URBAN OUTFITTERS INC 10-K

Item 1. Business General We are a leading lifestyle products and services company that operates a portfolio of global consumer brands comprised of the Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues brands. We have achieved compounded annual sales growth of approximately 5% over the past five years, with sales of approximately $4.5 billion during the fiscal year ended January 31, 2022. The COVID-19 pandemic had a negative impact on our results for the fiscal year ended January 31, 2021, and continued to impact our operations for the fiscal year ended January 31, 2022. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations–Overview– Current Trends for further discussion. We operate under three reportable segments – Retail, Wholesale and Nuuly. Our Retail segment includes our store and digital channels and consists of our Anthropologie, Bhldn, Free People, FP Movement, Terrain, Urban Outfitters and Menus & Venues brands. We have over 51 years of experience creating and managing retail stores that offer highly differentiated collections of fashion apparel, accessories and home goods, among other things, in inviting and dynamic store settings. Our core strategy is to provide unified environments that establish emotional bonds with the customer, through Company-owned stores and franchisee-owned stores. In addition to retail stores, we offer our products and services directly to our customers through our websites, mobile applications, social media and third-party digital platforms, catalogs and customer contact centers. The Menus & Venues brand includes various casual dining concepts and event venues. We operate a Wholesale segment under the Free People, FP Movement and Urban Outfitters brands. The Wholesale segment sells through department and specialty stores worldwide, digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets apparel, intimates and activewear. Our Nuuly segment, formerly known as the Subscription segment, consists of the Nuuly brand, which offers customers with a more sustainable way to explore fashion. Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s and kids’ clothes, shoes and accessories from any brands. Milestones in our Company’s growth are as follows: • 1970: First Urban Outfitters store opened near the University of Pennsylvania campus in Philadelphia, Pennsylvania • 1976: Incorporated in the Commonwealth of Pennsylvania • 1984: Free People Wholesale division established 1 • 1992: First Anthropologie store opened in Wayne, Pennsylvania • 1993: Initial public offering of URBN shares on NASDAQ • 1998: First European Urban Outfitters store opened in London; Anthropologie website launched • 1999: Urban Outfitters website launched • 2002: First Free People store opened in the Garden State Plaza Mall in Paramus, New Jersey • 2004: Free People website launched • 2008: First Terrain garden center opened in Glen Mills, Pennsylvania • 2009: First European Anthropologie store opened in London • 2018: Urban Outfitters Wholesale division established; first European Free People store opened in Amsterdam • 2019: Launch of Nuuly Rent, a subscription rental service • 2020: First FP Movement store opened in Los Angeles, California • 2021: Launch of Nuuly Thrift, a peer-to-peer resale marketplace Our Retail segment omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. All available Company-owned Retail segment shopping channels are fully integrated, including stores, websites, mobile applications, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. 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 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 2022 ended on January 31, 2022. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor relations website, www.urbn.com/investor-relations , as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We will voluntarily provide electronic or paper copies (other than exhibits) of our filings free of charge upon written request. You may also obtain any materials we file with, or furnish to, the SEC on its website at www.sec.gov. Retail Segment Urban Outfitters. 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. We have established a reputation with these young adults, who are culturally sophisticated, self-expressive and actively engaged with their peer group. The product offering 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 and designed in collaboration with third-party brands. Stores average approximately 9,000 square feet of selling space. Our stores are located 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. As of January 31, 2022, we operated 261 Urban Outfitters stores, of which 184 were located in the United States, 18 were located in Canada and 59 were located in Europe, and sold merchandise through franchisee-owned stores in the United Arab Emirates. We plan to open approximately 10 Urban Outfitters stores and close approximately 5 Urban Outfitters stores due to lease expiration, globally, in fiscal 2023. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements. 