Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares, $0.0001 par value—~~92,174,487~~92,175,750 shares outstanding on ~~September 5,~~December 6, 2022.


	July 31,			January 31,			July 31,			October 31,			January 31,			October 31,
	2022			2022			2021			2022			2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	91,665		$	206,575		$	464,811		$	147,431		$	206,575		$	236,354
Marketable securities		160,020			239,420			156,982			146,364			239,420			188,375
Accounts receivable, net of allowance for doubtful accounts of $1,201, $1,348 and $1,302, respectively		97,374			63,760			94,402
Accounts receivable, net of allowance for doubtful accounts of $1,265, $1,348 and $1,313, respectively											81,422			63,760			114,208
Inventory		697,474			569,699			483,148			743,579			569,699			627,103
Prepaid expenses and other current assets		220,901			206,293			196,070			226,280			206,293			203,213
Total current assets		1,267,434			1,285,747			1,395,413			1,345,076			1,285,747			1,369,253
Property and equipment, net		1,150,247			1,145,085			1,047,751			1,175,080			1,145,085			1,088,287
Operating lease right-of-use assets		927,685			1,000,255			1,068,919			927,092			1,000,255			1,030,776
Marketable securities		152,528			223,557			113,249			95,246			223,557			269,780
Deferred income taxes and other assets		155,538			136,703			117,556			177,622			136,703			132,510
Total Assets	$	3,653,432		$	3,791,347		$	3,742,888		$	3,720,116		$	3,791,347		$	3,890,606
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	347,805		$	304,246		$	240,245		$	326,529		$	304,246		$	315,481
Current portion of operating lease liabilities		222,430			236,315			243,338			224,378			236,315			240,074
Accrued expenses, accrued compensation and other current liabilities		396,650			440,912			462,782			457,537			440,912			493,446
Total current liabilities		966,885			981,473			946,365			1,008,444			981,473			1,049,001
Non-current portion of operating lease liabilities		868,686			951,080			1,030,212			861,033			951,080			986,026
Deferred rent and other liabilities		110,669			113,054			96,891			112,248			113,054			108,848
Total Liabilities		1,946,240			2,045,607			2,073,468			1,981,725			2,045,607			2,143,875
Commitments and contingencies (see Note 12)
Shareholders’ equity:
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued		—			—			—
Common shares; $.0001 par value, 200,000,000 shares authorized, 92,173,342, 96,431,044 and 98,357,090 shares issued and outstanding, respectively		9			10			10
Preferred shares; $.0001 par value, 10,000,000 shares authorized, none issued											—			—			—
Common shares; $.0001 par value, 200,000,000 shares authorized, 92,174,487, 96,431,044 and 97,863,862 shares issued and outstanding, respectively											9			10			10
Additional paid-in-capital		—			—			26,581			7,850			—			18,671
Retained earnings		1,757,368			1,770,560			1,655,917			1,794,599			1,770,560			1,744,772
Accumulated other comprehensive loss		(50,185	)		(24,830	)		(13,088	)		(64,067	)		(24,830	)		(16,722	)
Total Shareholders’ Equity		1,707,192			1,745,740			1,669,420			1,738,391			1,745,740			1,746,731
Total Liabilities and Shareholders’ Equity	$	3,653,432		$	3,791,347		$	3,742,888		$	3,720,116		$	3,791,347		$	3,890,606

The accompanying notes are an integral part of these condensed consolidated financial statements.


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	July 31,						July 31,						October 31,						October 31,
	2022			2021			2022			2021			2022			2021			2022			2021
Net sales	$	1,183,388		$	1,157,725		$	2,235,322		$	2,085,140		$	1,175,349		$	1,131,424		$	3,410,671		$	3,216,564
Cost of sales		808,836			722,460			1,537,469			1,349,224
Cost of sales (excluding store impairment)														817,348			740,686			2,354,817			2,089,910
Store impairment														958			—			958			—
Gross profit		374,552			435,265			697,853			735,916			357,043			390,738			1,054,896			1,126,654
Selling, general and administrative expenses		288,734			269,412			565,798			496,560			299,725			274,836			865,523			771,396
Income from operations		85,818			165,853			132,055			239,356			57,318			115,902			189,373			355,258
Other loss, net		(2,262	)		(1,797	)		(4,251	)		(1,952	)		(5,019	)		(551	)		(9,270	)		(2,503	)
Income before income taxes		83,556			164,056			127,804			237,404			52,299			115,351			180,103			352,755
Income tax expense		24,083			36,794			36,798			56,595			15,068			26,496			51,866			83,091
Net income	$	59,473		$	127,262		$	91,006		$	180,809		$	37,231		$	88,855		$	128,237		$	269,664
Net income per common share:
Basic	$	0.64		$	1.29		$	0.97		$	1.84		$	0.40		$	0.90		$	1.37		$	2.75
Diluted	$	0.64		$	1.28		$	0.96		$	1.82		$	0.40		$	0.89		$	1.36		$	2.71
Weighted-average common shares outstanding:
Basic		93,041,310			98,315,441			94,240,412			98,213,555			92,174,160			98,202,399			93,544,085			98,209,796
Diluted		93,648,214			99,601,292			94,977,505			99,463,468			93,036,066			99,415,838			94,322,783			99,447,551

The accompanying notes are an integral part of these condensed consolidated financial statements.

												Accumulated
	Common Shares					Additional						Other																Accumulated
	Number of			Par		Paid-in			Retained			Comprehensive						Common Shares					Additional					Other
	Shares			Value		Capital			Earnings			Loss			Total			Number of			Par		Paid-in			Retained		Comprehensive
Balances as of April 30, 2022		94,434,621		$	9	$	—		$	1,740,508		$	(44,596	)	$	1,695,921
																		Shares			Value		Capital			Earnings		Loss			Total
Balances as of July 31, 2022																			92,173,342		$	9	$	—		$	1,757,368	$	(50,185	)	$	1,707,192
Comprehensive income		—			—		—			59,473			(5,589	)		53,884			—			—		—			37,231		(13,882	)		23,349
Share-based compensation		—			—		7,007			—			—			7,007			—			—		7,862			—		—			7,862
Share-based awards		54,532			—		376			—			—			376			1,667			—		—			—		—			—
Share repurchases		(2,315,811	)		—		(7,383	)		(42,613	)		—			(49,996	)		(522	)		—		(12	)		—		—			(12	)
Balances as of July 31, 2022		92,173,342		$	9	$	—		$	1,757,368		$	(50,185	)	$	1,707,192
Balances as of October 31, 2022																			92,174,487		$	9	$	7,850		$	1,794,599	$	(64,067	)	$	1,738,391

											Accumulated
	Common Shares					Additional					Other																Accumulated
	Number of			Par		Paid-in			Retained		Comprehensive						Common Shares					Additional					Other
	Shares			Value		Capital			Earnings		Loss			Total			Number of			Par		Paid-in			Retained		Comprehensive
Balances as of April 30, 2021		98,235,127		$	10	$	17,585		$	1,528,655	$	(11,741	)	$	1,534,509
																	Shares			Value		Capital			Earnings		Loss			Total
Balances as of July 31, 2021																		98,357,090		$	10	$	26,581		$	1,655,917	$	(13,088	)	$	1,669,420
Comprehensive income		—			—		—			127,262		(1,347	)		125,915			—			—		—			88,855		(3,634	)		85,221
Share-based compensation		—			—		7,398			—		—			7,398			—			—		7,100			—		—			7,100
Share-based awards		125,800			—		1,742			—		—			1,742			9,998			—		—			—		—			—
Share repurchases		(3,837	)		—		(144	)		—		—			(144	)		(503,226	)		—		(15,010	)		—		—			(15,010	)
Balances as of July 31, 2021		98,357,090		$	10	$	26,581		$	1,655,917	$	(13,088	)	$	1,669,420
Balances as of October 31, 2021																		97,863,862		$	10	$	18,671		$	1,744,772	$	(16,722	)	$	1,746,731

The accompanying notes are an integral part of these condensed consolidated financial statements.


