,459,159 23,892,795 (1) In addition to the shares repurchased under the share repurchase program, for the quarter ended January 31, 2022, the Company acquired and subsequently retired 3,325 common shares from employees to meet payroll tax withholding requirements.
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Base Period Jan-18 INDEXED RETURNS Years Ended Company/Market/Peer Group Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Urban Outfitters, Inc. $ 100.00 $ 94.69 $ 75.05 $ 80.41 $ 84.19 $ 80.30 S&P 500 $ 100.00 $ 97.69 $ 118.87 $ 139.37 $ 171.83 $ 157.71 S&P 500 Apparel Retail $ 100.00 $ 108.99 $ 117.78 $ 129.08 $ 138.72 $ 152.98 Item 6.
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These shares do not reduce the number of shares that may yet be purchased under our publicly announced share repurchase programs. (2) On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20,000,000 shares under a share repurchase program.
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On June 4, 2019, the Company’s Board of Directors authorized the repurchase of an additional 20,000,000 shares under a share repurchase program. Item 6. Selected Financial Data Reserved. 19

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeStore data for fiscal 2022 was as follows: January 31, Stores Stores January 31, 2021 Opened Closed 2022 Urban Outfitters United States 174 13 (3 ) 184 Canada 17 1 — 18 Europe 56 3 — 59 Urban Outfitters Global Total 247 17 (3 ) 261 Anthropologie Group United States 204 7 (5 ) 206 Canada 11 — — 11 Europe 22 2 (3 ) 21 Anthropologie Group Global Total 237 9 (8 ) 238 Free People Group United States (1) 138 28 (4 ) 162 Canada 6 — (1 ) 5 Europe 5 1 — 6 Free People Group Global Total 149 29 (5 ) 173 Menus & Venues United States 11 1 (2 ) 10 Menus & Venues Total 11 1 (2 ) 10 Total Company-Owned Stores 644 56 (18 ) 682 Franchisee-Owned Stores (2) 1 2 — 3 Total URBN 645 58 (18 ) 685 (1) 18 FP Movement stores were opened during the year ended January 31, 2022. 20 FP Movement stores were open as of January 31, 2022.
Biggest changeNet sales from the Retail segment accounted for approximately 92.1%, 93.4% and 93.6% of total consolidated net sales for fiscal 2023, 2022 and 2021, respectively. 21 Store data for fiscal 2023 was as follows: January 31, 2022 Stores Opened Stores Closed January 31, 2023 Urban Outfitters United States 184 4 (5 ) 183 Canada 18 — — 18 Europe 59 3 — 62 Urban Outfitters Global Total 261 7 (5 ) 263 Anthropologie Group United States 206 5 (4 ) 207 Canada 11 — (1 ) 10 Europe 21 1 (1 ) 21 Anthropologie Group Global Total 238 6 (6 ) 238 Free People Group United States (1) 162 14 (2 ) 174 Canada 5 — (2 ) 3 Europe 6 5 — 11 Free People Group Global Total 173 19 (4 ) 188 Menus & Venues United States 10 1 — 11 Menus & Venues Total 10 1 — 11 Total Company-Owned Stores 682 33 (15 ) 700 Franchisee-Owned Stores (2) 3 5 — 8 Total URBN 685 38 (15 ) 708 (1) Eleven FP Movement stores were opened during the year ended January 31, 2023.
Sellers on Nuuly Thrift can transfer their earnings to their bank account or convert them to “Nuuly Cash,” a gift card with a bonus to be used at any of the Company’s brands. The Company earns a commission based on sales made in the marketplace.
Sellers on Nuuly Thrift can transfer their earnings to their bank account or convert them to “Nuuly Cash,” a gift card with a bonus to be used at any of the Company’s brands. Nuuly Thrift earns a commission based on sales made in the marketplace.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We operate under three reportable segments – Retail, Wholesale and Nuuly. Our Retail segment consists of our Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We operate under three reportable segments – Retail, Wholesale and Nuuly. Our Retail segment consists of our Anthropologie, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands.
Our retail locations are reviewed for impairment at the retail location level, which is the lowest level at which 24 individual cash flows can be identified. Newly opened retail locations may take time to generate positive operating and cash flow results.
Our retail locations are reviewed for impairment at the retail location level, which is the lowest level at which individual cash flows can be identified. Newly opened retail locations may take time to generate positive operating and cash flow results.
Revenue does not include taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. Revenue is recognized net of estimated customer returns.
Revenue does not include taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. 23 Revenue is recognized net of estimated customer returns.
We monitor Retail segment metrics including customer traffic, conversion rates, average units per transaction at our stores and on our websites and mobile applications and average unit retail price at our stores and average order value on our websites and mobile applications.
We monitor Retail segment metrics including customer traffic, conversion rates, average units per transaction at our stores and on our websites and mobile applications and average unit selling price at our stores and average order value on our websites and mobile applications.
Retail segment comparable net sales 28 increased 42.5% at the Free People Group, 34.5% at the Anthropologie Group and 17.2% at Urban Outfitters. Retail segment comparable net sales increased in North America and Europe.
Retail segment comparable net sales increased 42.5% at the Free People Group, 34.5% at the Anthropologie Group and 17.2% at Urban Outfitters. Retail segment comparable net sales increased in North America and Europe.
Revenue Recognition Merchandise: Merchandise is sold through retail stores, catalogs and the digital sales channel, as well as to wholesale customers, franchise partners and subscription customers. Revenue is recognized when control of the promised goods is transferred to the customer. We have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation.
Revenue Recognition Merchandise: Merchandise is sold through retail stores, catalogs and the digital sales channel, as well as to wholesale customers, franchise partners and Nuuly customers. Revenue is recognized when control of the promised goods is transferred to the customer. We have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation.