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. We plan for future digital channel growth to come from expansion domestically and internationally. Urban Outfitters’ North American Retail segment net sales accounted for approximately 27.5% of consolidated net sales for fiscal 2022. European and Asian Retail segment net sales accounted for approximately 9.1% of consolidated net sales for fiscal 2022. Anthropologie Group. The Anthropologie Group consists of the Anthropologie, Bhldn and Terrain brands. The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The Anthropologie brand’s unique and eclectic internally designed and third-party brand product assortment includes women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and 2 wellness . In addition, the brand offers a catalog in North America that market s select merchandise, most of which is also available in Anthropologie brand stores. The Bhldn brand emphasizes every element that contributes to a wedding. The brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience. Terrain’s product offering includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. As of January 31, 2022, we operated 238 Anthropologie Group stores, of which 206 were located in the United States, 11 were located in Canada and 21 were located in Europe, and sold merchandise through a franchisee-owned store in the United Arab Emirates. Stores average approximately 8,000 square feet of selling space. In addition to individual brand stores, we operate expanded format stores that include multiple Anthropologie Group brands, which allows for the presentation of an expanded assortment of products in certain categories. Our stores are located in specialty centers, upscale street locations and enclosed malls. We plan to open approximately 8 Anthropologie Group stores and close approximately 8 Anthropologie Group stores due to lease expiration, globally, in fiscal 2023. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements. 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, and offers a catalog in North America that markets select merchandise, most of which is also available in Anthropologie brand stores. We plan for future digital channel growth to come from expansion domestically and internationally. The Anthropologie Group’s North American Retail segment net sales accounted for approximately 37.4% of consolidated net sales for fiscal 2022. European and Asian Retail segment net sales accounted for approximately 2.0% of consolidated net sales for fiscal 2022. Free People Group. The Free People Group consists of the Free People and FP Movement brands. Our Free People and FP Movement retail stores primarily offer private label merchandise targeted to young contemporary women aged 25 to 30. The Free People brand offers 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. Retail stores average approximately 2,000 square feet of selling space. Our stores are located in enclosed malls, upscale street locations and specialty centers. As of January 31, 2022, we operated 173 Free People Group stores, of which 162 were located in the United States, five were located in Canada and six were located in Europe. Of the 173 Free People Group stores open as of January 31, 2022, 20 were FP Movement stores, all located in the United States. We plan to open approximately 28 new Free People Group stores (including 16 FP Movement stores) and close approximately 1 Free People Group store due to lease expiration, globally, in fiscal 2023. We plan for future store growth to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements. The Free People Group operates websites and mobile applications in North America, Europe and Asia that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement wholesale offerings. The Free People Group also offers catalogs that market select merchandise, most of which is also available in our Free People and FP Movement stores. We plan for future digital channel growth to come from expansion domestically and internationally. The Free People Group’s North American Retail segment net sales accounted for approximately 16.3% for fiscal 2022. European and Asian Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2022. Menus & Venues. The Menus & Venues brand focuses on a dining experience that provides excellence in food, beverage and service. As of January 31, 2022, we operated 10 restaurants, all of which were located in the United States. The Menus & Venues brand net sales accounted for less than 1.0% of consolidated net sales for fiscal 2022. Wholesale Segment The Wholesale segment consists of the Free People, FP Movement and Urban Outfitters brands. The Wholesale segment was established in 1984 with the Free People brand to develop, in conjunction with Urban Outfitters, private label apparel lines of young women’s casual wear that could be effectively sold in Urban Outfitters stores and later began selling to department and specialty stores worldwide. The Urban Outfitters wholesale division, established in 2018, designs and sells the BDG and other own brand apparel collections to select department stores. We display our wholesale products in certain department stores using a shop-within-shop sales model. We believe that the shop-within-shop model allows for a more complete merchandising of our products, which allows us to differentiate ourselves from our competition and further strengthens each brand’s image. During fiscal 2022, the Wholesale segment’s range of young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People brand and the BDG and other own brand apparel collections under the Urban Outfitters brand were sold through