	Six Months Ended						Nine Months Ended
	July 31,						October 31,
	2022			2021			2022			2021
Cash flows from operating activities:
Net income	$	91,006		$	180,809		$	128,237		$	269,664
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		52,383			51,223			77,529			77,985
Non-cash lease expense		94,821			95,097			143,036			144,347
Provision (benefit) for deferred income taxes		6,136			(1,275	)		366			(5,086	)
Share-based compensation expense		14,109			11,968			21,971			19,068
Store impairment								958			—
Loss on disposition of property and equipment, net		284			121			345			193
Changes in assets and liabilities:
Receivables		(34,607	)		(4,349	)		(19,235	)		(24,387	)
Inventory		(134,092	)		(93,049	)		(184,800	)		(238,094	)
Prepaid expenses and other assets		(36,593	)		4,272			(56,699	)		(10,087	)
Payables, accrued expenses and other liabilities		37,088			61,586			59,305			161,251
Operating lease liabilities		(122,198	)		(111,210	)		(177,183	)		(172,575	)
Net cash (used in) provided by operating activities		(31,663	)		195,193			(6,170	)		222,279
Cash flows from investing activities:
Cash paid for property and equipment		(105,652	)		(105,624	)		(143,445	)		(159,008	)
Cash paid for marketable securities		(22,973	)		(165,927	)		(22,000	)		(442,249	)
Sales and maturities of marketable securities		164,314			148,582			230,745			237,879
Net cash provided by (used in) investing activities		35,689			(122,969	)		65,300			(363,378	)
Cash flows from financing activities:
Proceeds from the exercise of stock options		376			2,815			376			2,815
Share repurchases related to share repurchase program		(112,016	)		—			(112,016	)		(14,888	)
Share repurchases related to taxes for share-based awards		(6,668	)		(7,562	)		(6,680	)		(7,684	)
Net cash used in financing activities		(118,308	)		(4,747	)		(118,320	)		(19,757	)
Effect of exchange rate changes on cash and cash equivalents		(628	)		1,699			46			1,575
(Decrease) increase in cash and cash equivalents		(114,910	)		69,176
Decrease in cash and cash equivalents								(59,144	)		(159,281	)
Cash and cash equivalents at beginning of period		206,575			395,635			206,575			395,635
Cash and cash equivalents at end of period	$	91,665		$	464,811		$	147,431		$	236,354
Supplemental cash flow information:
Cash paid during the year for:
Income taxes	$	21,532		$	42,767		$	33,516		$	81,747
Non-cash investing activities—Accrued capital expenditures	$	21,960		$	60,168		$	41,431		$	75,206

The accompanying notes are an integral part of these condensed consolidated financial statements.

During all periods shown, marketable securities are classified as available-for-sale. The amortized cost, gross unrealized gains (losses) and fair value of available-for-sale securities by major security type and class of security as of ~~July~~October 31, 2022, January 31, 2022 and ~~July~~October 31, 2021 were as follows:


	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
As of October 31, 2022
Short-term Investments:
Corporate bonds	$	85,788	$	—	$	(1,626	)	$	84,162
Municipal and pre-refunded municipal bonds		58,417		—		(910	)		57,507
US Treasury securities		4,750		—		(55	)		4,695
		148,955		—		(2,591	)		146,364
Long-term Investments:
Corporate bonds		61,707		—		(4,472	)		57,235
Municipal and pre-refunded municipal bonds		28,803		—		(1,801	)		27,002
Mutual funds, held in rabbi trust		12,546		—		(1,786	)		10,760
Certificates of deposit		249		—		—			249
		103,305		—		(8,059	)		95,246
	$	252,260	$	—	$	(10,650	)	$	241,610
As of January 31, 2022
Short-term Investments:
Corporate bonds	$	85,062	$	1	$	(200	)	$	84,863
Municipal and pre-refunded municipal bonds		128,984		1		(273	)		128,712
US Treasury securities		14,999		—		(38	)		14,961
Commercial paper		10,884		—		—			10,884
		239,929		2		(511	)		239,420
Long-term Investments:
Corporate bonds		148,830		—		(2,478	)		146,352
Municipal and pre-refunded municipal bonds		60,533		1		(912	)		59,622
Mutual funds, held in rabbi trust		12,419		—		(606	)		11,813
US Treasury securities		5,222		—		(46	)		5,176
Federal government agencies		350		—		(5	)		345
Certificates of deposit		249		—		—			249
		227,603		1		(4,047	)		223,557
	$	467,532	$	3	$	(4,558	)	$	462,977


	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
As of October 31, 2021
Short-term Investments:
Corporate bonds	$	53,744	$	3	$	(71	)	$	53,676
Municipal and pre-refunded municipal bonds		114,818		9		(73	)		114,754
US Treasury securities		16,849		—		(3	)		16,846
Commercial paper		3,099		—		—			3,099
		188,510		12		(147	)		188,375
Long-term Investments:
Corporate bonds		174,884		1		(1,125	)		173,760
Municipal and pre-refunded municipal bonds		78,955		8		(362	)		78,601
Mutual funds, held in rabbi trust		11,540		542		(1	)		12,081
US Treasury securities		4,748		—		(7	)		4,741
Federal government agencies		350		—		(2	)		348
Certificates of deposit		249		—		—			249
		270,726		551		(1,497	)		269,780
	$	459,236	$	563	$	(1,644	)	$	458,155

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

(Losses)

Value

As of July 31, 2022

Short-term Investments:

Corporate bonds

$
76,652

$
—

$
(1,211
)

$
75,441

Municipal and pre-refunded municipal bonds

75,518

—

(595
)

74,923

US Treasury securities

9,749

—

(93
)

9,656

161,919

—

(1,899
)

160,020

Long-term Investments:

Corporate bonds

96,086

—

(4,160
)

91,926

Municipal and pre-refunded municipal bonds

47,437

—

(1,858
)

45,579

US Treasury securities

3,229

—

(129
)

3,100

Mutual funds, held in rabbi trust

12,361

—

(1,025
)

11,336

Federal government agencies

350

—

(12
)

338

Certificates of deposit

249

—

—

249

159,712

—

(7,184
)

152,528

$
321,631

$
—

$
(9,083
)

$
312,548

As of January 31, 2022

Short-term Investments:

Corporate bonds

$
85,062

$
1

$
(200
)

$
84,863

Municipal and pre-refunded municipal bonds

128,984

1

(273
)

128,712

US Treasury securities

14,999

—

(38
)

14,961

Commercial paper

10,884

—

—

10,884

239,929

2

(511
)

239,420

Long-term Investments:

Corporate bonds

148,830

—

(2,478
)

146,352

Municipal and pre-refunded municipal bonds

60,533

1

(912
)

59,622

US Treasury securities

5,222

—

(46
)

5,176

Mutual funds, held in rabbi trust

12,419

—

(606
)

11,813

Federal government agencies

350

—

(5
)

345

Certificates of deposit

249

—

—

249

227,603

1

(4,047
)

223,557

$
467,532

$
3

$
(4,558
)

$
462,977

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

(Losses)

Value

As of July 31, 2021

Short-term Investments:

Corporate bonds

$
28,808

$
2

$
(24
)

$
28,786

Municipal and pre-refunded municipal bonds

122,173

14

(87
)

122,100

Commercial paper

6,096

—

—

6,096

157,077

16

(111
)

156,982

Long-term Investments:

Corporate bonds

61,646

4

(159
)

61,491

Municipal and pre-refunded municipal bonds

40,069

34

(56
)

40,047

Mutual funds, held in rabbi trust

11,610

143

(42
)

11,711

113,325

181

(257
)

113,249

$
270,402

$
197

$
(368
)

$
270,231

Proceeds from the sales and maturities of available-for-sale securities were ~~$164,314~~$230,745 and ~~$148,582~~$237,879 for the ~~six~~nine months ended ~~July~~October 31, 2022 and 2021, respectively. The Company included in “Other loss, net,” in the Condensed Consolidated Statements of Income, a net realized loss of ~~$222~~$1,131 and ~~$334~~$1,465 for the three and ~~six~~nine months ended ~~July~~October 31, 2022, respectively, and a net realized gain of $4$9 and $13 for the three and ~~six~~nine months ended ~~July~~October 31, 2021. Amortization of discounts and premiums, net, was ~~$1,225~~$1,037 and ~~$2,882~~$3,919 for the three and ~~six~~nine months ended ~~July~~October 31, 2022, respectively, and ~~$1,398~~$1,804 and ~~$2,736~~$4,540 for the three and ~~six~~nine months ended ~~July~~October 31, 2021, respectively. Amortization of discounts and premiums, net, is included in “Other loss, net” in the Condensed Consolidated Statements of Income. Mutual funds represent assets held in an irrevocable rabbi trust for the Company’s Non-qualified Deferred Compensation Plan (“NQDC”). These assets are a source of funds to match the funding obligations to participants in the NQDC but are subject to the Company’s general creditors. The Company elected the fair value option for financial assets for the mutual funds held in the rabbi trust resulting in all unrealized gains and losses being recorded in “Other loss, net” in the Condensed Consolidated Statements of Income.

5. Fair Value

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach that relate to its financial assets and financial liabilities). The levels of the hierarchy are described as follows:

•

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

•

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•

Level 3: Unobservable inputs that reflect the Company’s own assumptions.