We expect the amount of our provision and related inventory to increase over time as we increase our sales. The majority of inventory at January 31, 2022 and 2021 consisted of finished goods. Raw materials and work-in-process were not material to the overall inventory value.
We expect the amount of our provision and related inventory to increase over time as we increase our sales. The majority of inventory at January 31, 2023 and 2022 consisted of finished goods. Raw materials and work-in-process were not material to the overall inventory value.
Cash Flows from Investing Activities Cash used in investing activities in fiscal 2022 and 2021 was primarily related to purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities.
Cash used in investing activities in fiscal 2022 and 2021 was primarily related to purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities.
A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of products designed internally and designed in collaboration with third-party brands.
A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of products designed internally or designed in collaboration with third-party brands.
Retail segment return policies vary by brand, 23 but generally provide for no time limit on returns and the refund to be issued in either the form of original payment or as a gift card. Payment for merchandise is tendered primarily by cash, check, credit card, debit card, gift card or alternative payment method s .
Retail segment return policies vary by brand, but generally provide for no time limit on returns and the refund to be issued in either the form of original payment or as a gift card. Payment for merchandise is tendered primarily by cash, check, credit card, debit card, gift card or alternative payment methods.
The Anthropologie Group consists of the Anthropologie, Bhldn and Terrain brands. Merchandise at the Anthropologie brand is tailored to sophisticated and contemporary women aged 28 to 45. The internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and wellness.
Merchandise at the Anthropologie brand is tailored to sophisticated and contemporary women aged 28 to 45. The internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and wellness.
Our Nuuly segment net sales accounted for approximately 1.1% of consolidated net sales for fiscal 2022 and less than 1.0% of consolidated net sales for fiscal 2021 and 2020. Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States.
Our Nuuly segment net sales accounted for approximately 2.7%, 1.1%, and less than 1.0% of consolidated net sales for fiscal 2023, 2022 and 2021, respectively. Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States.
Net deferred tax assets as of January 31, 2022 and January 31, 2021 totaled $69.9 million and $66.5 million, respectively, representing 1.8% and 1.9% of total assets, respectively. To the extent we believe that recovery of a deferred tax asset is at risk, we establish valuation allowances.
Net deferred tax assets as of January 31, 2023 and January 31, 2022 totaled $70.9 million and $69.9 million, respectively, representing 1.9% and 1.8% of total assets, respectively. To the extent we believe that recovery of a deferred tax asset is at risk, we establish valuation allowances.
Cash Flows from Financing Activities Cash used in financing activities in fiscal 2022, 2021 and 2020 was primarily related to $55.8 million, $7.0 million and $217.4 million, respectively, of repurchases of our common shares under our share repurchase programs during each of those years.
Cash Flows from Financing Activities Cash used in financing activities in fiscal 2023, 2022 and 2021 was primarily related to $112.0 million, $55.8 million and $7.0 million, respectively, of repurchases of our common shares under our share repurchase programs during each of those years.
Urban Outfitters operates websites and mobile applications in North America and Europe that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores and sells merchandise through franchisee-owned stores in the United Arab Emirates.
Urban Outfitters operates websites and mobile applications in North America and Europe that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores and sells merchandise through franchisee-owned stores in the Middle East.
Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s, and kids’ clothes, shoes and accessories from any brands. Our fiscal year ends on January 31. All references to our fiscal years refer to the fiscal years ended on January 31 in those years.
Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell any brand of women’s, men’s, and kids’ apparel, shoes and accessories. Our fiscal year ends on January 31. All references to our fiscal years refer to the fiscal years ended on January 31 in those years.
The Anthropologie Group operates websites and mobile applications in North America and Europe that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, offers a catalog in North America that markets select merchandise, most of which is also available in Anthropologie brand.
The Anthropologie Group operates websites and mobile applications in North America and Europe that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, offers a catalog in North America that markets select merchandise, most of which is also available in Anthropologie brand stores and sells merchandise through franchisee-owned stores in the Middle East.
The Free People Group also offers catalogs that market select merchandise, most of which is also available in our Free People and FP Movement stores. The Free People Group’s North American Retail segment net sales accounted for approximately 16.3% of consolidated net sales for fiscal 2022, compared to approximately 14.6% for fiscal 2021.
The Free People Group also offers catalogs that market select merchandise, most of which is also available in our Free People and FP Movement stores. The Free People Group’s North American Retail segment net sales accounted for approximately 17.5% of consolidated net sales for fiscal 2023, compared to approximately 16.3% for fiscal 2022.
European and Asian Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2022 and fiscal 2021. 21 The Menus & Venues brand focuses on a dining experience that provides excellence in food, beverage and service .
European Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2023 and fiscal 2022. The Menus & Venues brand focuses on a dining and event experience that provides excellence in food, beverage and service.
Excluded from the above table are tax contingencies of $22,422 because we cannot reasonably estimate in which future periods these amounts will ultimately be settled. As a result, the $22,422 liability was classified as a non-current liability in the Company’s Consolidated Balance Sheets as of January 31, 2022.
Excluded from the above table are tax contingencies of $23,320 because we cannot reasonably estimate in which future periods these amounts will ultimately be settled. As a result, the $23,320 liability was classified as a non-current liability in the Company’s Consolidated Balance Sheets as of January 31, 2023.
For example, our fiscal year 2022 ended on January 31, 2022, our fiscal year 2021 ended on January 31, 2021, and our fiscal year 2020 ended on January 31, 2020. Current Trends Impact of the Coronavirus Pandemic on Fiscal 2021 In March 2020 the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic.
For example, our fiscal year 2023 ended on January 31, 2023, our fiscal year 2022 ended on January 31, 2022, and our fiscal year 2021 ended on January 31, 2021. Current Trends Impact of the Coronavirus Pandemic on Fiscal 2021 In March 2020, the World Health Organization declared the novel strain of coronavirus ("COVID-19") a global pandemic.