department and specialty stores worldwide, including Nordstrom, Dillard’s, digital businesses and our Retail segment. We monitor the styles and products that are popular with our wholesale customers to give us insight into current fashion trends, helping us to better 3 serve our retail customers. W holesale sales and showroom facilities are located in Dallas, New York City , Los Angeles, Chicago and London . Our Wholesale segment net sales accounted for approximately 5.5 % of consolidated net sales for fiscal 202 2 . Nuuly Segment Nuuly. Our Nuuly segment consists of the Nuuly brand, which includes Nuuly Rent and Nuuly Thrift. Nuuly Rent is a monthly women’s apparel subscription rental service that launched in July 2019. For a monthly fee, Nuuly subscribers can select rental product from a wide selection of the Company’s own brands, third-party market brands and one-of-a-kind vintage pieces via a custom-built, digital platform. Subscribers select their products each month, wear them as often as they like and then swap into new products the following month. Subscribers are also able to purchase the rented product. Nuuly Thrift, which launched in October 2021, is a peer-to-peer resale marketplace where customers can buy and sell women’s, men’s and kids’ apparel, shoes and accessories from any brands. Sellers on Nuuly Thrift can transfer their earnings to their bank account or convert them to “Nuuly Cash,” a gift card with a bonus to be used at any of the Company’s brands. The Company earns a commission based on sales made in the marketplace. Nuuly segment net sales accounted for approximately 1.1% of consolidated net sales for fiscal 2022. Store Environment We create a unified environment in our stores that establishes an emotional bond with the customer. Every element of the environment is tailored to the aesthetic preferences of our target customers. Through creative design, much of the existing retail space is modified to incorporate a mosaic of fixtures, finishes and revealed architectural details. In our stores, merchandise is integrated into a variety of creative vignettes and displays designed to offer our customers an entire look at a distinct lifestyle. This dynamic visual merchandising and display technique provides the connection among the store design, the merchandise and the customer. Essential components of the ambiance of each store may include playing music that appeals to our target customers, using unique signage and employing a staff that understands and identifies with the target customer. Our Urban Outfitters, Anthropologie Group and Free People Group stores are primarily located in upscale street locations, free-standing locations, enclosed malls and specialty centers. We plan for our store environment and location strategy to remain consistent over the next several years. Buying and Design Operations Maintaining a constant flow of fresh and fashionable merchandise for our Retail segment is critically important to our ongoing performance. We maintain our own buying groups that select and develop products to satisfy our target customers and provide us with the appropriate amount and timing of products offered. Our buyers stay in touch with the evolving tastes of their target customers by shopping at major trade markets, attending national and regional trade shows and staying current with mass media influences, including social media, music, video, film, magazines and pop culture. Our buyers and designers play an important role in our ability to identify and deliver the latest fashion trends to our customers. The success of our brands relies upon our ability to attract, train and retain talented, highly motivated buying and design employees. In addition to management training programs for both newly hired and existing employees, we have a number of retention programs that offer qualitative and quantitative performance-based incentives. Merchandise Our Urban Outfitters brand offers a wide array of eclectic merchandise, including women’s and men’s fashion apparel, activewear, intimates, footwear, accessories, home products, electronics and beauty. Our Anthropologie brand product offerings include women’s apparel, accessories, intimates, shoes, home furnishings, a diverse array of gifts and decorative items and beauty and wellness. Our Bhldn brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations. Our Terrain brand product offerings include lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. Our Free People brand offers a showcase for casual women’s apparel, intimates, FP Movement activewear, shoes, accessories, home products, gifts and beauty and wellness. Our FP Movement brand offers performance-ready activewear, beyond-the-gym staples and wellness essentials. Our Nuuly brand allows subscribers to select rental product from a wide selection of the Company’s own brands, third-party market brands and one-of-a-kind vintage pieces. Our merchandise is continuously updated to appeal to our target customers’ changing tastes and is supplied by a large number of domestic and foreign vendors, with new shipments of merchandise arriving at our stores and fulfillment centers almost daily. The wide breadth of merchandise offered by our brands includes a combination of national third-party brands, private label product designed in collaboration with third-party brands and exclusive merchandise developed and designed internally by our brands. This combination allows us to offer fashionable merchandise and to differentiate our product mix from that of traditional department stores, as well as that of other specialty and digital retailers. Private label and exclusive merchandise generally yields higher gross profit margins than third-party branded merchandise, and helps to keep our product offerings current and unique. 