•

~~Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.~~

•

~~Level 3: Unobservable inputs that reflect the Company’s own assumptions.~~

Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy. The Company’s financial assets that are accounted for at fair value on a recurring basis are presented in the tables below:

Marketable Securities Fair Value as of

July 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Corporate bonds

$
—

$
167,367

$
—

$
167,367

Municipal and pre-refunded municipal bonds

—

120,502

—

120,502

US Treasury securities

—

12,756

—

12,756

Mutual funds, held in rabbi trust

11,336

—

—

11,336

Federal government agencies

—

338

—

338

Certificates of deposit

—

249

—

249

$
11,336

$
301,212

$
—

$
312,548


	Marketable Securities Fair Value as of
	October 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	141,397	$	—	$	141,397
Municipal and pre-refunded municipal bonds		—		84,509		—		84,509
Mutual funds, held in rabbi trust		10,760		—		—		10,760
US Treasury securities		—		4,695		—		4,695
Certificates of deposit		—		249		—		249
	$	10,760	$	230,850	$	—	$	241,610


	Marketable Securities Fair Value as of
	January 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	231,215	$	—	$	231,215
Municipal and pre-refunded municipal bonds		—		188,334		—		188,334
Mutual funds, held in rabbi trust		11,813		—		—		11,813
US Treasury securities		—		20,137		—		20,137
Commercial paper		—		10,884		—		10,884
Federal government agencies		—		345		—		345
Certificates of deposit		—		249		—		249
	$	11,813	$	451,164	$	—	$	462,977


	Marketable Securities Fair Value as of
	October 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	227,436	$	—	$	227,436
Municipal and pre-refunded municipal bonds		—		193,355		—		193,355
Mutual funds, held in rabbi trust		12,081		—		—		12,081
US Treasury securities		21,587		—		—		21,587
Commercial paper		—		3,099		—		3,099
Federal government agencies		348		—		—		348
Certificates of deposit		—		249		—		249
	$	34,016	$	424,139	$	—	$	458,155

Marketable Securities Fair Value as of

January 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Corporate bonds

$
—

$
231,215

$
—

$
231,215

Municipal and pre-refunded municipal bonds

—

188,334

—

188,334

US Treasury securities

—

20,137

—

20,137

Mutual funds, held in rabbi trust

11,813

—

—

11,813

Commercial paper

—

10,884

—

10,884

Federal government agencies

—

345

—

345

Certificates of deposit

—

249

—

249

$
11,813

$
451,164

$
—

$
462,977

Marketable Securities Fair Value as of

July 31, 2021

Level 1

Level 2

Level 3

Total

Assets:

Corporate bonds

$
—

$
90,277

$
—

$
90,277

Municipal and pre-refunded municipal bonds

—

162,147

—

162,147

Mutual funds, held in rabbi trust

11,711

—

—

11,711

Commercial paper

—

6,096

—

6,096

$
11,711

$
258,520

$
—

$
270,231

Financial assets

Level 1 assets consist of financial instruments whose value has been based on inputs that use, as their basis, readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers.

Level 2 assets consist of financial instruments whose value has been based on quoted prices for similar assets and liabilities in active markets as well as quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 assets consist of financial instruments where there has been no active market. The Company held no Level 3 financial instruments as of ~~July~~October 31, 2022, January 31, 2022 and ~~July~~October 31, 2021.

The fair value of cash and cash equivalents (Level 1) approximates carrying value since cash and cash equivalents consist of short-term highly liquid investments with maturities of less than three months at the time of purchase. As of ~~July~~October 31, 2022, January 31, 2022 and ~~July~~October 31, 2021, cash and cash equivalents included cash on hand, cash in banks, money market accounts and marketable securities with maturities of less than three months at the time of purchase.

Non-financial assets

The Company’s non-financial assets, primarily consisting of property and equipment and lease-related right-of-use assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The fair value of property and equipment was determined using a discounted cash-flow model that utilized Level 3 inputs. The Company’s retail locations are reviewed for impairment at the retail location level, which is the lowest level at which individual cash flows can be identified. In calculating future cash flows, the Company makes estimates regarding future operating results based on its experience and knowledge of market factors in which the retail location is located. Right-of-use assets are tested for impairment in the same manner as property and equipment. During the three months ended October 31, 2022, the Company determined that certain long-lived assets at the Company's retail locations were unable to recover their carrying value. These assets were written down to a fair value resulting in impairment charges of $958 across four retail locations, with a carrying value after impairment of $12,988 related to the right-of-use assets.

The Company has operating leases for stores, distribution and fulfillment centers, corporate offices and equipment. The Company subleases certain properties to third parties.

Short-term lease costs and sublease income were not material during the three and ~~six~~nine months ended ~~July~~October 31, 2022 and ~~July~~October 31, 2021.

As of ~~July~~October 31, 2022, the Company had commitments of approximately ~~$6,678~~$42,487 not included in the amounts above related to ~~five~~nine executed but not yet commenced leases.

In response to the COVID-19 pandemic and mandated store closures, the Company withheld certain minimum lease payments due to landlords. The amounts withheld at July 31, 2022 and 2021 were included in “Current portion of operating lease liabilities” in the Condensed Consolidated Balance Sheets.13

8. Share-Based Compensation

The Company maintains stock incentive plans pursuant to which it can grant restricted shares, unrestricted shares, incentive stock options, non-qualified stock options, restricted stock units (“RSU’s”), performance stock units (“PSU’s”) or stock appreciation rights (“SAR’s”). The fair value of PSU’s and RSU’s is equal to the stock price on the date of the grant. Share-based compensation expense included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Income, for the three and ~~six~~nine months ended ~~July~~October 31, 2022 and 2021, was as follows:

Three Months Ended

Six Months Ended

July 31,

July 31,

2022

2021

2022

2021

Performance Stock Units

$
1,280

$
1,527

$
2,417

$
1,926

Restricted Stock Units

5,727

5,871

11,692

10,042

Total

$
7,007

$
7,398

$
14,109

$
11,968


	Three Months Ended				Nine Months Ended
	October 31,				October 31,
	2022		2021		2022		2021
Performance Stock Units	$	1,280	$	1,070	$	3,697	$	2,996
Restricted Stock Units		6,582		6,030		18,274		16,072
Total	$	7,862	$	7,100	$	21,971	$	19,068

Share-based awards granted and the weighted-average fair value of such awards for the ~~six~~nine months ended ~~July~~October 31, 2022 was as follows:


	Six Months Ended				Nine Months Ended
	July 31, 2022				October 31, 2022
			Weighted-				Weighted-
	Awards		Average Fair		Awards		Average Fair
	Granted		Value		Granted		Value
Performance Stock Units		167,500	$	25.38		167,500	$	25.38
Restricted Stock Units		1,070,500	$	24.98		1,105,500	$	24.85
Total		1,238,000				1,273,000

During the ~~six~~nine months ended ~~July~~October 31, 2022, 20,000 stock options were exercised, 80,001 PSU’s vested and ~~624,214~~625,881 RSU’s vested.

The total unrecognized compensation cost related to outstanding share-based awards and the weighted-average period in which the cost is expected to be recognized as of ~~July~~October 31, 2022 was as follows:


	July 31, 2022				October 31, 2022
	Unrecognized		Weighted-		Unrecognized		Weighted-
	Compensation		Average		Compensation		Average
	Cost		Years		Cost		Years
Performance Stock Units	$	8,505		2.2	$	7,225		2.0
Restricted Stock Units		44,263		2.2		37,700		2.0
Total	$	52,768			$	44,925

The following tables present the changes in “Accumulated other comprehensive loss,” by component, net of tax, for the three and ~~six~~nine months ended ~~July~~October 31, 2022 and 2021:

Three Months Ended July 31, 2022

Six Months Ended July 31, 2022

Unrealized Gains

Unrealized Gains

Foreign

and (Losses) on

Foreign

and (Losses) on

Currency

Available-for-

Currency

Available-for-

Translation

Sale Securities

Total

Translation

Sale Securities

Total

Balance at beginning of period

$
(36,593
)

$
(8,003
)

$
(44,596
)

$
(22,204
)

$
(2,626
)

$
(24,830
)
Other comprehensive income (loss)
   before reclassifications

(6,243
)

876

(5,367
)

(20,632
)

(4,389
)

��
(25,021
)
Amounts reclassified from
   accumulated other comprehensive
   income (loss)

—

(222
)

(222
)

—

(334
)

(334
)
Net current-period other
   comprehensive income (loss)

(6,243
)

654

(5,589
)

(20,632
)

(4,723
)

(25,355
)
Balance at end of period

$
(42,836
)

$
(7,349
)

$
(50,185
)

$
(42,836
)

$
(7,349
)

$
(50,185
)


	Three Months Ended October 31, 2022									Nine Months Ended October 31, 2022
				Unrealized Gains									Unrealized Gains
	Foreign			and (Losses) on						Foreign			and (Losses) on
	Currency			Available-for-						Currency			Available-for-
	Translation			Sale Securities			Total			Translation			Sale Securities			Total
Balance at beginning of period	$	(42,836	)	$	(7,349	)	$	(50,185	)	$	(22,204	)	$	(2,626	)	$	(24,830	)
Other comprehensive income (loss) before reclassifications		(13,451	)		700			(12,751	)		(34,083	)		(3,689	)		(37,772	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(1,131	)		(1,131	)		—			(1,465	)		(1,465	)
Net current-period other comprehensive income (loss)		(13,451	)		(431	)		(13,882	)		(34,083	)		(5,154	)		(39,237	)
Balance at end of period	$	(56,287	)	$	(7,780	)	$	(64,067	)	$	(56,287	)	$	(7,780	)	$	(64,067	)


	Three Months Ended October 31, 2021									Nine Months Ended October 31, 2021
				Unrealized Gains									Unrealized Gains
	Foreign			and (Losses) on						Foreign			and (Losses) on
	Currency			Available-for-						Currency			Available-for-
	Translation			Sale Securities			Total			Translation			Sale Securities			Total
Balance at beginning of period	$	(12,922	)	$	(166	)	$	(13,088	)	$	(16,950	)	$	(170	)	$	(17,120	)
Other comprehensive income (loss) before reclassifications		(2,605	)		(1,038	)		(3,643	)		1,423			(1,038	)		385
Amounts reclassified from accumulated other comprehensive income (loss)		—			9			9			—			13			13
Net current-period other comprehensive income (loss)		(2,605	)		(1,029	)		(3,634	)		1,423			(1,025	)		398
Balance at end of period	$	(15,527	)	$	(1,195	)	$	(16,722	)	$	(15,527	)	$	(1,195	)	$	(16,722	)

Three Months Ended July 31, 2021

Six Months Ended July 31, 2021

Unrealized Gains

Unrealized Gains

Foreign

and (Losses) on

Foreign

and (Losses) on

Currency

Available-for-

Currency

Available-for-

Translation

Sale Securities

Total

Translation

Sale Securities

Total

Balance at beginning of period

$
(11,528
)

$
(213
)

$
(11,741
)

$
(16,950
)

$
(170
)

$
(17,120
)
Other comprehensive income (loss)
   before reclassifications

(1,394
)

43

(1,351
)

4,028

—

4,028

Amounts reclassified from
   accumulated other comprehensive
   income (loss)

—

4

4

—

4

4

Net current-period other
   comprehensive income (loss)

(1,394
)

47

(1,347
)

4,028

4

4,032

Balance at end of period

$
(12,922
)

$
(166
)

$
(13,088
)

$
(12,922
)

$
(166
)

$
(13,088
)

All unrealized gains and losses on available-for-sale securities reclassified from accumulated other comprehensive loss were recorded in “Other loss, net” in the Condensed Consolidated Statements of Income.