Judgment is used in determining the amount of breakage revenue to be recognized and is based on historical gift card redemption patterns. Gift card breakage revenue is included in net sales and is not material. Our gift cards do not expire.
Revenue is recognized from breakage over time in proportion to gift card redemptions. Judgment is used in determining the amount of breakage revenue to be recognized and is based on historical gift card redemption patterns. Gift card breakage revenue is included in net sales and is not material. Our gift cards do not expire.
The COVID-19 pandemic and general unfavorable macro-economic conditions have also disrupted the Company’s global supply chain in fiscal 2022, leading to COVID-19 related factory closures, continued port congestion and shipping delays, which have resulted in inventory receipt delays and an increase in inbound freight costs.
The COVID-19 pandemic and general unfavorable macroeconomic conditions also disrupted the Company's global supply chain in fiscal 2022, leading to COVID-19 related factory and port closures, continued port congestion and shipping delays, which resulted in inventory receipt delays and an increase in inbound transportation costs.
As of January 31, 2022 and 2021, reserves for estimated sales returns totaled $69.8 million and $82.0 million, representing 3.4% and 4.0% of total liabilities, respectively. Inventory We value our inventory, which consists primarily of general consumer merchandise held for sale, at the lower of cost or net realizable value.
As of January 31, 2023 and 2022, reserves for estimated sales returns totaled $70.1 million and $69.8 million, representing 3.7% and 3.4% of total liabilities, respectively. Inventory We value our inventory, which consists primarily of general consumer merchandise held for sale, at the lower of cost or net realizable value.
We may also repurchase common shares. We believe that our new brand initiatives, new store openings, merchandise expansion programs, international growth opportunities and our marketing, social media, website and mobile initiatives are significant contributors to our sales. During fiscal 2023, we plan to continue our investment in these initiatives for all brands.
We believe that our new brand initiatives, new store openings, merchandise expansion programs, international growth opportunities and our marketing, social media, website and mobile initiatives are significant contributors to our sales. During fiscal 2024, we plan to continue our investment in these initiatives for all brands.
To the extent we establish valuation allowances or increase the allowances in a period, we record additional income tax expense in the Consolidated Statements of Income. Valuation allowances were $30.9 million as of January 31, 2022 and $18.7 million as of January 31, 2021.
To the extent we establish valuation allowances or increase the allowances in a period, we record additional income tax expense in the Consolidated Statements of Income. Valuation allowances were $33.1 million as of January 31, 2023 and $30.9 million as of January 31, 2022.
The increase in Wholesale segment net sales in fiscal 2022 as compared to fiscal 2021 was primarily due to a $46.5 million, or 24.9%, increase in sales for the Free People Group, due to a significant number of the brand’s wholesale partners having had a meaningful portion of their businesses negatively impacted by the COVID-19 pandemic during fiscal 2021.
The benefit from foreign currency translation in fiscal 2022 also contributed to the increase in non-comparable net sales. 28 The increase in Wholesale segment net sales in fiscal 2022 as compared to fiscal 2021 was primarily due to a $46.5 million, or 24.9%, increase in sales for the Free People Group, due to a significant number of the brand’s wholesale partners having had a meaningful portion of their businesses negatively impacted by the COVID-19 pandemic during fiscal 2021.
The Wholesale segment primarily designs, develops and markets apparel, intimates and activewear. Our Nuuly segment, formerly known as the Subscription segment, consists of the Nuuly brand, which offers customers with a more sustainable way to explore fashion. Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019.
The Wholesale segment primarily designs, develops and markets apparel, intimates and activewear. Our Nuuly segment consists of the Nuuly brand, which offers customers with a more sustainable way to explore fashion. Nuuly Rent is a monthly women’s apparel subscription rental service.
We believe that our new store investments generally have the potential to generate positive cash flow within a year; however, the impact of the COVID-19 pandemic may result in a slightly longer timeframe. We may also enter into one or more acquisitions or transactions related to the expansion of our brand offerings, including additional franchise and joint venture agreements.
We believe that our new store investments generally have the potential to generate positive cash flow within a year. We may also enter into one or more acquisitions or transactions related to the expansion of our brand offerings, including additional franchise and joint venture agreements.
Cash paid for property and equipment for fiscal 2022, 2021 and 2020 was $262.4 million, $159.2 million and $217.4 million, respectively, which was primarily used to expand our fulfillment center network in fiscal 2022, 2021, and 2020.
Cash paid for property and equipment for fiscal 2023, 2022 and 2021 was $199.5 million, $262.4 million and $159.2 million, respectively, which was primarily used to expand our fulfillment center network in all fiscal years.
During fiscal 202 1 , we recorded impairment charges for 42 retail locations, totaling $ 15.5 million , with a carrying value after impairment of $ 101.8 million primarily related to the right-of-use assets .
During fiscal 2023, we recorded impairment charges for 19 retail locations, totaling $6.4 million, with a carrying value after impairment of $49.0 million primarily related to the right-of-use assets. During fiscal 2021, we recorded impairment charges for 42 retail locations, totaling $15.5 million, with a carrying value after impairment of $101.8 million primarily related to the right-of-use assets.
We record uncertain tax positions on the basis of a two-step process whereby (1) we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. 25 Our tax liability for uncertain tax positions contains uncertainties because we are required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions.
We record uncertain tax positions on the basis of a two-step process whereby (1) we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the 25 more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
Retail segment comparable net sales increased 5.7% at the Free People Group and decreased 7.0% at Urban Outfitters and 18.4% at the Anthropologie Group. Retail segment comparable net sales decreased in both North America and Europe.
Retail segment comparable net sales increased 11.5% at the Free People Group, 11.3% at the Anthropologie Group and decreased 7.1% at Urban Outfitters. Retail segment comparable net sales increased in North America and Europe.