4 The ever-changing mix of products available to our customers allows us to adapt our merchandise to prevailing fashion trends, and together with the inviting atmosphere and experience of our stores , social media and third-party digital platforms, websites and mobile applications encourages our core customers to visit our shopping channels frequently. We select price points for our merchandise that are consistent with the spending patterns of our target customers. As such, our stores carry merchandise at a wide range of price points that may vary considerably within product categories. Store Operations We have organized our retail store operations by brand into geographic areas or districts that each have a district leader. District leaders are responsible for several stores and monitor and supervise individual store leaders. Each store leader is responsible for overseeing the daily operations of one of our stores. In addition to a store leader, the staff of a typical store includes a combination of some or all of the following positions: a visual merchandising manager, several department managers and full and part-time sales and visual staff. An essential requirement for the success of our stores is our ability to attract, train and retain talented, highly motivated store leaders, visual merchandising managers and other key employees. In addition to management training programs for both newly hired and existing employees, we have a number of retention programs that offer qualitative and quantitative performance-based incentives to district-level leaders and store leaders. Marketing and Promotion We believe we have highly effective marketing tools in our websites, mobile applications, catalogs, email campaigns and social media and third-party digital platforms. We refresh this media as frequently as daily to reflect the most cutting edge trends in fashion and culture. We also believe that highly visible store locations, broad merchandise selection and creative and visual presentation within our stores, on our websites and on our mobile applications entice our customers to explore these channels and purchase merchandise. Consequently, we rely on these elements, as well as the brand recognition created by our direct marketing activities, to draw customers to our omni-channel operations. Marketing activities for each of our brand’s retail stores may include special event promotions and a variety of public relations activities designed to create community awareness of our stores and products. We also are active in social media and third-party digital platforms. We believe that the traditional method of a one-way communication to customers is no longer enough. We believe that by starting a conversation and interacting directly with our customers, most notably via Instagram, Facebook, TikTok, Pinterest and Google and our own mobile applications, we are more effective at understanding and serving their fashion needs. Customer Loyalty Programs Loyalty programs offer customers access to member-only benefits and rewards, which promotes brand loyalty. The Urban Outfitters brand offers UO Rewards, a customer loyalty program designed to create authentic, lasting relationships with customers by rewarding devoted members with reward coupons, exclusive offers and unique experiences. Members can earn and accumulate points based on purchase activity and engaging with the brand through social media. Upon reaching the specified point threshold, members are issued a reward coupon which can be redeemed for both in-store and online purchases. The Anthropologie brand offers AnthroPerks. AnthroPerks is a customer loyalty program that is designed to deliver benefits and experiences to help make our customers’ shopping journey in-store and online easier and more inspirational. Members are given free shipping benefits, birthday discounts, receipt look up, exclusive offers, early access to special collections and invitations to “Anthro Events” experiences. In February 2021, we began testing a paid loyalty program called UP. In exchange for an annual fee, UP provides membership benefits across our entire portfolio of brands, including a gift card, free standard shipping and free returns on all orders, a discount on orders, early access to products and exclusive events and a discount on the monthly Nuuly subscription fee. We plan to expand our test pilot through fiscal 2023. Suppliers To serve our target customers and to recognize changes in fashion trends and seasonality, we purchase merchandise from numerous foreign and domestic vendors, the majority of which is settled in U.S. dollars. We also have arrangements with agents and third-party manufacturers to produce our private label and exclusive merchandise. To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their merchandise, any event causing a disruption of imports, such as the imposition of increased security or