13. Segment Reporting

The Company offers lifestyle-oriented general merchandise and consumer products and services through a portfolio of global consumer brands. The Company operates three reportable segments – “Retail,” “Wholesale” and “Nuuly.”

The Company’s Retail segment consists of the Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands. The Company has aggregated its brands into the Retail segment based upon their shared management, customer base and economic characteristics. Reporting in this format provides management with the financial information necessary to evaluate the success of the segments and the overall business. The Company’s Retail segment omni-channel strategy enhances its customers’ brand experience by providing a seamless approach to the customer shopping experience. All available Company-owned Retail segment shopping channels are fully integrated, including retail locations, websites, mobile applications, catalogs and customer contact centers.

The Company’s Wholesale segment consists of the Free People, FP Movement and Urban Outfitters brands. The Wholesale segment sells through department and specialty stores worldwide, digital businesses and the Retail segment.

The Nuuly segment consists of the Nuuly brand, which offers customers a more sustainable way to explore fashion. 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 women’s, men’s and kids’ clothes, shoes and accessories.

The Company evaluates the performance of each segment based on the net sales and pre-tax income from operations (excluding intercompany charges) of the segment. The Company accounts for intersegment sales and transfers as if the sales and transfers were made to third parties making similar volume purchases. Corporate expenses include expenses incurred and directed by the corporate office that are not allocated to segments. The principal identifiable assets for the Retail and Wholesale segments are inventory and property and equipment. The principal identifiable assets for the Nuuly segment are rental product and property and equipment.

The accounting policies of the reportable segments are the same as the policies described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022. All of the Company’s segments are highly diversified. No one customer constitutes more than 10% of the Company’s total consolidated net sales. A summary of the information about the Company’s operations by segment is as follows:


	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2022			2021			2022			2021
Net sales
Retail operations	$	1,067,531		$	1,043,905		$	3,126,157		$	2,990,413
Wholesale operations		80,223			79,549			211,194			208,112
Nuuly operations		35,279			12,688			86,904			30,447
Intersegment elimination		(7,684	)		(4,718	)		(13,584	)		(12,408	)
Total net sales	$	1,175,349		$	1,131,424		$	3,410,671		$	3,216,564
Income from operations
Retail operations	$	64,427		$	126,615		$	216,260		$	377,489
Wholesale operations		12,782			10,098			30,021			33,377
Nuuly operations		(3,228	)		(4,900	)		(9,358	)		(11,800	)
Intersegment elimination		547			850			1,137			1,195
Total segment operating income		74,528			132,663			238,060			400,261
General corporate expenses		(17,210	)		(16,761	)		(48,687	)		(45,003	)
Total income from operations	$	57,318		$	115,902		$	189,373		$	355,258


	October 31,		January 31,		October 31,
	2022		2022		2021
Inventory
Retail operations	$	682,005	$	507,510	$	582,711
Wholesale operations		61,574		62,189		44,392
Total inventory	$	743,579	$	569,699	$	627,103
Rental product, net (1)
Nuuly operations	$	76,449	$	32,075	$	22,203
Total rental product, net	$	76,449	$	32,075	$	22,203

Three Months Ended

Six Months Ended

July 31,

July 31,

2022

2021

2022

2021

Net sales

Retail operations

$
1,095,191

$
1,089,022

$
2,058,626

$
1,946,508

Wholesale operations

61,900

61,985

130,971

128,563

Nuuly operations

28,776

9,939

51,625

17,759

Intersegment elimination

(2,479
)

(3,221
)

(5,900
)

(7,690
)
Total net sales

$
1,183,388

$
1,157,725

$
2,235,322

$
2,085,140

Income from operations

Retail operations

$
96,292

$
176,829

$
151,833

$
250,874

Wholesale operations

7,534

9,099

17,239

23,279

Nuuly operations

(2,379
)

(3,618
)

(6,130
)

(6,900
)
Intersegment elimination

177

264

590

345

Total segment operating income

101,624

182,574

163,532

267,598

General corporate expenses

(15,806
)

(16,721
)

(31,477
)

(28,242
)
Total income from operations

$
85,818

$
165,853

$
132,055

$
239,356

(1)

Rental product, net is included in "Deferred income taxes and other assets" in the Condensed Consolidated Balance Sheets.


Property and equipment, net
Retail operations	$	1,133,561	$	1,113,294	$	1,056,282
Wholesale operations		1,073		1,458		1,593
Nuuly operations		40,446		30,333		30,412
Total property and equipment, net	$	1,175,080	$	1,145,085	$	1,088,287

July 31,

January 31,

July 31,

2022

2022

2021

Inventory

Retail operations

$
623,562

$
507,510

$
438,144

Wholesale operations

73,912

62,189

45,004

Total inventory

$
697,474

$
569,699

$
483,148

Rental product, net ⁽¹⁾

Nuuly operations

$
59,236

$
32,075

$
10,900

Total rental product, net

$
59,236

$
32,075

$
10,900

(1) Rental product, net is included in "Deferred income taxes and other assets" in the Condensed Consolidated Balance Sheets.

Property and equipment, net

Retail operations

$
1,114,792

$
1,113,294

$
1,016,644

Wholesale operations

1,174

1,458

1,762

Nuuly operations

34,281

30,333

29,345

Total property and equipment, net

$
1,150,247

$
1,145,085

$
1,047,751

The following tables summarize net sales and percentage of net sales from contracts with customers by merchandise category and by segment:


	Three Months Ended								Three Months Ended
	July 31,								October 31,
	2022				2021				2022				2021
Net sales
Apparel	$	721,966	66	%	$	721,570	66	%	$	688,630	64	%	$	679,692	65	%
Home		193,098	18	%		188,298	18	%		192,384	18	%		192,312	18	%
Accessories		133,783	12	%		133,408	12	%		135,784	13	%		128,065	13	%
Other		46,344	4	%		45,746	4	%		50,733	5	%		43,836	4	%
Retail operations		1,095,191	100	%		1,089,022	100	%		1,067,531	100	%		1,043,905	100	%
Apparel		54,215	91	%		56,342	96	%		65,713	91	%		70,097	94	%
Accessories		5,011	9	%		2,212	4	%		6,603	9	%		4,476	6	%
Other		195	—			210	—			223	0	%		258	0	%
Wholesale operations		59,421	100	%		58,764	100	%		72,539	100	%		74,831	100	%
Nuuly operations		28,776				9,939				35,279				12,688
Total net sales	$	1,183,388			$	1,157,725			$	1,175,349			$	1,131,424

	Six Months Ended								Nine Months Ended
	July 31,								October 31,
	2022				2021				2022				2021
Net sales
Apparel	$	1,360,941	66	%	$	1,269,056	65	%	$	2,049,571	66	%	$	1,948,748	65	%
Home		355,908	17	%		361,684	19	%		548,292	17	%		553,996	19	%
Accessories		247,625	12	%		233,451	12	%		383,409	12	%		361,516	12	%
Other		94,152	5	%		82,317	4	%		144,885	5	%		126,153	4	%
Retail operations		2,058,626	100	%		1,946,508	100	%		3,126,157	100	%		2,990,413	100	%
Apparel		113,727	91	%		116,658	97	%		179,440	91	%		186,755	96	%
Accessories		10,974	9	%		3,823	3	%		17,577	9	%		8,299	4	%
Other		370	—			392	—			593	0	%		650	0	%
Wholesale operations		125,071	100	%		120,873	100	%		197,610	100	%		195,704	100	%
Nuuly operations		51,625				17,759				86,904				30,447
Total net sales	$	2,235,322			$	2,085,140			$	3,410,671			$	3,216,564

The Apparel category includes intimates and activewear. The Home category includes home furnishings, electronics, gifts and decorative items. The Accessories category includes footwear, jewelry and handbags. The Other category includes beauty and shipping and handling for the Retail and Wholesale segments, and additionally the Menus & Venues brand for the Retail segment.

The Company historically presented the merchandise categories on a company-wide basis. The Company has updated the presentation of the above tables to include a summary of net sales and percentage of net sales by both merchandise category and by segment. Prior year amounts have been reclassified to conform to the current year presentation.