(amounts in millions) Fiscal Year Ended January 31, 2022 2021 2020 Net sales $ 4,548.8 $ 3,449.7 $ 3,983.8 Cost of sales (excluding store impairment) 3,054.8 2,572.3 2,729.4 Store impairment (1) — 15.5 14.6 Gross profit 1,494.0 861.9 1,239.8 Selling, general and administrative expenses 1,085.4 857.9 994.0 Goodwill impairment (2) — — 13.9 Income from operations 408.6 4.0 231.9 Interest income 2.3 3.1 10.6 Interest expense (1.1 ) (3.4 ) (1.2 ) Other expense (5.2 ) (0.2 ) (1.6 ) Income before income taxes 404.6 3.5 239.7 Income tax expense 94.0 2.3 71.6 Net income 310.6 1.2 168.1 AS A PERCENTAGE OF NET SALES Net sales 100.0 % 100.0 % 100.0 % Cost of sales (excluding store impairment) 67.2 74.6 68.5 Store impairment (1) — 0.4 0.4 Gross profit 32.8 25.0 31.1 Selling, general and administrative expenses 23.8 24.9 25.0 Goodwill impairment (2) — — 0.3 Income from operations 9.0 0.1 5.8 Interest income 0.1 0.1 0.3 Interest expense (0.0) (0.1) (0.0) Other expense (0.2) (0.0) (0.1) Income before income taxes 8.9 0.1 6.0 Income tax expense 2.1 0.1 1.8 Net income 6.8 % 0.0 % 4.2 % Period over Period Change: Net sales 31.9 % (13.4 )% 0.8 % Gross profit 73.3 % -30.5 % -7.9 % Income from operations n-m* -98.3 % -39.2 % Net income n-m* -99.3 % -43.6 % (1) During fiscal 2021, we recorded store impairment charges for 42 retail locations, totaling $15.5 million.
(amounts in millions) Fiscal Year Ended January 31, 2023 2022 2021 Net sales $ 4,795.2 $ 4,548.8 $ 3,449.7 Cost of sales (excluding store impairment) 3,361.6 3,054.8 2,572.3 Store impairment (1) 6.4 — 15.5 Gross profit 1,427.2 1,494.0 861.9 Selling, general and administrative expenses 1,200.6 1,085.4 857.9 Income from operations 226.6 408.6 4.0 Interest income 2.0 2.3 3.1 Interest expense (1.3 ) (1.1 ) (3.4 ) Other expense (6.0 ) (5.2 ) (0.2 ) Income before income taxes 221.3 404.6 3.5 Income tax expense 61.6 94.0 2.3 Net income 159.7 310.6 1.2 AS A PERCENTAGE OF NET SALES Net sales 100.0 % 100.0 % 100.0 % Cost of sales (excluding store impairment) 70.1 67.2 74.6 Store impairment (1) 0.1 — 0.4 Gross profit 29.8 32.8 25.0 Selling, general and administrative expenses 25.1 23.8 24.9 Income from operations 4.7 9.0 0.1 Interest income 0.0 0.1 0.1 Interest expense (0.0) (0.0) (0.1 ) Other expense (0.1 ) (0.2 ) (0.0) Income before income taxes 4.6 8.9 0.1 Income tax expense 1.3 2.1 0.1 Net income 3.3 % 6.8 % 0.0 % Period over Period Change: Net sales 5.4 % 31.9 % (13.4 )% Gross profit (4.5 )% 73.3 % (30.5 )% Income from operations (44.5 )% n-m* (98.3 )% Net income (48.6 )% n-m* (99.3 )% (1) During fiscal 2023, we recorded store impairment charges for 19 retail locations, totaling $6.4 million.
Rental product represented less than 1.0% of total assets as of January 31, 2022 and January 31, 2021. Impairment of Long-lived Assets We review the carrying values of our definite-lived, long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Rental product as of January 31, 2023 and January 31, 2022 totaled $90.9 million and $32.1 million, representing 2.5% and less than 1.0% of total assets, respectively. 24 Impairment of Long-lived Assets We review the carrying values of our definite-lived, long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
We anticipate our capital expenditures during fiscal 2023 to be approximately $225 million, a portion of which will be to support new and expanded fulfillment and distribution centers. All fiscal 2023 capital expenditures are expected to be financed by cash flow from operating activities and existing cash and cash equivalents.
We anticipate our capital expenditures during fiscal 2024 to be approximately $230 million, primarily to support new and expanded fulfillment and distribution centers and new store openings. All fiscal 2024 capital expenditures are expected to be financed by cash flow from operating activities and existing cash and cash equivalents.
The Anthropologie Group’s North American Retail segment net sales accounted for approximately 37.4% of consolidated net sales for fiscal 2022, compared to 36.5% for fiscal 2021. European and Asian Retail segment net sales accounted for approximately 2.0% of consolidated net sales for fiscal 2022, compared to approximately 1.7% for fiscal 2021.
The Anthropologie Group’s North American Retail segment net sales accounted for approximately 39.6% of consolidated net sales for fiscal 2023, compared to 37.4% for fiscal 2022. European Retail segment net sales accounted for approximately 1.8% of consolidated net sales for fiscal 2023, compared to approximately 2.0% for fiscal 2022.
Uncollectible accounts receivable primarily results from unauthorized credit card transactions. We maintain an allowance for doubtful accounts for our Wholesale segment accounts receivable, which we review on a regular basis and believe is sufficient to cover potential credit losses and billing adjustments. Payment terms in our Wholesale segment vary by customer with the most common being a net 30-day policy.
Uncollectible accounts receivable in the Retail and Nuuly segments primarily results from unauthorized credit card transactions. We maintain an allowance for doubtful accounts for our Wholesale segment accounts receivable, which we review on a regular basis and believe is sufficient to cover potential credit losses and billing adjustments.
Share Repurchases See Note 12, “Shareholders’ Equity,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for certain financial information regarding the Company’s share repurchases.