regulatory requirements applicable to imported goods, war, public health concerns (including global pandemics such as COVID-19), acts of terrorism, natural disasters (including as a result of climate change), port security considerations or labor disputes, financial or political instability in any of the countries in which merchandise we purchase is manufactured, the effects of Brexit, changes to U.S. or foreign trade policies, including the enactment of tariffs, border adjustment taxes, or increases in duties or quotas, disruption in the supply of fabrics or raw materials, transportation capacity shortages and delays, increases in the cost of fuel or decreases in the value of the U.S. dollar relative to foreign currencies could adversely affect 5 our business. During fiscal 202 2 , we purchased merchandise from approximately 4, 0 00 vendors located throughout the world. No single vendor or manufacturer accounted for more than 10% of merchandise purchased during that time. W e do not believe that the loss of any one vendor would have a material adverse effect on our business. Company Operations Distribution. We own a 291,000 square foot distribution center in Gap, Pennsylvania that receives and distributes approximately half of our retail store merchandise in North America. We also lease a 214,500 square foot distribution center located in Reno, Nevada that receives and distributes the remaining half of our retail store merchandise in North America. We own and operate an approximately 956,000 square foot fulfillment center in Indiana, Pennsylvania, for which construction was completed in fiscal 2020. The center primarily stores and distributes home products, home furnishings and electronics for the Retail segment. We own and operate a 1,000,000 square foot fulfillment center in Gap, Pennsylvania. Primary operations at the center include Retail and Wholesale segment fulfillment services, including inventory warehousing, receiving and customer shipping. We also own and operate a 463,000 square foot fulfillment center located in Reno, Nevada. This center is used primarily to house and distribute merchandise to our western United States digital customers. We lease a 309,000 square foot fulfillment center located in Bristol, Pennsylvania, which is used primarily to conduct our Nuuly Rent operations. The lease commenced in fiscal 2020. In addition, this fulfillment center has been recently used to support increased customer demand in the digital channel. We own and operate an approximately 400,000 square foot omni-channel fulfillment center in Peterborough, England that supports our European stores, digital and wholesale channels. We began construction on the facility during fiscal 2020 and completed the installation of the remaining material handling equipment and became fully operational during fiscal 2022. We exited our distribution and fulfillment centers in Rushden, England during fiscal 2022 upon completion of the omni-channel fulfillment center in Peterborough, England. In fiscal 2021, we purchased land in Kansas City, Kansas for the development of an approximately 880,000 square foot omni-channel fulfillment center. Construction of the facility began in fiscal 2021 and is expected to be fully operational during fiscal 2024. The facility will support the growth and expansion of our Retail segment business in North America by providing more efficient and faster inventory processing, as well as faster and more consistent delivery times to our stores and digital customers. To support customer demand until the omni-channel fulfillment center is operational, we signed a short-term lease in fiscal 2022 for an approximately 401,000 square foot fulfillment center located in Kansas City, Missouri. Information Systems. We recognize the need for high-quality information to manage merchandise planning, buying, inventory management and control functions and have therefore invested in a retail software package that meets our processing and reporting requirements. We utilize point-of-sale register systems connected by a secure data network to our home offices. Additionally, our stores have mobile point-of-sale devices that have virtually the same functionality as our cash registers. These systems provide for register efficiencies, timely customer checkout and instant back office access to register information, as well as daily updates of sales, inventory data and price changes. Our digital channel, which includes our websites, mobile applications and catalogs, maintains separate software systems that manage the merchandise and customer information for our customer contact centers and fulfillment functions. Our Wholesale segment uses a separate software system for customer service, order entry, production planning and inventory management. Nuuly Rent uses a custom-built digital platform that helps us manage merchandising functions, customer information and service, financial accounting and fulfillment of customer orders. Nuuly Thrift uses a custom-built digital platform that helps us manage peer-to-peer resale marketplace operational functions, customer information and service and financial accounting. We host digital and business applications across private cloud infrastructure as well as have our own fully redundant data centers, located at the Philadelphia Navy Yard and at our Reno fulfillment