The Company has foreign operations primarily in Europe and Canada. Revenues and long-lived assets, based upon the Company’s domestic and foreign operations, are as follows:

Certain matters contained in this filing with the United States Securities and Exchange Commission (“SEC”) may contain forward-looking statements and are being made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the impacts of public health crises such as the coronavirus (COVID-19) pandemic, overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, the effects of the implementation of the United Kingdom’s withdrawal from membership in the European Union (commonly referred to as “Brexit”), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war (including geopolitical instability), terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises, increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs, border adjustment taxes or increases in duties or quotas), the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our filings with the SEC, including those set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed on April 1, 2022. We disclaim any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.

Unless the context otherwise requires, all references to the “Company,” “we,” “us” or “our” refer to Urban Outfitters, Inc., together with its subsidiaries.

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. Our Retail segment consumer products and services are sold directly to our customers through our retail locations, websites, mobile applications, social media and third-party digital platforms, catalogs and customer contact centers and franchisee-owned stores. The Wholesale segment consists of our Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets apparel, intimates, activewear and shoes. Our Nuuly segment consists of the Nuuly brand, which offers customers a more sustainable way to explore fashion. 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 users can buy and sell women’s, men’s and kids’ clothes, 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. For example, our fiscal year 2023 will end on January 31, 2023, and our fiscal year 2022 ended on January 31, 2022.

The COVID-19 pandemic continued to negatively impact the Company’s store operations during the first ~~half~~nine months of fiscal 2022 with residual impacts on store traffic and store sales resulting from store closures, primarily in Europe and Canada, occupancy restrictions and reduced store hours globally. During the second quarter of fiscal 2022, all remaining COVID-19 government mandated store closures in Europe and Canada expired, although some capacity restrictions continued in certain European and Canadian stores. 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. The Company made a strategic decision to ~~start bringing~~accelerate receipt of 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 the ability to fulfill customer demand.

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 the ~~second~~third quarter of fiscal 2023 and related government and private sector responsive actions could continue to affect its business operations. ~~The~~In the first half of fiscal 2023, the Company ~~continues~~continued to experience global supply chain disruptions resulting in inventory receipt ~~delays. In~~delays and in response, the Company ~~is continuing~~continued to further diversify its supply chain. In the third quarter of fiscal 2023, timing of supply chain ~~and bring~~deliveries started to improve, resulting in ~~certain merchandise earlier. Furthermore, the~~earlier than planned receipts of inventory. The Company expects that its operations will continue to be influenced by ~~recent general~~ economic ~~conditions~~pressures such as inflation and labor shortages, ~~and inflation, which have resulted~~resulting in higher ~~wages, higher inbound transportation and outbound delivery costs,~~wage expense and lower levels of discretionary spending by its customers, particularly customers of the Urban Outfitters brand. Additionally, fluctuations in foreign currency rates may impact the Company's operating results. The Company cannot reasonably estimate the duration and severity of ~~the COVID-19 pandemic or of~~ existing and future macroeconomic conditions ~~which have had and~~or current global issues that may ~~continue to~~ have a material ~~impact~~effect on ~~its business.~~the Company's business and the global economy. 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 and macroeconomic trends may change. Additionally, current global issues may affect the Company’s business and the global economy, including the geopolitical impact of Russia’s invasion of Ukraine and any related economic or other sanctions.results.

Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. 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. We manage and analyze our performance based on a single Retail segment omni-channel rather than separate channels and believe that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance.

Our comparable Retail segment net sales data is equal to the sum of our comparable store and comparable digital channel net sales. A store is considered to be comparable if it has been open at least 12 full months, unless it was materially expanded or remodeled within that year or was not otherwise operating at its full capacity within that year due to store specific closures from events such as damage from fire, flood and natural weather events. The Company did not remove stores that were closed or operating for an extended period of time at a reduced capacity due to the COVID-19 pandemic from the comparable stores net sales calculations. A digital channel is considered to be comparable if it has been operational for at least 12 full months. Sales from stores and digital channels that do not fall within the definition of comparable store or digital channel are considered to be non-comparable. Franchise net sales and the effects of foreign currency translation are also considered non-comparable.

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. We believe that changes in any of these metrics may be caused by a response to our brands’ fashion offerings, our marketing campaigns, circulation of our catalogs and an overall growth in brand recognition.

Urban Outfitters targets young adults aged 18 to 28 through a unique merchandise mix, compelling store environment, social media and third-party digital platforms, websites and mobile applications and a product offering that includes women’s and men’s fashion apparel, activewear, intimates, footwear, accessories, home goods, electronics and beauty. 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. Urban Outfitters stores are in street locations in large metropolitan areas and select university communities, specialty centers and enclosed malls that accommodate our customers’ propensity not only to shop, but also to congregate with their peers. 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 and Qatar.~~Middle East. Urban Outfitters’ North American Retail segment net sales accounted for approximately ~~24.4%~~23.6% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to approximately ~~28.8%~~28.1% for the comparable period in fiscal 2022. European Retail segment net sales accounted for ~~9.0%~~8.8% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to approximately ~~8.7%~~9.0% for the comparable period in fiscal 2022.

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. 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, head pieces, 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. Merchandise includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. In addition to individual brand stores, the Anthropologie Group operates expanded format stores that include multiple Anthropologie Group brands, which allows for the presentation of an expanded assortment of products in certain categories. Anthropologie Group stores are located in specialty centers, upscale street locations and enclosed malls. 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 ~~United Arab Emirates and Qatar.~~Middle East. The Anthropologie Group’s North American Retail segment net sales accounted for approximately ~~38.4%~~38.8% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to approximately ~~36.7%~~36.6% for the comparable period in fiscal 2022. European Retail segment net sales accounted for 1.8% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, ~~compared to approximately 1.9% for~~and the comparable period in fiscal 2022.

The Free People Group consists of the Free People and FP Movement brands. The Free People brand focuses its product offering on private label merchandise targeted to young contemporary women aged 25 to 30 and provides a unique merchandise mix of casual women’s apparel, intimates, FP Movement activewear, shoes, accessories, home products, gifts and beauty and wellness. The FP Movement brand offers performance-ready activewear, beyond-the-gym staples and wellness essentials. Free People Group stores are located in enclosed malls, upscale street locations and specialty centers. 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. 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 ~~17.1%~~17.3% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to approximately ~~16.2%~~16.4% for the comparable period in fiscal 2022. European Retail segment net sales accounted for less than 1.0% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, and the comparable period in fiscal 2022.

The Menus & Venues brand focuses on the dining and event experience that provides excellence in food, beverage and service. The Menus & Venues brand net sales accounted for less than 1.0% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, and the comparable period in fiscal 2022.

Net sales from the Retail segment accounted for approximately ~~92.1%~~91.7% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to ~~93.4%~~93.0% for the comparable period in fiscal 2022.

Store data for the ~~six~~nine months ended ~~July~~October 31, 2022 was as follows:

Selling square footage by brand as of ~~July~~October 31, 2022 and 2021 was as follows:

We plan for future store growth for all three brands 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 digital channel growth to come from expansion domestically and internationally.

January 31,

Projected

Projected

January 31,

2022

Openings

Closings

2023

Urban Outfitters

261

8

(7
)

262

Anthropologie Group

238

6

(7
)

237

Free People Group ⁽¹⁾

173

22

(1
)

194

Menus & Venues

10

1

—

11

Total Company-Owned Stores

682

37

(15
)

704

Franchisee-Owned Stores

3

5

—

8

Total URBN

685

42

(15
)

712

(1)

Includes 11 FP Movement projected store openings.

~~(1)~~

~~Includes 12FP Movement projected store openings.~~

Wholesale Segment

Our Wholesale segment consists of the Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People Group brand and the BDG and “iets frans” brand apparel collections under the Urban Outfitters brand. Our Wholesale segment net sales accounted for approximately ~~5.6%~~5.8% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to ~~5.8%~~6.1% for the comparable period in fiscal 2022.

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. For a monthly fee, Nuuly subscribers can select rental product from a wide selection of the Company’s own brands, third-party 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. 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. 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. Our Nuuly segment net sales accounted for approximately ~~2.3%~~2.5% of consolidated net sales for the ~~six~~nine months ended ~~July~~October 31, 2022, compared to less than 1.0% for the comparable period in fiscal 2022.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.

Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors. Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements for the fiscal year ended January 31, 2022, which are included in our Annual Report on Form 10-K filed with the SEC on April 1, 2022. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. We are not currently aware of any reasonably likely events or circumstances that would cause our actual results to be materially different from our

estimates. There have been no significant changes to our critical accounting policies during the ~~six~~nine months ended ~~July~~October 31, 2022.

Results of Operations

As a Percentage of Net Sales

The table below sets forth, for the periods indicated, certain income statement data and the percentage of our net sales represented by such data. The table should be read in conjunction with the discussion that follows.