Credit Facilities See Note 8, "Debt," in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for certain financial information regarding the Company's debt.
Net sales from the Wholesale segment accounted for approximately 5.5%, 5.7% and 8.2% of total consolidated net sales for fiscal 2022, 2021 and 2020, respectively. Nuuly Segment Our Nuuly segment, formerly known as the Subscription segment, consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift.
Net sales from the Wholesale segment accounted for approximately 5.2%, 5.5% and 5.7% of total consolidated net sales for fiscal 2023, 2022 and 2021, respectively. Nuuly Segment Our Nuuly segment consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift. Nuuly Rent is a monthly women’s apparel subscription rental service.
Store leases have remaining lease terms that range from less than one year up to 15 years, some of which contain options to extend the lease for one or two 5-year periods.
We have elected the practical expedient to not separate non-lease components from lease components as it pertains to real estate leases. Store leases have remaining lease terms that range from less than one year up to 15 years, some of which contain options to extend the lease for one or two 5-year periods.
Selling square footage by brand as of January 31, 2022 and January 31, 2021 was as follows: January 31, January 31, 2022 2021 Change Selling square footage (in thousands): Urban Outfitters 2,264 2,195 3.1 % Anthropologie Group 1,813 1,815 -0.1 % Free People Group (1) 367 331 10.9 % Total URBN (2) 4,444 4,341 2.4 % (1) Selling square footage for FP Movement was 25 and 2 as of January 31, 2022 and 2021, respectively.
Selling square footage by brand as of January 31, 2023 and January 31, 2022 was as follows: January 31, 2023 January 31, 2022 Change Selling square footage (in thousands): Urban Outfitters 2,272 2,264 0.4 % Anthropologie Group 1,812 1,813 (0.1 )% Free People Group (1) 392 367 6.8 % Total URBN (2) 4,476 4,444 0.7 % (1) Selling square footage for FP Movement was 40 and 25 as of January 31, 2023 and 2022, respectively.
Inventory as of January 31, 2022 and 2021 totaled $569.7 million and $389.6 million, representing 15.0% and 11.0% of total assets, respectively.
Inventory as of January 31, 2023 and 2022 totaled $587.5 million and $569.7 million, representing 16.0% and 15.0% of total assets, respectively.
We record expense for performance-based awards based on our current expectations of the probable number of awards that will ultimately vest.
Additionally, we make certain estimates about the number of awards that will become vested under performance-based incentive plans. We record expense for performance-based awards based on our current expectations of the probable number of awards that will ultimately vest.
Urban Outfitters’ North American Retail segment net sales accounted for approximately 27.5% of consolidated net sales for fiscal 2022, compared to 31.3% for fiscal 2021. European and Asian Retail segment net sales accounted for approximately 9.1% of consolidated net sales for fiscal 2022, compared to approximately 8.5% for fiscal 2021.
Urban Outfitters’ North American Retail segment net sales accounted for approximately 23.0% of consolidated net sales for fiscal 2023, compared to 27.5% for fiscal 2022. European Retail segment net sales accounted for approximately 8.9% of consolidated net sales for fiscal 2023, compared to approximately 9.1% for fiscal 2022. The Anthropologie Group consists of the Anthropologie and Terrain brands.
See Note 10, “Income Taxes,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for a reconciliation of the statutory U.S. federal income tax rate to our effective tax rate. Fiscal 2021 Compared to Fiscal 2020 Net sales in fiscal 2021 decreased by 13.4% to $3.45 billion, from $3.98 billion in fiscal 2020.
Our effective tax rate for fiscal 2023 was 27.8% compared to 23.2% in fiscal 2022. See Note 10, “Income Taxes,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for a reconciliation of the statutory U.S. federal income tax rate to our effective tax rate.
Subscribers select their products each month, wear them as often as they like and then swap into new products the following month. Subscribers are also able to purchase the rented product. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s, and kids’ apparel, shoes, and accessories from any brands.
Subscribers are also able to purchase the rented product. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell any brand of women’s, men’s, and kids’ apparel, shoes, and accessories.
All available Company-owned Retail segment shopping channels are fully integrated, including retail locations, websites, mobile applications, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels.
Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital 20 channels.
Other Matters Recent Accounting Pronouncements See Note 2, “Summary of Significant Accounting Policies —Recent Accounting Pronouncements ,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of recently adopted and issued accounting pronouncements.
Other Matters Recent Accounting Pronouncements See Note 2, “Summary of Significant Accounting Policies —Recent Accounting Pronouncements ,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of recently adopted and issued accounting pronouncements. 31 Seasonality Our business experiences seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period.
The liability remains outstanding until the card is redeemed by the customer, at which time we recognize revenue. Over time, a portion of the outstanding gift cards will not be redeemed by the customer which we refer to as “breakage”. Revenue is recognized from breakage over time in proportion to gift card redemptions.
At the time of issuance, we have an open performance obligation for the future delivery of promised goods or services. The liability remains outstanding until the card is redeemed by the customer, at which time we recognize revenue. Over time, a portion of the outstanding gift cards will not be redeemed by the customer which we refer to as “breakage”.
We plan for future digital channel growth to come from expansion domestically and internationally. 22 Projected openings and closings for fiscal 2023 are as follows: January 31, Projected Projected January 31, 2022 Openings Closings 2023 Urban Outfitters 261 10 (5 ) 266 Anthropologie Group 238 8 (8 ) 238 Free People Group (1) 173 28 (1 ) 200 Menus & Venues 10 — — 10 Total Company-Owned Stores 682 46 (14 ) 714 Franchisee-Owned Stores 3 4 — 7 Total URBN 685 50 (14 ) 721 (1) Includes 16 FP Movement projected store openings.
We plan for future digital channel growth to come from expansion domestically and internationally. 22 Projected openings and closings for fiscal 2024 are as follows: January 31, 2023 Projected Openings Projected Closings January 31, 2024 Urban Outfitters 263 8 (8 ) 263 Anthropologie Group 238 8 (6 ) 240 Free People Group (1) 188 17 (1 ) 204 Menus & Venues 11 2 (1 ) 12 Total Company-Owned Stores 700 35 (16 ) 719 Franchisee-Owned Stores 8 2 — 10 Total URBN 708 37 (16 ) 729 (1) Includes 10 FP Movement projected store openings.
Retail segment net sales for fiscal 2021 accounted for 93.6% of total net sales compared to 91.6% of total net sales during fiscal 2020.
Retail segment net sales for fiscal 2023 accounted for 92.1% of total net sales compared to 93.4% of total net sales during fiscal 2022.
The $534.0 million decrease was attributable to a $420.7 million, or 11.5%, decrease in Retail segment net sales and a $129.6 million, or 39.7%, decrease in Wholesale segment net sales, partially offset by a $16.3 million increase in Nuuly segment net sales.
The $246 million increase was attributable to a $166.7 million, or 3.9%, increase in Retail segment net sales and an increase in Nuuly segment net sales of $81.9 million, or 171.6%, partially offset by a $2.1 million, or 0.8%, decrease in Wholesale segment net sales.
Additionally, during fiscal 2021, and in response to the COVID-19 pandemic, we had borrowings of $220.0 million under our Amended Credit Facility to protect our cash reserves. We subsequently repaid the entire $220.0 million during fiscal 2021.
During the last three years, we have satisfied our cash requirements primarily through our cash flow from operating activities, and additionally, during fiscal 2023, through the sales and maturities of marketable securities. Additionally, during fiscal 2021, in response to the COVID-19 pandemic, we had borrowings of $220.0 million under our Amended Credit Facility to protect our cash reserves.
These tables should be read in conjunction with the discussion that follows: (amounts in millions) January 31, 2022 2021 2020 Cash, cash equivalents and marketable securities $ 669.6 $ 694.0 $ 530.4 Working capital 304.3 317.2 414.6 Fiscal Year Ended January 31, 2022 2021 2020 Net cash provided by operating activities $ 359.3 $ 285.8 $ 273.9 Net cash used in investing activities (487.7 ) (101.9 ) (186.1 ) Net cash used in financing activities (60.3 ) (10.4 ) (222.0 ) The decrease in working capital at January 31, 2022, as compared to January 31, 2020, was primarily due to the increase in certain accrued expenses, accrued compensation and other current liabilities (such as accrued incentive-based compensation, accrued capital expenditures and other accrued operational expenses) partially offset by the net increase in inventory less accounts payable, both due to the continued growth of the Company’s operations since fiscal 2020. 30 During the last three years, we have satisfied our cash requirements through our cash flow from operating activities.
These tables should be read in conjunction with the discussion that follows: (amounts in millions) January 31, 2023 2022 2021 Cash, cash equivalents and marketable securities $ 485.5 $ 669.6 $ 694.0 Working capital 347.3 304.3 317.2 Fiscal Year Ended January 31, 2023 2022 2021 Net cash provided by operating activities $ 142.7 $ 359.3 $ 285.8 Net cash used in investing activities (32.0 ) (487.7 ) (101.9 ) Net cash used in financing activities (118.4 ) (60.3 ) (10.4 ) The increase in working capital at January 31, 2023, as compared to January 31, 2022, was primarily due to the timing of disbursements, partially offset by the net decrease in cash, cash equivalents and current marketable securities.
The Company made a strategic decision to bring certain product categories in earlier in the third and fourth quarters of fiscal 2022 in an attempt to minimize the impact of such disruptions on customer demand. The Company continued to qualify for certain government assistance programs that partially offset related expenses in locations impacted by closures during fiscal 2022.
The Company made a strategic decision to accelerate receipt of certain product categories earlier in the third and fourth quarters of fiscal 2022 in an attempt to minimize the impact of such disruptions on the ability to fulfill customer demand.
Impact of the Coronavirus Pandemic and Macroeconomic Uncertainties on Future Operations The COVID-19 pandemic continues to impact the Company’s operations and related government and private sector responsive actions could continue to affect its business operations. The Company is also experiencing COVID-19 supply chain disruptions resulting in inventory receipt delays.
Impact of the Coronavirus Pandemic and Macroeconomic Uncertainties on Fiscal 2023 and Future Operations The COVID-19 pandemic and its effects on the global economy continued to impact the Company's operations through fiscal 2023 and related government and private sector responsive actions could continue to affect its business operations.
Cash Flows from Operating Activities For all periods, our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs.
Our primary uses of cash have been to fund business operations, purchase inventory, expand our fulfillment centers, open new stores and repurchase our common shares. 29 Cash Flows from Operating Activities For all periods, our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs.
The Company cannot reasonably estimate the duration and severity of the COVID-19 pandemic, which has had and may continue to have a material impact on its business. As a result, current financial information may not be necessarily indicative of future operating results and the Company’s plans to address the impact of the COVID-19 pandemic may change.
The Company cannot reasonably estimate the duration and severity of existing and future macroeconomic conditions or current global issues that may have a material effect on the Company's business and the global economy. As a result, current financial information may not be necessarily indicative of future operating results.
Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019. For a monthly fee, Nuuly subscribers can select rental product from a wide selection of the Company’s own brands, third-party market brands and one-of-a-kind vintage pieces via a custom-built, digital platform.
For a monthly fee, Nuuly subscribers can select rental product from a wide selection of the Company’s own brands, third-party market brands and one-of-a-kind vintage pieces via a custom-built, digital platform. Subscribers select their products each month, wear them as often as they like and then swap into new products the following month.
( 4 ) Refer to Note 15, “Commitments and Contingencies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K. 32 Commercial Commitments The following table summarizes our commercial commitments as of January 31, 2022: Amount of Commitment Per Period (in thousands) Description Total Amounts Committed Less Than One Year More Than One Year Trade letters of credit (1) $ 50,564 $ 50,564 $ — Stand-by letters of credit (2) 13,140 13,140 — Total commercial commitments $ 63,704 $ 63,704 $ — (1) Consists primarily of outstanding letter of credit commitments in connection with import inventory purchases.
Commercial Commitments The following table summarizes our commercial commitments as of January 31, 2023: Amount of Commitment Per Period (in thousands) Description Total Amounts Committed Less Than One Year More Than One Year Trade letters of credit (1) $ 75,665 $ 75,665 $ — Stand-by letters of credit (2) 12,433 12,433 — Total commercial commitments $ 88,098 $ 88,098 $ — (1) Consists primarily of outstanding letter of credit commitments in connection with import inventory purchases.
Interest expense for the Amended Credit Facility for the years ended January 31, 2022, January 31, 2021 and January 31, 2020, was $1.0 million, $2.7 million and $1.0 million, respectively, which was included in “Interest expense,” in the Consolidated Statements of Income. 31 Capital and Operating Expenditures During fiscal 2023, we plan to complete construction on a new omni-channel fulfillment center in Kansas City, Kansas (which will be fully operational in fiscal 2024), open approximately 46 new Company-owned retail locations, expand or relocate certain existing retail locations, invest in new products, markets and brands, purchase inventory for our operating segments at levels appropriate to maintain our planned sales, upgrade our systems, improve and expand our digital capabilities and invest in omni-channel marketing when appropriate.
Capital and Operating Expenditures During fiscal 2024, we plan to complete construction on a new omni-channel fulfillment center in Kansas City, Kansas, open approximately 35 new Company-owned retail locations, expand or relocate certain existing retail locations, increase capacity at our Bristol, Pennsylvania Nuuly fulfillment center and invest in a new Nuuly fulfillment center in Raymore, Missouri in response to the growth in Nuuly subscribers, invest in new products, markets and brands, purchase inventory and rental product for our operating segments at levels appropriate to maintain our planned sales, upgrade our systems, improve and expand our digital capabilities, invest in omni-channel marketing when appropriate and repurchase common shares.
The Menus & Venues brand net sales accounted for less than 1.0 % of consolidated net sales for fiscal 202 2 and fiscal 202 1 . Net sales from the Retail segment accounted for approximately 93.4%, 93.6% and 91.6% of total consolidated net sales for fiscal 2022, 2021 and 2020, respectively.
The Menus & Venues brand net sales accounted for less than 1.0% of consolidated net sales for fiscal 2023 and fiscal 2022.
Share-Based Compensation Accounting for share-based compensation requires measurement of compensation cost for all share-based awards at fair value on the date of grant and recognition of compensation over the service period. A Black-Scholes model was used to determine the fair value of our stock options granted in the fiscal year ended January 31, 2020.
Share-Based Compensation Accounting for share-based compensation requires measurement of compensation cost for all share-based awards at fair value on the date of grant and recognition of compensation over the service period. The fair value of the performance stock units and restricted stock units granted during fiscal 2023, 2022 and 2021 equaled the stock price on the date of the grant.
Menus & Venues: Revenue from restaurant sales and events is recognized upon completion of the service when we satisfy our single performance obligation. Customer deposits may be received in advance for events, which represents a contract liability until we satisfy our performance obligation.
Payment terms in our Wholesale segment vary by customer with the most common being a net 30-day policy. Menus & Venues: Revenue from restaurant sales and events is recognized upon completion of the service when we satisfy our single performance obligation.
A customer may pause the monthly subscription, at which point the customer will not be billed for future months until the subscription is no longer on hold. Merchandise sales to Nuuly Rent customers are discussed above under Merchandise.
A customer may pause the monthly subscription, at which point the customer will not be billed for future months until the subscription is no longer on hold. Gift Cards: We account for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer.
Contractual Obligations The following table summarizes our contractual obligations as of January 31, 2022: Payments Due by Period (in thousands) Description Total Obligations Less Than One Year More Than One Year Operating leases (1) $ 1,442,628 $ 297,586 $ 1,145,042 Purchase commitments (2) 941,847 905,648 36,199 Tax payable (3) 24,166 2,843 21,323 Construction contracts (4) 97,941 61,273 36,668 Total contractual obligations $ 2,506,582 $ 1,267,350 $ 1,239,232 (1) Refer to Note 9, “Leases,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Share Repurchases See Note 12, “Shareholders’ Equity,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for certain financial information regarding the Company’s share repurchases. 30 Contractual Obligations The following table summarizes our contractual obligations as of January 31, 2023: Payments Due by Period (in thousands) Description Total Obligations Less Than One Year More Than One Year Operating leases (1) $ 1,361,892 $ 292,057 $ 1,069,835 Purchase commitments (2) 780,098 730,658 49,440 Tax payable (3) 21,323 5,331 15,992 Construction contracts (4) 121,212 121,212 — Total contractual obligations $ 2,284,525 $ 1,149,258 $ 1,135,267 (1) Refer to Note 9, “Leases,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Additionally, during fiscal 2021 the Company recorded a $14.6 million year-over-year increase in inventory obsolescence reserves and a $15.5 million store impairment charge, compared to a $14.6 million store impairment charge in fiscal 2020. Total inventory at January 31, 2021 decreased by $19.9 million, or 4.9%, to $389.6 million from $409.5 million at January 31, 2020.
Additionally, during fiscal 2023, the Company recorded a $6.4 million store impairment charge. Total inventory at January 31, 2023 increased by $17.8 million, or 3.1%, to $587.5 million from $569.7 million at January 31, 2022. Total Retail segment inventory increased by 4.4% and Wholesale segment inventory decreased by 7.3%.
Negative comparable store net sales resulted from a decrease in store traffic, transactions and average unit selling price, while units per transaction and conversion rate increased. The digital channel net sales increase was driven by an increase in conversion rate and sessions, while average order value 29 and units per transaction decreased.
The increase in digital channel net sales was low single-digit positive as an increase in average order value was offset by decreases in sessions, units per transaction and conversion rate.
We have elected not to record a lease liability and right-of-use asset for leases with original terms of 12 months or less. We have elected the practical expedient to not separate non-lease components from lease components as it pertains to real estate leases.
Leases We have operating leases for stores, distribution and fulfillment centers, corporate offices and equipment that are recognized as right-of-use assets and lease liabilities. We sublease certain properties to third parties. We have elected not to record a lease liability and right-of-use asset for leases with original terms of 12 months or less.
The decrease in non-comparable net sales was primarily due to the store closures and lower store productivity as a result of the COVID-19 pandemic at the 46 new Company-owned stores opened and 22 Company-owned stores and restaurants closed since the prior comparable period.
The decrease in non-comparable net sales during fiscal 2023 was due to the negative impact of foreign currency translation, partially offset by the 89 new Company-owned stores and restaurants opened and 33 Company-owned stores and restaurants closed since the prior comparable period.
Seasonality Our business experiences seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, the seasonality also impacts our working capital requirements, particularly with regard to inventory.
Historically, and consistent with the retail industry, the seasonality also impacts our working capital requirements, particularly with regard to inventory.
Subscription Fees: Revenue for Nuuly Rent is generated through monthly subscription fees and the purchase of merchandise in a customer’s possession. The monthly subscription rental fee is recognized as revenue on the date the customer is billed.
Customer deposits may be received in advance for events, which represents a contract liability until we satisfy our performance obligation. Subscription Fees: Revenue for Nuuly Rent is primarily generated through monthly subscription fees. The monthly subscription rental fee is recognized as revenue in the month the customer is billed.
The Bhldn brand emphasizes every element that contributes to a wedding. The Bhldn brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience.
The brand also has a wedding collection consisting of wedding dresses, bridesmaid dresses, party dresses, bridal accessories and decor. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience. Merchandise includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories.
The decrease in our Retail segment net sales during fiscal 2021 was due to a decrease of $372.6 million, or 10.6%, in Retail segment comparable net sales and a decrease of $48.1 million in non-comparable net sales, including the net impact of store openings and closings since the prior comparable period and the impact of foreign currency translation.
The increase in our Retail segment net sales during fiscal 2023 was due to an increase of $171.4 million, or 4.2%, in Retail segment comparable net sales, partially offset by a decrease of $4.7 million in non-comparable net sales.
We elect to account for forfeitures as they occur rather than estimate the expected forfeitures. 26 Results of Operations As a Percentage of Net Sales Because of the material impact COVID-19 had on our business operations in fiscal 2021, including mandated store closures, the following financial highlights have been provided as a comparison of fiscal 2022 results to fiscal 2020.
We elect to account for forfeitures as they occur rather than estimate the expected forfeitures. 26 Results of Operations As a Percentage of Net Sales The tables below set forth, for the periods indicated, the results of operations and the percentage of our net sales represented by certain statement of operations data.
The increase in the effective tax rate for fiscal 2021 was primarily due to the ratio of foreign taxable losses to global taxable profits and lower income before income taxes as compared to the prior year comparable period. Liquidity and Capital Resources The following tables set forth certain balance sheet and cash flow data for the periods indicated.
See Note 10, “Income Taxes,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K, for a reconciliation of the statutory U.S. federal income tax rate to our effective tax rate. Liquidity and Capital Resources The following tables set forth certain balance sheet and cash flow data for the periods indicated.
The increase was driven by an increase in comparable Retail segment net sales, partially offset by a decline in Wholesale segment net sales. • Gross profit rate improved to 32.8% for the year ended January 31, 2022, compared to 31.1% for the year ended January 31, 2020.
The decrease in Wholesale segment net sales in fiscal 2023 as compared to fiscal 2022 was primarily due to a $3.0 million, or 1.3%, decrease in sales for the Free People Group, which was primarily driven by an decrease in sales to department stores, partially offset by an increase in sales to specialty accounts.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are exposed to market risks relating to changes in interest rates on outstanding borrowings under our Credit Facility because these borrowings bear interest at variable rates. A 100 basis point change in our applicable interest rate would not have a material impact to interest expense for the year ended January 31, 2022.
Biggest changeWe are exposed to market risks relating to changes in interest rates on outstanding borrowings under our Credit Facility because these borrowings bear interest at variable rates. A 100 basis point change in our applicable interest rate would not have a material impact to interest expense for the year ended January 31, 2023. Item 8.
As of January 31, 2022 and 2021, our cash, cash equivalents and marketable securities consisted primarily of cash on hand and in banks, money market accounts, municipal and pre-refunded municipal bonds rated “BBB” or better, corporate bonds rated “BBB” or better, certificates of deposit and mutual funds.
As of January 31, 2023 and 2022, our cash, cash equivalents and marketable securities consisted primarily of cash on hand and in banks, money market accounts, municipal and pre-refunded municipal bonds rated “BBB” or better, corporate bonds rated “BBB” or better, certificates of deposit and mutual funds.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to the following types of market risks—fluctuations in the purchase price of merchandise, as well as other goods and services, the value of foreign currencies in relation to the U.S. dollar and changes in interest rates.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk We are exposed to the following types of market risks—fluctuations in the purchase price of merchandise, as well as other goods and services, the value of foreign currencies in relation to the U.S. dollar and changes in interest rates.
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Financial Statemen ts and Supplementary Data The information required by this Item is incorporated by reference from Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality and from our Consolidated Financial Statements and related notes thereto. Item 9. Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure None.

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