center. All systems are fully redundant and have full disaster recovery plans either within our private cloud or our own data centers. Competition Our Retail and Wholesale segments compete with individual and chain fashion specialty brands as well as department stores, both in stores and online, in highly competitive domestic and international markets. Our Retail segment competes on the basis of, among other things, the location of our stores, website, mobile application and catalog presentation, website and mobile application design and functionality, the breadth, quality, style, price and availability of our merchandise and the level of customer service offered. Although we believe that the eclectic mix of products and the unique store and digital experiences offered by our Retail segment help differentiate us, it also means that our stores compete against a wide variety of smaller, independent specialty retailers, as well as department stores and national specialty chains. Some of our competitors have substantially greater name recognition as well as financial, marketing and other resources. Our Anthropologie Group and Free People Group stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers. In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. 6 Along with certain Retail segment competitive factors noted above, other key factors for our digital channel include website and mobile application availability, the effectiveness of our customer lists and the speed and accuracy of our merchandise delivery. Additionally, o ur digital channel competes against numerous websites, mobile applications , catalogs and digital marketplaces , which may have a greater volume of circulation and web traffic or more effective marketing through online media and social networking sites. Our Wholesale segment competes with numerous wholesale companies on the basis of quality, price, performance and fashion of our merchandise offerings. Many of our Wholesale segment competitors have a wider product distribution network. In addition, certain of our wholesale competitors have greater name recognition and greater financial, marketing and other resources than us. Our Nuuly Rent business operates in an evolving apparel subscription rental market in which our competitors offer varying types of subscription rental models and products that may have greater appeal to consumers. Our Nuuly Thrift business operates in a developing apparel and accessories resale market in which our competitors have sellers and products that may have greater appeal to customers. Trademarks and Service Marks We are the registered owner in the United States of certain service marks and trademarks, including, but not limited to “Urban Outfitters,” “Anthropologie,” “Free People,” “Bhldn,” “Terrain,” “BDG,” “FP Movement” and “Nuuly.” Each mark is renewable indefinitely, contingent upon continued use at the time of renewal. In addition, we currently have pending registration applications with the U.S. Patent and Trademark Office covering certain other marks. We also own marks that have been registered in foreign countries, and have applications for marks pending in additional foreign countries. We regard our marks as important to our business due to their name recognition with our customers. We are not aware of any valid claims of infringement or challenges to our right to use any of our marks in the United States. Human Capital The Company strives to build a unique creative culture capable of growing strong, customer-centric brands. We seek to foster an inclusive environment where our employees unite to communicate with integrity, respect our planet, our world and each other, build our future through creative entrepreneurship and nurture meaningful connections with customers and each other. Employees. As of January 31, 2022, we employed approximately 23,000 people, approximately 42% of whom were full-time employees. The number of part-time employees fluctuates depending on seasonal needs. Of our total employees, approximately 1% work in the Wholesale segment, 2% work in the Nuuly segment and the remaining 97% work in our Retail segment. Except in certain international locations, our employees are not covered by a collective bargaining agreement. We believe that our relations with our employees are excellent. Talent Acquisition, Development and Retention . The Company aims to be the leading destination for creative and entrepreneurial talent in the specialty fashion market. Hiring, retaining and developing talented employees is critically important to our operations. Our talent strategy is focused on attracting the best employees, recognizing and rewarding their performance, and continually developing, engaging and retaining them. The future success of our business initiatives relies heavily on our employees. By combining a robust internal pipeline of existing talent through development initiatives and external attraction, we believe we are positioned to drive high levels of performance, engagement and retention. We continue to invest in resources that encourage our employees to be active participants in the navigation of their careers. Through the alignment of functional expertise, training, mentorship and coaching, we believe we have created an environment that allows our employees to excel. We invest in our employees through accessible