Three Months Ended ~~July~~October 31, 2022 (Fiscal 2023) Compared To

Three Months Ended ~~July~~October 31, 2021 (Fiscal 2022)


(amounts in millions)	Three Months Ended												Three Months Ended
	July 31,												October 31,
	2022						2021						2022							2021
Net sales	$	1,183.4			100.0	%	$	1,157.7			100.0	%	$	1,175.3			100.0		%	$	1,131.4			100.0	%
Cost of sales		808.8		68.3				722.4			62.4
Cost of sales (excluding store impairment)														817.3		69.5					740.7			65.5
Store impairment														1.0		0.1					—			—
Gross profit		374.6			31.7			435.3			37.6			357.0			30.4				390.7			34.5
Selling, general and administrative expenses		288.8		24.4				269.4			23.3			299.7		25.5					274.8			24.3
Income from operations		85.8			7.3			165.9			14.3			57.3			4.9				115.9			10.2
Other loss, net		(2.2	)	(0.2)				(1.8	)	(0.1)				(5.0	)		(0.5	)			(0.5	)	(0.0)
Income before income taxes		83.6			7.1			164.1			14.2			52.3			4.4				115.4			10.2
Income tax expense		24.1		2.1				36.8			3.2			15.1		1.2					26.5			2.3
Net income	$	59.5			5.0	%	$	127.3			11.0	%	$	37.2			3.2		%	$	88.9			7.9	%

Net sales for the ~~second~~third quarter of fiscal 2023 were $1.18 billion, compared to ~~$1.16~~$1.13 billion in the ~~second~~third quarter of fiscal 2022. The ~~$25.7~~$43.9 million increase was attributable to a ~~$6.2~~$23.6 million, or ~~0.6%~~2.3%, increase in Retail ~~segment net sales, a $0.7 million, or 1.1%, increase in Wholesale~~ segment net sales and an increase in Nuuly segment net sales of ~~$18.8 million.~~$22.6 million, or 178.1%, partially offset by a $2.3 million, or 3.1%, decrease in Wholesale segment net sales. Retail segment net sales for the ~~second~~third quarter of fiscal 2023 accounted for ~~92.5%~~90.8% of total net sales compared to ~~94.1%~~92.3% of total net sales in the ~~second~~third quarter of fiscal 2022.

The increase in our Retail segment net sales during the ~~second~~third quarter of fiscal 2023 was due to an increase of ~~$9.6~~$36.0 million, or ~~0.9%~~3.6%, in Retail segment comparable net sales, partially offset by a decrease of ~~$3.4~~$12.4 million in non-comparable net ~~sales, including the negative impact of foreign currency translation and the positive net impact of store openings and closings since the prior comparable period.~~sales. Retail segment comparable net sales increased ~~7.7%~~13.1% at the Anthropologie Group and 8.1% at the Free People Group and ~~7.2% at the Anthropologie Group and~~ decreased ~~8.9%~~9.1% at Urban Outfitters. Retail segment comparable net sales increased in ~~Europe~~both North America and ~~were flat in North America.~~Europe. The overall increase in Retail segment comparable net sales was driven by ~~low single-digit~~mid-single-digit positive digital channel sales ~~while~~and low single-digit positive retail store ~~sales were flat.~~sales. The digital channel net sales increase was driven by increases in sessions and average order value, while conversion rate and units per transaction ~~decreased and conversion rate was flat.~~decreased. Comparable store net sales ~~were flat~~increased as higher store traffic, transactions and ~~transactions~~average unit retail price were offset by a decrease in conversion rate and units per ~~transaction and average unit retail price.~~transaction. The decrease in non-comparable net sales during the ~~second~~third quarter of fiscal 2023 was primarily due to the negative impact of foreign currency translation of approximately 200 basis points, partially offset by the 6051 new Company-owned stores and restaurants opened and 1916 Company-owned stores and restaurants closed since the prior comparable period.

The ~~increase~~decrease in Wholesale segment net sales in the ~~second~~third quarter of fiscal 2023, as compared to the ~~second~~third quarter of fiscal 2022, was primarily due to a ~~$1.9~~$2.6 million, or ~~3.6%~~3.8%, ~~increase~~decrease in sales for the Free People Group, ~~which~~partially offset by an increase in Urban Outfitters wholesale sales. The Free People Group wholesale sales decrease was primarily ~~driven~~due to a decrease in sales to department stores, partially offset by an increase in sales to specialty ~~accounts, partially offset by~~accounts. The increase in Nuuly segment net sales was due to a ~~decline~~185% increase in ~~Urban Outfitters wholesale sales.~~our subscribers during the third quarter of fiscal 2023 as compared to the third quarter of fiscal 2022.

Gross profit percentage for the ~~second~~third quarter of fiscal 2023 decreased to ~~31.7%~~30.4% of net sales, from ~~37.6%~~34.5% of net sales in the ~~second~~third quarter of fiscal 2022. Gross profit decreased to ~~$374.6~~$357.0 million in the ~~second~~third quarter of fiscal 2023 from ~~$435.3~~$390.7 million in the ~~second~~third quarter of fiscal 2022. The decrease in gross profit rate and dollars was primarily due to higher markdowns at all three brands as compared to record low markdown rates in the comparable prior year ~~quarter. Lower initial merchandise markups driven largely by higher inbound transportation expenses further contributed~~quarter, with the Urban Outfitters brand experiencing the largest year-over-year decline primarily due to ~~the deleverage. Additionally, higher carrier fuel surcharges resulted in an increase in delivery expense.~~elevated inventory levels and macroeconomic trends.

Total inventory at ~~July~~October 31, 2022, as compared to ~~July~~October 31, 2021, increased by ~~$214.3~~$116.5 million, or ~~44.4%~~18.6%, to ~~$697.5~~$743.6 million. Retail segment inventory increased by ~~42.3%~~17.0% driven by higher costs, earlier than planned receipts due to improved timing of supply chain deliveries and excess inventory of slower selling product in certain categories. Wholesale segment inventory increased by ~~64.2%. The increase~~38.7% due to softness in inventory for both segments was driven by higher inbound transportation expenses and planned earlier receipts to protect sales against a volatile supply chain. Additionally, lower than expected Urban Outfitters brand sales in fiscal 2023 resulted in increased inventory levels.department store sales.

Selling, general and administrative expenses increased by ~~$19.3~~$24.9 million, or ~~7.2%~~9.1%, in the ~~second~~third quarter of fiscal 2023, compared to the ~~second~~third quarter of fiscal 2022. Selling, general and administrative expenses as a percentage of net sales increased in the ~~second~~third quarter of fiscal 2023 to ~~24.4%~~25.5% of net sales, compared to ~~23.3%~~24.3% of net sales for the ~~second~~third quarter of fiscal 2022. The increase in rate as a percentage of net sales and increase in selling, general and administrative dollars was primarily related to increased store payroll expenses incurred due to increased store associate hours to support increased customer traffic ~~as well as~~and higher average wages in order to attract and retain ~~employees.~~employees, as well as marketing expenses to support increased sales and customer growth.

Income from operations was ~~7.3%~~4.9% of net sales, or ~~$85.8~~$57.3 million, for the ~~second~~third quarter of fiscal 2023 compared to ~~14.3%~~10.2% of net sales, or ~~$165.9~~$115.9 million, for the ~~second~~third quarter of fiscal 2022. The decrease in dollars and rate was primarily due to lower gross profit.

Our effective tax rate for the ~~second~~third quarter of fiscal 2023 was 28.8% compared to ~~22.4%~~23.0% in the ~~second~~third quarter of fiscal 2022. The change in effective tax rate for the three months ended ~~July~~October 31, 2022, was attributable to the ratio of foreign taxable earnings to global taxable earnings, tax rate law changes and the prior year favorable impact of equity activity.

~~Six~~Nine Months Ended ~~July~~October 31, 2022 (Fiscal 2023) Compared To

~~Six~~Nine Months Ended ~~July~~October 31, 2021 (Fiscal 2022)


(amounts in millions)	Six Months Ended													Nine Months Ended
	July 31,													October 31,
	2022							2021						2022							2021
Net sales	$	2,235.3			100.0		%	$	2,085.1		100.0		%	$	3,410.7			100.0		%	$	3,216.6			100.0	%
Cost of sales		1,537.4			68.8				1,349.2		64.7
Cost of sales (excluding store impairment)															2,354.8			69.1				2,089.9			65.0
Store impairment															1.0		0.0					—			—
Gross profit		697.9			31.2				735.9		35.3				1,054.9			30.9				1,126.7			35.0
Selling, general and administrative expenses		565.8			25.3				496.5		23.8				865.5			25.3				771.4			24.0
Income from operations		132.1			5.9				239.4		11.5				189.4			5.6				355.3			11.0
Other loss, net		(4.3	)		(0.2	)			(2.0	)	(0.1	)			(9.3	)		(0.3	)			(2.5	)	(0.0)
Income before income taxes		127.8			5.7				237.4		11.4				180.1			5.3				352.8			11.0
Income tax expense		36.8		1.6					56.6		2.7				51.9		1.5					83.1			2.6
Net income	$	91.0			4.1		%	$	180.8		8.7		%	$	128.2			3.8		%	$	269.7			8.4	%

Net sales for the ~~six~~nine months ended ~~July~~October 31, 2022 were ~~$2.24~~$3.41 billion, compared to ~~$2.09~~$3.22 billion in the comparable period of fiscal 2022. The ~~$150.2~~$194.1 million increase was attributable to a ~~$112.1~~$135.7 million, or ~~5.8%~~4.5%, increase in Retail segment net sales, ~~a $4.2 million, or 3.5%, increase in Wholesale segment net sales and~~ an increase in Nuuly segment net sales of ~~$33.9 million.~~$56.5 million, or 185.4%, and a $1.9 million, or 1.0%, increase in Wholesale segment net sales. Retail segment net sales for the ~~six~~nine months ended ~~July~~October 31, 2022 accounted for ~~92.1%~~91.7% of total net sales compared to ~~93.4%~~93.0% of total net sales in the ~~six~~nine months ended ~~July~~October 31, 2021.

The increase in our Retail segment net sales during the first ~~six~~nine months of fiscal 2023 was due to an increase of ~~$100.8~~$136.6 million, or ~~5.4%~~4.8%, in Retail segment comparable net sales, ~~and an increase~~partially offset by a decrease of ~~$11.3~~$0.9 million in

non-comparable net ~~sales, including the positive net impact of store openings and closings since the prior comparable period and the negative impact of foreign currency translation.~~sales. Retail segment comparable net sales increased ~~12.2%~~12.5% at the Anthropologie Group and ~~10.8%~~9.9% at the Free People Group and decreased ~~4.5%~~6.0% at Urban Outfitters. Retail segment comparable net sales increased in both North America and Europe. The relative proportion of Retail segment sales attributable to store and digital channels changed ~~significantly in the first half of fiscal 2023 compared to fiscal 2022~~ due in large part to the temporary global store closures and occupancy restrictions in the ~~United States, Europe, and Canada in fiscal 2022 resulting from~~first nine months of the prior year due to the COVID-19 pandemic. With those restrictions lifted in the current year, Retail segment comparable sales increased due to double-digit growth in retail store sales driven by higher traffic and transactions as well as an increase in average unit selling price, partially offset by a decrease in units per transaction and a decrease in conversion rate. ~~Higher retail store~~Digital channel net sales were ~~partially~~flat as an increase in average order value was offset by ~~low-single digit negative digital channel sales due to~~ decreases in sessions, units per transaction and conversion ~~rate, which were only partially offset by an increase in average order value.~~rate. The ~~increase~~decrease in non-comparable net sales during the first ~~half~~nine months of fiscal 2023 was primarily due to the 72negative impact of foreign currency translation of approximately 140 basis points, partially offset by the 79 new Company-owned stores and restaurants opened and 22 Company-owned stores and restaurants closed since the prior comparable ~~period, partially offset by the impact of foreign currency translation.~~period.

The increase in Wholesale segment net sales in the first ~~six~~nine months of fiscal 2023, as compared to the first ~~six~~nine months of fiscal 2022, was primarily due to a ~~$6.8~~$4.1 million, or ~~6.1%~~2.3%, increase in sales for the Free People Group, which was primarily driven by an increase in sales to ~~department stores and~~ specialty accounts, partially offset by a decline in Urban Outfitters wholesale sales. The increase in Nuuly segment net sales was due to a 200% increase in our subscribers during the first nine months of fiscal 2023 as compared to the first nine months of fiscal 2022.

Gross profit percentage for the first ~~six~~nine months of fiscal 2023 decreased to ~~31.2%~~30.9% of net sales, from ~~35.3%~~35.0% of net sales in the comparable period in fiscal 2022. Gross profit decreased to ~~$697.9~~$1,054.9 million for the first ~~six~~nine months of fiscal 2023 from ~~$735.9~~$1,126.7 million in the comparable period in fiscal 2022. The decrease in gross profit rate and dollars was primarily due to higher markdowns at all three brands ~~and~~as compared to record low markdown rates in the comparable prior year period, as well as lower initial merchandise markups driven largely by higher inbound transportation expenses.

Selling, general and administrative expenses increased by ~~$69.2~~$94.1 million, or ~~13.9%~~12.2%, to ~~$565.8~~$865.5 million in the first ~~six~~nine months of fiscal 2023, compared to the comparable period in fiscal 2022. Selling, general and administrative expenses as a percentage of net sales increased in the first ~~six~~nine months of fiscal 2023 to 25.3% of net sales, compared to ~~23.8%~~24.0% of net sales for the comparable period in fiscal 2022. The increase in rate as a percentage of net sales and increase in selling, general and administrative dollars was primarily related to ~~the increased penetration of retail store sales in the current year as we incurred~~ higher store payroll expenses to support ~~the~~ retail store sales growth in the ~~six~~nine months ended ~~July~~October 31, ~~2022.~~2022, along with increased store associate hours to support increased customer traffic and higher average wages in order to attract and retain employees. Additionally, marketing expenses increased to support sales and customer growth.

Income from operations was ~~5.9%~~5.6% of net sales, or ~~$132.1~~$189.4 million, for the first ~~six~~nine months of fiscal 2023 compared to ~~11.5%~~11.0%, or ~~$239.4~~$355.3 million, for the first ~~six~~nine months of fiscal 2022. The decrease in dollars was primarily due to the increase in selling, general and administrative expenses and gross margin impact noted above. The decrease in operating income rate was primarily due to lower gross profit rate and deleverage in selling, general and administrative expenses during the first ~~six~~nine months of fiscal 2023.

Our effective tax rate for the first ~~six~~nine months of fiscal 2023 was 28.8% compared to ~~23.8%~~23.6% in the first ~~six~~nine months of fiscal 2022. The increase in effective tax rate for the ~~six~~nine months ended ~~July~~October 31, 2022 was attributable to the ratio of foreign taxable earnings to global taxable earnings, tax rate law changes and the prior year favorable impact of equity activity.

Liquidity and Capital Resources

The following tables set forth certain balance sheet and cash flow data for the periods indicated. These tables should be read in the conjunction with the discussion that follows:


(amounts in millions)
	July 31,		January 31,		July 31,		October 31,		January 31,		October 31,
	2022		2022		2021		2022		2022		2021
Cash, cash equivalents and marketable securities	$	404.2	$	669.6	$	735.0	$	389.0	$	669.6	$	694.5
Working capital		300.5		304.3		449.0		336.6		304.3		320.3


	Six Months Ended						Nine Months Ended
	July 31,						October 31,
	2022			2021			2022			2021
Net cash (used in) provided by operating activities	$	(31.7	)	$	195.2		$	(6.2	)	$	222.3
Net cash provided by (used in) investing activities		35.7			(123.0	)		65.3			(363.4	)
Net cash used in financing activities		(118.3	)		(4.7	)		(118.3	)		(19.8	)

The ~~decrease~~increase in working capital as of ~~July~~October 31, 2022, as compared to ~~July~~January 31, 2022 and October 31, 2021, was primarily due to the increase in inventory and the timing of disbursements, partially offset by the net decrease in cash, cash equivalents and current marketable ~~securities, partially offset by the increase in inventory.~~securities.

During the last two years, we have satisfied our cash requirements primarily through our cash flow from operating activities, and additionally, in the first ~~six~~nine months of fiscal 2023, through the sale and maturities of marketable securities. 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.

Cash Flows from Operating Activities

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. Cash used in operating activities in the first ~~six~~nine months of fiscal 2023 compared to cash provided by operating activities in the first ~~six~~nine months of 2022 was primarily due to lower net income, ~~increased inventory levels,~~the timing of disbursements and an investment in additional Nuuly rental product to support the growth in the ~~business and the timing of accounts receivable.~~business.

Cash Flows from Investing Activities

Cash provided by investing activities in the first ~~six~~nine months of fiscal 2023 primarily related to sales and maturities of marketable securities, partially offset by the purchases of property and equipment and marketable securities. Cash used in investing activities in the first ~~six~~nine months of fiscal 2022 primarily related to purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities. Cash paid for property and equipment in the first ~~six~~nine months of fiscal 2023 and 2022 was ~~$105.7~~$143.4 million and ~~$105.6~~$159.0 million, respectively, which was primarily used to expand our fulfillment center network and store base in both periods.

Cash Flows from Financing Activities

Cash used in financing activities in the first ~~six~~nine months of fiscal 2023 and 2022 primarily related to repurchases of our common shares under our share repurchase programs and from employees to meet payroll tax withholding requirements on vested awards. ~~Cash used in financing activities in the first six months of fiscal 2022 primarily~~

~~related to share repurchases of our common shares from employees to meet payroll tax withholding requirements on vested awards.~~

Credit Facilities

See Note 6, “Debt,” of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Company’s debt.

Capital and Operating Expenditures

During fiscal 2023, we plan to substantially complete construction on a new omni-channel fulfillment center in Kansas City, Kansas (which we expect to be fully operational in fiscal 2024), open approximately 3733 new Company-owned retail locations, expand or relocate certain existing retail locations, increase capacity at our Nuuly fulfillment center in response to the growth in 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, ~~and~~ invest in omni-channel marketing when ~~appropriate. We may also~~appropriate and 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 anticipate our capital expenditures during fiscal 2023 to be approximately $225 million, ~~a portion of which will be~~primarily to support new and expanded fulfillment and distribution ~~centers.~~centers and new store openings. All fiscal 2023 capital expenditures are expected to be financed by cash flow from operating activities, existing cash and cash equivalents and sales and maturities of marketable securities. 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.~~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. We believe that our existing cash and cash equivalents, availability under our current credit facilities and future cash flows provided by operations will be sufficient to fund these initiatives.

Share Repurchases

See Note 9, “Shareholders’ Equity,” of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Company’s share repurchases.

Other Matters

See Note 1, “Basis of Presentation,” Recent Accounting Pronouncements, of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

There have been no material changes to our quantitative or qualitative disclosures found in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

Item 4. Controls and Procedures

~~Item 4.~~

~~Controls and Procedures~~

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed by us in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of our management, including the Principal Executive Officer and the Principal Financial Officer, of the effectiveness of the design and operation of these disclosure controls and

procedures. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures were effective.

There have been no changes in our internal controls over financial reporting during the three months ended ~~July~~October 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

~~Item 1.~~

~~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 1A.Risk Factors

~~Item 1A.~~

~~Risk Factors~~

There have been no material changes in our risk factors since January 31, 2022. Please refer to our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on April 1, 2022, for our risk factors.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and the Use of Proceeds~~

~~Issuer Purchase of Equity Securities~~

~~A summary of the repurchase activity under the Company’s share repurchase programs for the quarter ended July 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⁾

May 1, 2022 through May 31, 2022

—

$
—

—

21,470,737

June 1, 2022 through June 30, 2022

2,314,347

$
21.59

2,314,347

19,156,390

July 1, 2022 through July 31, 2022

—

$
—

—

19,156,390

Total Fiscal 2023 Second Quarter

2,314,347

2,314,347

19,156,390

⁽¹⁾

In addition to the shares repurchased under the share repurchase program, for the quarter ended July 31, 2022, the Company acquired and subsequently retired 1,464 common shares from employees to meet payroll tax withholding requirements on vested awards. 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; all shares were repurchased and the authorization was completed by the end of June 2022. 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. Exhibits


~~Item 6.~~Exhibit	~~Exhibits~~

~~Exhibit~~ Number		Description

3.1		Amended and Restated Articles of Incorporation are incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on September 9, 2004.

3.2		Amendment No. 1 to Amended and Restated Articles of Incorporation is incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on September 9, 2004.

3.3		Amendment No. 2 to Amended and Restated Articles of Incorporation is incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (file no 000-22754) filed on May 31, 2013.

3.4		Amended and Restated By-laws are incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (file no 000-22754) filed on March 30, 2020.

10.131.1		Third Amendment to Credit Agreement dated June 10, 2022, by and among Urban Outfitters, Inc., its domestic subsidiaries, URBN Canada Retail, Inc., JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Chase Bank, N.A., and Wells Fargo Bank, National Association, as joint lead arrangers and co-book managers, and certain other lenders party thereto.

31.1*		Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer.

31.2*		Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer.

32.1**		Section 1350 Certification of the Principal Executive Officer.

32.2**		Section 1350 Certification of the Principal Financial Officer.

101.INS*		Inline XBRL Instance Document.

101.SCH*		Inline XBRL Taxonomy Extension Schema.

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase.

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase.

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase.

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

~~Filed herewith~~

**	~~Furnished herewith~~

Attached as Exhibits 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the three and ~~six~~nine months ended ~~July~~October 31, 2022, filed with the Securities and Exchange Commission on ~~September 9,~~December 12, 2022, formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Shareholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		URBAN OUTFITTERS, INC.

Date: ~~September 9,~~December 12, 2022	By:		/s/ RICHARD A. HAYNE
			Richard A. Hayne
			Chief Executive Officer


		URBAN OUTFITTERS, INC.

Date: ~~September 9,~~December 12, 2022	By:		/s/ MELANIE MAREIN-EFRON
			Melanie Marein-Efron
			Chief Financial Officer


Pennsylvania	23-2003332
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

5000 South Broad Street, Philadelphia, PA	19112-1495
(Address of Principal Executive Offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $.0001 per share	URBN	NASDAQ Global Select Market


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	July 31,				July 31,				October 31,				October 31,
	2022		2021		2022		2021		2022		2021		2022		2021
Operating lease costs	$	62,348	$	67,794	$	126,047	$	136,502	$	63,615	$	66,903	$	189,662	$	203,405
Variable lease costs		33,924		28,179		66,496		48,681		33,607		28,908		100,103		77,589
Total lease costs	$	96,272	$	95,973	$	192,543	$	185,183	$	97,222	$	95,811	$	289,765	$	280,994


	Operating			Operating
	Leases			Leases
Fiscal Year
2023 (excluding the six months ended July 31, 2022)	$	147,276
2023 (excluding the nine months ended October 31, 2022)				$	76,404
2024		261,558			272,593
2025		224,303			238,771
2026		189,684			202,448
2027		136,735			148,319
Thereafter		361,212			440,004
Total undiscounted future minimum lease payments		1,320,768			1,378,539
Less imputed interest		(229,652	)		(293,128	)
Total discounted future minimum lease payments	$	1,091,116		$	1,085,411


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of~~July~~ October 31, 2022,, January 31, 2022 and ~~July~~October 31, 2021	1

	Condensed Consolidated Statements of Incomefor the three and ~~six~~nine months ended ~~July~~October 31, 2022 and 2021	2

	Condensed Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~July~~October 31, 2022 and 2021	3

	Condensed Consolidated Statements of Shareholders’ Equity for the three and ~~six~~nine months ended ~~July~~October 31, 2022 and 2021	4

	Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~July~~October 31, 2022 and 2021	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2930

Item 4.	Controls and Procedures	2931

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	3132

Item 1A.	Risk Factors	3132

~~Item 2.~~	~~Unregistered Sales of Equity Securities and the Use of Proceeds~~	31

Item 6.	Exhibits	3233

	Signatures	3334

	Marketable Securities Fair Value as of
	July 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	—	$	90,277	$	—	$	90,277
Municipal and pre-refunded municipal bonds		—		162,147		—		162,147
Mutual funds, held in rabbi trust		11,711		—		—		11,711
Commercial paper		—		6,096		—		6,096
	$	11,711	$	258,520	$	—	$	270,231

	Three Months Ended July 31, 2022									Six Months Ended July 31, 2022
				Unrealized Gains									Unrealized Gains
	Foreign			and (Losses) on						Foreign			and (Losses) on
	Currency			Available-for-						Currency			Available-for-
	Translation			Sale Securities			Total			Translation			Sale Securities			Total
Balance at beginning of period	$	(36,593	)	$	(8,003	)	$	(44,596	)	$	(22,204	)	$	(2,626	)	$	(24,830	)
Other comprehensive income (loss) before reclassifications		(6,243	)		876			(5,367	)		(20,632	)		(4,389	)	��	(25,021	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(222	)		(222	)		—			(334	)		(334	)
Net current-period other comprehensive income (loss)		(6,243	)		654			(5,589	)		(20,632	)		(4,723	)		(25,355	)
Balance at end of period	$	(42,836	)	$	(7,349	)	$	(50,185	)	$	(42,836	)	$	(7,349	)	$	(50,185	)

	Three Months Ended July 31, 2021									Six Months Ended July 31, 2021
				Unrealized Gains									Unrealized Gains
	Foreign			and (Losses) on						Foreign			and (Losses) on
	Currency			Available-for-						Currency			Available-for-
	Translation			Sale Securities			Total			Translation			Sale Securities			Total
Balance at beginning of period	$	(11,528	)	$	(213	)	$	(11,741	)	$	(16,950	)	$	(170	)	$	(17,120	)
Other comprehensive income (loss) before reclassifications		(1,394	)		43			(1,351	)		4,028			—			4,028
Amounts reclassified from accumulated other comprehensive income (loss)		—			4			4			—			4			4
Net current-period other comprehensive income (loss)		(1,394	)		47			(1,347	)		4,028			4			4,032
Balance at end of period	$	(12,922	)	$	(166	)	$	(13,088	)	$	(12,922	)	$	(166	)	$	(13,088	)

Property and equipment, net
Retail operations	$	1,114,792	$	1,113,294	$	1,016,644
Wholesale operations		1,174		1,458		1,762
Nuuly operations		34,281		30,333		29,345
Total property and equipment, net	$	1,150,247	$	1,145,085	$	1,047,751


	January 31,		Stores		Stores			October 31,
	2022		Opened		Closed			2022
Urban Outfitters
United States		184		3		(2	)		185
Canada		18		—		—			18
Europe		59		2		—			61
Urban Outfitters Global Total		261		5		(2	)		264
Anthropologie Group
United States		206		3		(1	)		208
Canada		11		—		—			11
Europe		21		1		—			22
Anthropologie Group Global Total		238		4		(1	)		241
Free People Group
United States (1)		162		9		(1	)		170
Canada		5		—		—			5
Europe		6		4		—			10
Free People Group Global Total		173		13		(1	)		185
Menus & Venues
United States		10		1		—			11
Menus & Venues Total		10		1		—			11
Total Company-Owned Stores		682		23		(4	)		701
Franchisee-Owned Stores (2)		3		3		—			6
Total URBN		685		26		(4	)		707


	January 31,		Projected		Projected			January 31,
	2022		Openings		Closings			2023
Urban Outfitters		261		7		(5	)		263
Anthropologie Group		238		6		(5	)		239
Free People Group (1)		173		19		(5	)		187
Menus & Venues		10		1		—			11
Total Company-Owned Stores		682		33		(15	)		700
Franchisee-Owned Stores		3		5		—			8
Total URBN		685		38		(15	)		708

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⁾
May 1, 2022 through May 31, 2022		—	$	—		—		21,470,737
June 1, 2022 through June 30, 2022		2,314,347	$	21.59		2,314,347		19,156,390
July 1, 2022 through July 31, 2022		—	$	—		—		19,156,390
Total Fiscal 2023 Second Quarter		2,314,347				2,314,347		19,156,390