resources and structured training programs that offer all employees opportunities for development. We create, manage or offer a large collection of courses for employees that cover a range of subjects such as onboarding, diversity and inclusion fundamentals, tactical tools to support completion of job functions, support for compliance, well-being and a respectful workplace, skills and tools to lead with confidence, inspire and connect authentically and courses to build skills and knowledge to support sound judgment and strong decision-making. We deliver training to employees through live in-person and virtual classes, pre-recorded self-led written, audio and video courses and curated on demand courses from third-party platforms such as LinkedIn Learning. Compensation, Benefits and Wellness . We aim to offer competitive compensation and category leading benefits to our employees. Varying by level, our compensation strategy is built around providing a mix of salary or hourly pay, cash based short-term incentives, and equity based long-term incentives to employees. In addition, we offer a comprehensive suite of health and retirement benefits, including medical, dental and prescription drug coverage, as well as paid parental leave, 401(k) matching contributions and a generous employee discount. Our home office in Philadelphia, Pennsylvania includes a state-of-the-art fitness center, walkable river paths, and spacious dog parks, fostering employee health, wellness, and engagement. Following our experience with remote work during the COVID-19 pandemic, depending on business needs, individual performance, and other factors, we permit employees to work under a “hybrid” mix of in-person and remote work, fully in-office or fully remote positions as necessary to meet business needs while providing employees flexibility to match their own preferences. 7 Diversity and Inclusion. We are committed to creating and maintaining an inclusive culture that values and respects diversity of all kinds. Women hold key leadership positions throughout the Company, including positions on our Board of Directors and executive team. Our diversity and inclusion commitments focus on building an inclusive community , finding and developing the best talent possible and supporting our local communities. I n July 2020 , we created a Diversity & Inclusion Committee that is tasked with reporting and recommending actions aligned to those commitments to our executive team . In 2021, based on a recommendation from the Diversity & Inclusion Committee, we worked with employees to create a suite of Employee Resource Groups (“ERGs”). Our ERGs empower employees to share their voices, ideas and passions with the Diversity & Inclusion Committee and the Company community at large. In addition to the ERG’s , the executive team has engaged in the design and implementation of a listening strategy, which includes an all-company engagement survey, expanded new hire touchpoints, and the ability to deploy follow up pulse surveys as needed. We include diversity and inclusion initiatives as bonus goals for members of the executive team to drive progress to our goals . We have offered bias training to our entire field and home office organization and fulfillment center management. We have integrated diversity and inclusion fundamentals training into the onboarding experience for all home office employees , as well as field and fulfillment center salaried new hires and have engaged with various organizations to support our talent acquisition and development efforts in this space. In fiscal 202 3 , the Diversity & Inclusion Committee will continue partnering with the Company’s executive leadership to support and engage our diverse employees and expand the pool of available diverse talent in the fashion industry. Human Capital Oversight . The Board of Directors, as well as the Compensation and Leadership Development Committee (the “Compensation Committee”), oversee human capital issues. The Compensation Committee has formal oversight over the Company’s policies and strategies relating to its human capital management including policies, processes and strategies relating to employee recruitment, retention and development, workforce diversity and workplace and employment practices. The Compensation Committee regularly receives reports on talent, succession planning and diversity and inclusion. On a quarterly basis, the Compensation Committee receives a talent dashboard with key metrics including employee survey feedback and turnover information. The Compensation Committee engages periodically on compensation program design for employees at various levels. Financial Information about Operations We aggregate our operations into three reportable segments, the Retail segment, the Wholesale segment and the Nuuly segment. See Note 17, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information. Financial Information about Geographical Areas See Note 17, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding net sales and long-lived assets from domestic and foreign operations. Seasonality Our business is subject to seasonal fluctuations in net sales and net income, with a more significant portion typically realized in the second half of each year predominantly due to the year-end holiday period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory.