URBAN OUTFITTERS INC 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on this review, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of January 31, 2022. Management’s Annual Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Securities Exchange Act Rule 13a-15(f). Our system of internal control is designed to provide reasonable, not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of January 31, 2022. The effectiveness of internal control over financial reporting as of January 31, 2022 was audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that is included on page 35 of this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting There have been no changes in our internal controls over financial reporting during the fiscal quarter ended January 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information None. 34 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Urban Outfitters, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Urban Outfitters, Inc. and subsidiaries (the “Company”) as of January 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of January 31, 2022, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for the year ended January 31, 2022, and our report dated April 1, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Philadelphia, Pennsylvania April 1, 2022 35 PART III Item 10. Directors, Executive Officers and Corporate Governance The following table sets forth the name, age and position of each of our executive officers and directors: Name Age Position Richard A. Hayne 74 Chairman of the Board and Chief Executive Officer Melanie Marein-Efron 52 Chief Financial Officer Francis J. Conforti 46 Co-President and Chief Operating Officer, URBN Sheila B. Harrington 49 Global Chief Executive Officer, Urban Outfitters Group and Free People Group Azeez Hayne 45 Chief Administrative Officer and General Counsel, URBN Margaret A. Hayne Tricia D. Smith 63 50 Co-President and Chief Creative Officer, URBN; Director Global Chief Executive Officer, Anthropologie Group Edward N. Antoian (1) 66 Director Kelly Campbell 44 Director Sukhinder Singh Cassidy (3) 52 Director Harry S. Cherken, Jr. 72 Director Elizabeth A. Lambert (2)(3) 58 Director Amin N. Maredia (2) 49 Director Wesley McDonald (1)(2) 59 Director Todd R. Morgenfeld (1)(2) 49 Director John C. Mulliken (3) 49 Director Mary C. Egan 54 Nominee for Director (1) Member of the Audit Committee. (2) Member of the Compensation and Leadership Development Committee. (3) Member of the Nominating and Governance Committee. Mr. R. Hayne co-founded Urban Outfitters in 1970. He has been Chairman of the Board of Directors since the Company’s incorporation in 1976 and, until February 2016, also served as the Company’s President. Mr. R. Hayne served as the Company’s principal executive officer until 2007 and again beginning in January 2012. Margaret A. Hayne, Co-President and Chief Creative Officer of the Company, is Mr. R. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer and General Counsel of the Company, is Mr. R. Hayne’s nephew. Mr. R. Hayne’s long tenure leading the Company as Chairman of the Board of Directors, his tenure as principal executive officer and his exceptional leadership skills make him uniquely qualified to serve as a director. Ms. Marein-Efron joined the Company in January 2013 as Director of Financial, Planning & Analysis, was subsequently promoted to Executive Director Finance & Corporate Development, and in November 2020 was promoted to Chief Financial Officer. Prior to joining the Company, Ms. Marein-Efron worked at Campbell Soup Company, Godiva Chocolate and General Motors in various senior finance roles. She began her career at Arthur Andersen in 1991 in the financial advisory consulting practice. Ms. Marein-Efron holds a B.S. in Economics and M.B.A in Finance from the Wharton School of the University of Pennsylvania and is a Certified Public Accountant. Mr. Conforti joined the Company in March 2007 as Director of Finance and SEC Reporting. After being promoted to Controller and then to Chief Accounting Officer, he was appointed Chief Financial Officer in April 2012, and Co-President and Chief Operating Officer in October 2020. Prior to joining the Company, Mr. Conforti, a Certified Public Accountant, worked for AlliedBarton Security Services, LLC for five years, serving as Controller for three years. Mr. Conforti began his career at KPMG in 1998 where he held various audit roles. Ms. Harrington has served as Chief Executive Officer of the Urban Outfitters Group since January 2021 and as Chief Executive Officer of the Free People Group since October 2020. Prior to that, Ms. Harrington served as President of the Free People Group beginning in August 2016 and Chief Merchandising Officer of the Free People Group from February 2015 to August 2016 and Merchandise and Display Director of the Free People Group from March 2010 to February 2015. Ms. Harrington joined the Free People brand in 2002 to help launch the first store. She was responsible for the merchant product development for the brand across all three channels; stores, digital and wholesale. Ms. Harrington has been instrumental in the launch and development of new businesses such as Intimates, Shoes, Movement, Endless Summer and We the Free, in addition to expansion of the core offering. Over the years she has expanded the buying and planning teams and developed the visual merchandising team. Prior to joining Free People, Ms. Harrington spent time within the merchant organizations of Bloomingdales and The Gap. Ms. Harrington has a BS in Psychology from Queen’s University. Mr. A. Hayne joined the Company in February 2015 as Associate General Counsel and was appointed General Counsel and Corporate Secretary in June 2015, and Chief Administrative Officer in October 2020. Before joining the Company, Mr. A. Hayne worked for Morgan Lewis & Bockius LLP, serving as a partner in their Labor & Employment Practice Group from October 2010 through January 2015. After graduating from the University of Virginia School of Law in 2001, Mr. A. Hayne began his legal career 36 in Pepper Hamilton LLP’s Commercial Litigation department before moving to Morgan Lewis & Bockius LLP in July 2003. Richard A. Hayne, the Company’s current Chairman and Chief Executive Officer, is Mr. A. Hayne’s uncle , and Margaret A. Hayne, the Company’s current Co-President and Chief Creative Officer, is Mr. A. Hayne’s aunt. Ms. Hayne joined the Company in August 1982. She is an over 35-year veteran of the retail and wholesale industry. She has served as Co-President of the Company since October 2020 and as Chief Creative Officer of the Company. since November 2013. Ms. Hayne previously served as Chief Executive Officer of Free People from August 2015 until October 2020 and President of Free People from March 2007 until August 2016. Richard A. Hayne, the Company’s current Chairman and Chief Executive Officer, is Ms. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer and General Counsel of the Company, is Ms. Hayne’s nephew. As an employee of the Company for over 35 years and a director since 2013, Ms. Hayne brings a wealth of both Company-specific and industry-wide knowledge and experience to the Board of Directors. Ms. Smith joined the Company in April 2021 as the Global Chief Executive Officer of the Anthropologie Group. Prior to joining the Company, she was the Executive Vice President and Chief Merchandising Officer at Tilly’s from October 2019 through April 2021. Ms. Smith began her career on the sales floor at Nordstrom in Southern California that eventually led her to the role of Executive Vice President & General Merchandise Manager of Women’s, Young Contemporary, Designer, and Specialized Apparel, which she held from October 2016 to September 2019, and was an instrumental leader for a variety of significant merchandise management roles over her 25 year career. Mr. Antoian is a partner of and Founder of Zeke Capital Advisors, a financial advisory firm. From 1997 until March 2019, Mr. Antoian was a partner and Senior Portfolio Manager at Chartwell Investment Partners. Prior to that, Mr. Antoian worked at Delaware Management Co. as a Senior Portfolio Manager and at E.F. Hutton in Institutional Sales and as a certified public accountant for Price Waterhouse. Mr. Antoian holds an MBA in Finance and has financial and investment experience as a result of his experience as a CFA, CPA, financial advisor and portfolio manager. Mr. Antoian serves as a director of a not-for-profit entity and two private companies. As an independent director, Mr. Antoian brings his in-depth understanding of, and expertise in, finance and accounting to the Board of Directors. Ms. Campbell has served as President of Peacock, NBCUniversal’s streaming service, since November 1, 2021. Prior to joining Peacock, Ms. Campbell served as President of Hulu from February 2020 to October 2021 and as Chief Marketing Officer of Hulu from August 2017 to February 2020. From 2005 to 2017, Ms. Campbell held a variety of roles at Google across the Google Ads and Google Cloud businesses. Ms. Campbell brings a wealth of knowledge and experience about marketing and subscription businesses to the Board of Directors. Ms. Campbell was initially identified by Diversified Search, an outside search firm. Ms. Singh Cassidy is chairman of theBoardlist, a premium talent marketplace she founded in 2015 that is aimed at connecting highly endorsed women leaders with board opportunities in the technology industry. Ms. Singh Cassidy is also a founding venture partner of the Diversify Capital Fund, a growth stage investment fund from Acrew Capital, since January 2021. From May 2018 to June 2020, she was President of StubHub, a ticket exchange and resale company, where she helped lead the company’s $4.05 billion sale to Viagogo in February 2020. Ms. Singh Cassidy served as chief executive officer of Joyus, a video commerce platform she founded from January 2011 until February 2017. She has previously held various executive and managerial positions at companies including Google, Amazon, Polyvore, Inc., Accel Partners, Yodlee.com, News Corporation, and Merrill Lynch & Co., Inc. Ms. Singh Cassidy currently serves on the board of Upstart, Inc., a technology company in financial services, which she joined in February 2020, and has served on the boards of Trip Advisor, Inc., LM Ericsson Telephone Company, J. Crew Group, Inc., J. Hilburn, Inc., StitchFix, Inc., and Polyvore, Inc. As a consumer Internet and media executive, Ms. Singh Cassidy’s in-depth knowledge of the online media and advertising sectors, as well as her extensive executive, strategic and operational experience, bring a plethora of talent and expertise to the Board of Directors. Mr. Cherken is Senior Counsel at the law firm of Faegre Drinker Biddle & Reath LLP in Philadelphia, Pennsylvania. He was previously a partner of that firm from November 1984 to January 2020, is a former managing partner of that firm and also served as either Chair or Co-Chair of its Real Estate Group for 18 years. As a real estate lawyer for over 45 years representing public and private companies in the acquisition, construction, development, financing, leasing, management, consolidation and disposition of commercial real estate, he has extensive experience with various types of real estate transactions and retail leases, including negotiating real estate transactions and leases on behalf of the Company nearly from its inception. He also holds a Masters in Liberal Arts degree and serves as a trustee of various not-for-profit entities and academic institutions. In 2021, Mr. Cherken was appointed Honorary Consul for Philadelphia of the Republic of Armenia. Ms. Lambert is a partner of Lambert McGuire Design, an architecture and interior design studio based in Austin, Texas, which she founded in 2019, that works on various restaurant, hotel and retail projects. Ms. Lambert is also the owner of El Cosmico, an 18-acre vintage trailer, tepee, tent hotel and event space in Marfa, Texas, that she founded in 2009. Previously, Ms. Lambert founded and served as partner of Bunkhouse Group, an Austin hospitality management company from 2006 to 2019. Prior to her experience as a hotelier, Ms. Lambert worked as a prosecutor in the New York County District Attorney’s office and the Austin, Texas Attorney General’s office. Currently, Ms. Lambert also serves on the Board of Directors of the National Council on Crime & Delinquency. Ms. Lambert’s experience growing a design-centric and customer-focused hospitality company from the ground up gives her a unique perspective and set of skills to contribute to the Board of Directors. 37 Mr. Maredia is a Co-founder of, and Managing Partner at Meaningful Partners, a consumer-focused fund that invests in purpose, mission and consumer relevant businesses in the consumer sector. Prior to co-founding Meaningful Partners in 2018, Mr. Maredia served as the Chief Executive Officer of Sprouts Farmers Market, Inc (“Sprouts”), the second largest healthy grocer in the United States, beginning in 2015 and also served on the board of directors of Sprouts. Mr. Maredia also served as Chief Financial Officer of Sprouts from 2011 to 2015. Before Sprouts, Mr. Maredia served in key global strategic roles at Burger King Corporation including leading strategy, global business development and finance. Mr. Maredia has also been deeply involved in local and global community work for over two decades around health, education and economic development with various domestic and global organizations including the Aga Khan Development Network, the Sprouts Healthy Communities Foundation, Teach for America and Pratham USA. Mr. Maredia attended the Harvard Business School management program and has an undergraduate degree in Accounting from the University of Houston. Mr. Maredia’s in-depth experience in the consumer sector, including high growth omni-channel businesses, as well as his public company experience as Chief Executive Officer, Chief Financial Officer and board member brings valuable expertise to serve as a director. Mr. McDonald has been retired since 2017. Previously, he held the principal officer position of Chief Financial Officer of Kohl’s Corporation from 2015 to 2017, and prior thereto, he served as Senior Executive Vice President and Chief Financial Officer of Kohl’s beginning in 2010. Mr. McDonald began his tenure at Kohl’s in 2003 as its Executive Vice President and Chief Financial Officer. Before joining Kohl’s, Mr. McDonald served as Chief Financial Officer and Vice President of Abercrombie & Fitch Co. Earlier in his career, he held several positions of increasing responsibility at Target Corporation. Mr. McDonald currently serves on the Board of Directors of Wingstop Inc., which operates and franchises over 1,500 restaurants worldwide. Mr. McDonald’s experience as a chief financial officer and in other senior executive leadership roles working with publicly traded consumer products companies provides him with a distinctive set of qualifications and skills to serve as a director. Mr. Morgenfeld is the Chief Financial Officer and Head of Business Operations of Pinterest, Inc., a position he has held since 2019. From 2016 to 2019, he served as Chief Financial Officer of Pinterest, Inc. Before joining Pinterest, Mr. Morgenfeld served as Vice President of Finance at Twitter from 2015 to 2016 and Treasurer and Senior Vice President of Corporate Development and Corporate Financial Analytics for Hewlett-Packard Company from 2013 to 2015. Prior to his role at Hewlett-Packard, Mr. Morgenfeld was an investment partner at Silver Lake Partners from 2004 to 2013. Mr. Morgenfeld graduated first in his class from the United States Military Academy and also holds an MBA degree from Stanford University. Mr. Morgenfeld has served as a director of a not-for-profit entity and as chairman of the board and member of the audit committee of a public company. His significant finance and consumer internet experience provides valuable expertise to the Board of Directors. Mr. Mulliken currently serves as a Senior Advisor with The Boston Consulting Group (“BCG”), a global management consulting firm where Mr. Mulliken previously served as a management consultant on topics of retail, consumer goods and technology, and a frequent advisor to high growth technology companies. Prior to re-joining BCG in 2020 , Mr. Mulliken served on the executive team at Wayfair Inc. for a decade, serving as Chief Technology Officer and Senior Vice President of Strategic Initiatives . Mr. Mulliken founded and led several lifestyle brands including Joss & Main and Birch Lane. He also led the acquisition and integration of DwellStudio as well as the ground-up creation of a proprietary ad tech business and tech stack. Mr. Mulliken previously served as the Chief Integrated Product Officer at IndigoAg, an agricultural technology company. Mr. Mulliken also serves on the board at Bombas, a direct-to-consumer apparel company. Mr. Mulliken has a 25-year track record of leading innovation and growth as a technology executive and management consultant. Mr. Mulliken earned his undergraduate degree in Mathematics from Reed College and his MBA in Corporate Finance from London Business School. Mr. Mulliken’s decades of experience in ecommerce and multichannel retail as Chief Technology Officer and member of the executive team of a publicly traded company, as well as a strategy consultant and independent director, provides him valuable perspective as a director. Ms. Egan has been serving as an independent strategy consultant to high growth private equity and venture-capital backed consumer companies since 2018, currently as principal of Egan Advisory Group. In 2013, Ms. Egan founded Gatheredtable, a consumer software as a service company offering customized meal planning, and served as its Chief Executive Officer until Gatheredtable was sold to a strategic buyer in 2018. From 2010 to 2012, Ms. Egan served as head of global strategy and corporate development for Starbucks Corporation and in 2012 led Starbucks’ food category in the Americas. From 1996 to 2010, Ms. Egan was a management consultant and Managing Director at The Boston Consulting Group, where she partnered with several leading consumer and retail brands to develop and successfully implement aggressive growth strategies. Ms. Egan also serves on the board of directors of American Campus Communities, Inc. and Noodles & Company. Ms. Egan’s decades of experience partnering with management teams to develop and implement consumer-centric strategies for high growth omnichannel consumer brands, as well as working extensively with founders and entrepreneurs, gives her a unique set of skills to contribute to the Board of Directors. The Board of Directors has proposed to include Ms. Egan as a nominee to the Company’s Board of Directors in the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders upon recommendation by the Nominating and Governance Committee and initial identification by Diversified Search, an outside search firm. Code of Conduct and Ethics We have a written Code of Conduct and Ethics (the “Code”) that applies to our directors and employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. The Code includes guidelines relating to compliance with laws, including anti-bribery and illegal payment laws, the ethical handling of actual or potential conflicts of interest, the use of 38 corporate opportunities, protection and use of our confidential information, accepting gifts and business courtesies, accurate financial reporting and procedures for promoting compliance with, and reporting violations of, the Code. The Code is available on our website at www.urbn.com . We intend to post any amendments to the Code and also to disclose any waivers (to the extent applicable to the Company’s Chief Executive Officer, Chief Financial Officer or Principal Accounting Officer) on our website. Other Information Other information required by Item 10 relating to the Company’s directors is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 11. Executive Compensation Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 14. Principal Accountant Fees and Services Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34 ). Information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders. 39 PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements Consolidated Financial Statements filed herewith are listed in the accompanying index on page F-1. (2) Financial Statement Schedule None All other schedules are omitted because they are not applicable or not required, or because the required information is included in the Consolidated Financial Statements or notes thereto. (3) Exhibits The Exhibits listed below are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K. 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 filed on March 30, 2020. 4.1 Description of Registrant’s Securities Registered Pursuant to Section 12 is incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K (file no. 000-22754) filed on March 31, 2020. 10.1 Credit Agreement, dated June 29, 2018, 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 is incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on September 10, 2018. 10.2 Amended and Restated U.S. Pledge and Security Agreement, dated June 29, 2018, by and among Urban Outfitters, Inc., its domestic subsidiaries, URBN Canada Retail, Inc., and JPMorgan Chase Bank, N.A., in its capacity as administrative agent is incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on September 10, 2018. 10.3+ Urban Outfitters 2004 Stock Incentive Plan is incorporated by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A (file no. 000-22754) filed on April 26, 2004 and Amendment No. 1 to the Urban Outfitters 2004 Stock Incentive Plan is incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A (file no. 000-22754) filed on April 25, 2005. 10.4+ Urban Outfitters 401(k) Savings Plan (formerly known as The Urban Outfitters, Inc. PROFIT SHARING FUND prior to July 1, 1999) is incorporated by reference to Exhibit 10.4 of the Company’s Amendment No. 2 to the Registration Statement on Form S-1/A (file no. 033-69378) filed on November 3, 1993. (P) 10.5+ Urban Outfitters 2008 Stock Incentive Plan is incorporated by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A (file no. 000-22754) filed on April 2, 2013. 10.6+ Urban Outfitters Executive Incentive Plan, as amended and restated effective February 1, 2010, is incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A filed on April 1, 2015. 10.7+ Urban Outfitters 2017 Stock Incentive Plan is incorporated by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10-K filed on April 3, 2017. 10.8+ Form of 2004 Plan—Non-Qualified Stock Option Agreement is incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 10.9+ Form of 2004 Plan—Non-Qualified Stock Option Agreement for Non-Employee Directors is incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 40 Exhibit Number Description 10.10+ Form of 2004 Plan—Incentive Stock Option Agreement is incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 10.11+ Form of 2004 Plan—Stock Appreciation Right Agreement is incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on September 7, 2010. 10.12+ Form of 2004 Plan—Restricted Stock Unit Agreement is incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on December 10, 2010. 10.13+ Form of 2008 Plan—Non-Qualified Stock Option Agreement is incorporated by reference to Exhibit 99.4 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 10.14+ Form of 2008 Plan—Non-Qualified Stock Option Agreement for Non-Employee Directors is incorporated by reference to Exhibit 99.5 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 10.15+ Form of 2008 Plan—Incentive Stock Option Agreement is incorporated by reference to Exhibit 99.6 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on June 18, 2009. 10.16+ Form of 2008 Plan—Performance Stock Unit Agreement is incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on September 7, 2010. 10.17+ Form of 2008 Plan—Restricted Stock Unit Agreement is incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on December 10, 2010. 10.18+ Form of 2008 Plan—Performance/Restricted Stock Unit Agreement is incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on December 12, 2011. 10.19+ Form of 2008 Plan—Stock Appreciation Right Agreement is incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (file no. 000-22754) filed on December 12, 2011. 10.20+ Form of 2017 Plan—Non-Qualified Stock Option Agreement is incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on May 30, 2017. 10.21+ Form of 2017 Plan—Non-Qualified Stock Option Agreement for Non-Employee Directors is incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on May 30, 2017. 10.22+ Form of 2017 Plan—Incentive Stock Option Agreement is incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on May 30, 2017. 10.23+ Form of 2017 Plan—Performance/Restricted Stock Unit Agreement is incorporated by reference to Exhibit 99.4 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on May 30, 2017. 10.24+ Form of 2017 Plan—Stock Appreciation Right Agreement is incorporated by reference to Exhibit 99.5 of the Company’s Current Report on Form 8-K (file no. 000-22754) filed on May 30, 2017. 10.25 Limited Waiver, dated as of August 12, 2020, by and among Urban Outfitters, Inc., the other Loan Parties party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, under that certain Amended and Restated Credit Agreement dated as of June 29, 2018, among the Company, the Subsidiary Borrowers, the other Loan Parties party thereto, the Lenders party thereto and the Administrative Agent is incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on September 9, 2020. 10.26+ Employment Agreement, dated February 20, 2021, between Urban Outfitters, Inc. and Tricia D. Smith incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (file no. 000-227545) filed on September 9, 2021 . 21.1* List of Subsidiaries. 23.1* Consent of Deloitte & Touche LLP. 31.1* Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer. 31.2* Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer. 32.1** Section 1350 Certification of the Company’s Principal Executive Officer. 32.2** Section 1350 Certification of the Company’s Principal Financial Officer. 41 Exhibit Number Description 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 + Compensatory plan P Paper filing Item 16. Form 10-K Summary None. 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. April 1, 2022 By: /s/ R ICHARD A. H AYNE Richard A. Hayne Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date / S / R ICHARD A. H AYNE Richard A. Hayne (Principal Executive Officer) Chairman of the Board and Chief Executive Officer April 1, 2022 / S / M ELANIE M AREIN -E FRON Melanie Marein-Efron (Principal Financial and Accounting Officer) Chief Financial Officer April 1, 2022 / S / E DWARD N. A NTOIAN Edward N. Antoian Director April 1, 2022 / S / K ELLY C AMPBELL Kelly Campbell / S / S UKHINDER S INGH C ASSIDY Sukhinder Singh Cassidy Director April 1, 2022 Director April 1, 2022 / S / H ARRY S. C HERKEN , J R . Harry S. Cherken Jr. Director April 1, 2022 / S / M ARGARET A. H AYNE Margaret A. Hayne Director April 1, 2022 / S / E LIZABETH A. L AMBERT Elizabeth A. Lambert Director April 1, 2022 / S / A MIN N. M AREDIA Amin N. Maredia Director April 1, 2022 / S / W ESLEY M C D ONALD Wesley McDonald Director April 1, 2022 / S / T ODD R. M ORGENFELD Todd R. Morgenfeld Director April 1, 2022 / S / J OHN C. M ULLIKEN John C. Mulliken Director April 1, 2022 43 URBAN OUTFITTERS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm—Deloitte & Touche LLP F-2 Consolidated Balance Sheets as of January 31, 2022 and January 31, 2021 F-4 Consolidated Statements of Income for the fiscal years ended January 31, 2022, 2021 and 2020 F-5 Consolidated Statements of Comprehensive Income for the fiscal years ended January 31, 2022, 2021 and 2020 F-6 Consolidated Statements of Shareholders’ Equity for the fiscal years ended January 31, 2022, 2021 and 2020 F-7 Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2022, 2021 and 2020 F-8 Notes to Consolidated Financial Statements F-9 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Urban Outfitters, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Urban Outfitters, Inc. and subsidiaries (the "Company") as of January 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2022, based on criteria established in lnternal Control - lntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 1, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Retail Location Asset Impairment — Refer to Note 2 to the financial statements Critical Audit Matter Description The Company evaluates retail location assets for impairment when events or changes in circumstances exist that may indicate that the carrying amounts of retail location assets may not be recoverable. Events that result in an impairment review include plans to close a retail location, a significant decrease in the operating results of the retail location or significant adverse changes in the business climate. When such events or changes in circumstances occur, the Company evaluates its retail location assets for impairment by comparing the undiscounted future cash flows expected to be generated by the location to the location assets’ carrying amount. If the carrying amount of the location assets exceed the estimated undiscounted future cash flows, an analysis is performed to estimate the fair value of the assets. An impairment charge is recorded if the fair value of the retail location assets is less than the carrying amount. The Company makes significant assumptions to evaluate retail location assets for possible indications of impairment. When an indication of impairment is identified, management makes significant assumptions to estimate cash flows from forecasts of sales and gross profit for retail locations and, when the carrying amount of the location assets exceed those cash flows, to determine the fair value of the Company’s operating lease right-of-use assets. Given the Company’s evaluation of retail location asset impairment requires management to make significant assumptions, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the F-2 carrying amounts of retail location assets may not be recoverable, and, when applicable, developed reasonable forecasts of sales and gross profit and fair value estimates for operating lease right-of-use assets, including the methodology applied and the measurement inputs of market rent, required a high degree of auditor judgment and an increased extent of effort, including the assistance of our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of retail location assets may not be recoverable, and, when applicable, developed reasonable forecasts of sales and gross profit and determined fair value estimates for operating lease right-of-use assets, included the following, among others: • We tested the effectiveness of the controls over management’s identification of events or changes in circumstances that indicate that the carrying amounts of retail location assets may not be recoverable, the review of forecasts of sales and gross profit and the review of the methodology and the measurement inputs of market rent, underlying the fair value estimates for operating lease right-of-use assets. • We evaluated management’s impairment analysis by: - Testing retail location assets for possible indications of impairment, including searching for locations with a current period loss and a history of losses. - Evaluating whether the events or changes in circumstances that may have existed were identified by management, consistent with evidence obtained in other areas of the audit. • We evaluated management’s ability to accurately estimate cash flow from forecasts of sales and gross profit for retail locations and the reasonableness of the forecasts by comparing them to: - Historical sales and gross profit. - Internal communications to management and the board of directors. - External communications made by management to analysts and investors. - External information regarding retail industry growth and trends. • With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology applied and fair value determined for the lease right-of-use assets by: - Testing the methodology applied and measurement inputs of market rent, underlying the determination of the fair value and the mathematical accuracy of the calculation. - Developing a range of independent estimates and comparing those to the fair value determined by management. /s/ Deloitte & Touche LLP Philadelphia, Pennsylvania April 1, 2022 We have served as the Company's auditor since 2005. F-3 URBAN OUTFITTERS, INC. Consolidated Balance Sheets (in thousands, except share and per share data) January 31, January 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 206,575 $ 395,635 Marketable securities 239,420 174,695 Accounts receivable, net of allowance for doubtful accounts of $ 1,348 and $ 4,028 , respectively 63,760 89,952 Inventory 569,699 389,618 Prepaid expenses and other current assets 206,293 173,432 Total current assets 1,285,747 1,223,332 Property and equipment, net 1,145,085 967,422 Operating lease right-of-use assets 1,000,255 1,114,762 Marketable securities 223,557 123,662 Deferred income taxes and other assets 136,703 117,167 Total Assets $ 3,791,347 $ 3,546,345 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 304,246 $ 237,386 Current portion of operating lease liabilities 236,315 254,703 Accrued compensation and benefits 89,914 54,796 Accrued expenses and other current liabilities 350,998 359,247 Total current liabilities 981,473 906,132 Non-current portion of operating lease liabilities 951,080 1,074,009 Long-term debt — — Deferred rent and other liabilities 113,054 88,846 Total Liabilities 2,045,607 2,068,987 Commitments and contingencies (see Note 15) Shareholders’ equity: Preferred shares; $ .0001 par value, 10,000,000 shares authorized, none issued — — Common shares; $ .0001 par value, 200,000,000 shares authorized, 96,431,044 and 97,815,985 shares issued and outstanding, respectively 10 10 Additional paid-in-capital — 19,360 Retained earnings 1,770,560 1,475,108 Accumulated other comprehensive loss ( 24,830 ) ( 17,120 ) Total Shareholders’ Equity 1,745,740 1,477,358 Total Liabilities and Shareholders’ Equity $ 3,791,347 $ 3,546,345 The accompanying notes are an integral part of these consolidated financial statements. F-4 URBAN OUTFITTERS, INC. Consolidated Statements of Income (in thousands, except share and per share data) Fiscal Year Ended January 31, 2022 2021 2020 Net sales $ 4,548,763 $ 3,449,749 $ 3,983,789 Cost of sales (excluding store impairment) 3,054,813 2,572,347 2,729,352 Store impairment — 15,496 14,611 Gross profit 1,493,950 861,906 1,239,826 Selling, general and administrative expenses 1,085,384 857,934 993,990 Goodwill impairment — — 13,911 Income from operations 408,566 3,972 231,925 Interest income 2,343 3,119 10,638 Interest expense ( 1,104 ) ( 3,405 ) ( 1,202 ) Other expense ( 5,174 ) ( 173 ) ( 1,641 ) Income before income taxes 404,631 3,513 239,720 Income tax expense 94,015 2,277 71,624 Net income $ 310,616 $ 1,236 $ 168,096 Net income per common share: Basic $ 3.17 $ 0.01 $ 1.68 Diluted $ 3.13 $ 0.01 $ 1.67 Weighted-average common shares outstanding: Basic 98,022,583 97,817,651 99,833,011 Diluted 99,268,705 98,522,776 100,588,677 The accompanying notes are an integral part of these consolidated financial statements. F-5 URBAN OUTFITTERS, INC. Consolidated Statements of Comprehensive Income (in thousands) Fiscal Year Ended January 31, 2022 2021 2020 Net income $ 310,616 $ 1,236 $ 168,096 Other comprehensive (loss) income: Foreign currency translation ( 5,254 ) 11,378 ( 1,403 ) Change in unrealized (losses) gains on marketable securities, net of tax ( 2,456 ) ( 494 ) 502 Total other comprehensive (loss) income ( 7,710 ) 10,884 ( 901 ) Comprehensive income $ 302,906 $ 12,120 $ 167,195 The accompanying notes are an integral part of these consolidated financial statements. F-6 URBAN OUTFITTERS, INC. Consolidated Statements of Shareholders’ Equity (in thousands, except share data) Common Shares Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Number of Shares Par Value Balances as of January 31, 2019 105,642,283 $ 11 $ — $ 1,516,190 $ ( 27,103 ) $ 1,489,098 Comprehensive income — — — 168,096 ( 901 ) 167,195 Share-based compensation — — 21,109 — — 21,109 Share-based awards 588,158 — 974 — — 974 Share repurchases ( 8,253,626 ) ( 1 ) ( 12,606 ) ( 210,414 ) — ( 223,021 ) Balances as of January 31, 2020 97,976,815 $ 10 $ 9,477 $ 1,473,872 $ ( 28,004 ) $ 1,455,355 Comprehensive income — — — 1,236 10,884 12,120 Share-based compensation — — 20,300 — — 20,300 Share-based awards 482,508 — 495 — — 495 Share repurchases ( 643,338 ) — ( 10,912 ) — — ( 10,912 ) Balances as of January 31, 2021 97,815,985 $ 10 $ 19,360 $ 1,475,108 $ ( 17,120 ) $ 1,477,358 Comprehensive income — — — 310,616 ( 7,710 ) 302,906 Share-based compensation — — 25,741 — — 25,741 Share-based awards 803,300 — 3,290 — — 3,290 Share repurchases ( 2,188,241 ) — ( 48,391 ) ( 15,164 ) — ( 63,555 ) Balances as of January 31, 2022 96,431,044 $ 10 $ — $ 1,770,560 $ ( 24,830 ) $ 1,745,740 The accompanying notes are an integral part of these consolidated financial statements. F-7 URBAN OUTFITTERS, INC. Consolidated Statements of Cash Flows (in thousands) Fiscal Year Ended January 31, 2022 2021 2020 Cash flows from operating activities: Net income $ 310,616 $ 1,236 $ 168,096 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 105,672 103,771 112,256 Non-cash lease expense 193,032 197,088 190,652 (Benefit) provision for deferred income taxes ( 2,695 ) ( 14,270 ) 1,451 Share-based compensation expense 25,741 20,300 21,109 Goodwill impairment — — 13,911 Store impairment — 15,496 14,611 Loss on disposition of property and equipment, net 1 779 1,643 Changes in assets and liabilities: Receivables 26,029 ( 1,223 ) ( 7,825 ) Inventory ( 181,898 ) 22,381 ( 39,101 ) Prepaid expenses and other assets ( 10,209 ) ( 25,239 ) ( 16,308 ) Payables, accrued expenses and other liabilities 124,840 152,905 22,661 Operating lease liabilities ( 231,810 ) ( 187,410 ) ( 209,263 ) Net cash provided by operating activities 359,319 285,814 273,893 Cash flows from investing activities: Cash paid for property and equipment ( 262,429 ) ( 159,242 ) ( 217,433 ) Cash paid for marketable securities ( 505,936 ) ( 338,918 ) ( 397,220 ) Sales and maturities of marketable securities 280,701 396,260 428,508 Net cash used in investing activities ( 487,664 ) ( 101,900 ) ( 186,145 ) Cash flows from financing activities: Borrowings under debt — 220,000 — Repayments of debt — ( 220,000 ) — Proceeds from the exercise of share-based awards 3,290 495 974 Share repurchases related to share repurchase program ( 55,765 ) ( 7,036 ) ( 217,421 ) Share repurchases related to taxes for share-based awards ( 7,790 ) ( 3,876 ) ( 5,600 ) Net cash used in financing activities ( 60,265 ) ( 10,417 ) ( 222,047 ) Effect of exchange rate changes on cash and cash equivalents ( 450 ) 299 ( 2,122 ) (Decrease) increase in cash and cash equivalents ( 189,060 ) 173,796 ( 136,421 ) Cash and cash equivalents at beginning of period 395,635 221,839 358,260 Cash and cash equivalents at end of period $ 206,575 $ 395,635 $ 221,839 Supplemental cash flow information: Cash paid during the year for: Income taxes $ 111,632 $ 25,572 $ 74,429 Non-cash investing activities—Accrued capital expenditures $ 57,255 $ 36,926 $ 10,497 The accompanying notes are an integral part of these consolidated financial statements. F-8 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data) 1. Nature of Business Urban Outfitters, Inc. (the “Company” or “Urban Outfitters”), which was founded in 1970, was incorporated in the Commonwealth of Pennsylvania in 1976. The principal business activity of the Company is the operation of a general consumer product retail, wholesale, subscription and resale business selling to customers through various channels including retail locations, websites, catalogs and mobile applications. As of January 31, 2022 and 2021, the Company operated 682 and 644 stores, respectively. Stores located in the United States totaled 562 as of January 31, 2022 and 527 as of January 31, 2021. Operations in Europe and Canada included 86 stores and 34 stores as of January 31, 2022, respectively, and 83 stores and 34 stores as of January 31, 2021, respectively. In addition, the Company’s Wholesale segment sold and distributed apparel to department and specialty stores worldwide, digital businesses and to the Company’s Retail segment. The Company’s Nuuly segment, formerly known as the Subscription 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. 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. Impact of the Coronavirus Pandemic Impact of the Coronavirus Pandemic on Fiscal 2021 In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic. Consequently, the Company announced that it temporarily closed all stores, offices and showrooms globally, but began to reopen stores in late April 2020. The Company’s distribution and fulfillment centers remained open to support the digital business and the Wholesale segment operations. During the fourth quarter of fiscal 2021, certain store operations were again impacted by an additional round of temporary store closures and occupancy restrictions, primarily in Europe and Canada. In response to the COVID-19 pandemic, the Company took measures to protect its financial position and increase financial flexibility. During fiscal 2021, the Company recorded certain additional reserves, including inventory obsolescence reserves and an allowance for doubtful accounts for Wholesale segment customer accounts receivable, and non-cash charges, primarily store impairment charges. Impact of the Coronavirus Pandemic on Fiscal 2022 The COVID-19 pandemic continued to negatively impact the Company’s store operations during 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 macro-economic conditions have also disrupted the Company’s global supply chain in fiscal 2022, leading to COVID-19 related factory closures, continued port congestions and shipping delays, which have resulted in inventory receipt delays and an increase in inbound freight costs. The Company made a strategic decision to bring certain product categories in earlier in the third and fourth quarters of fiscal 2022 in an attempt to minimize the impact of such disruptions on customer demand. The Company continued to qualify for certain government assistance programs that partially offset related expenses in locations impacted by closures during fiscal 2022. As of the end of the second quarter of fiscal 2022, however, the programs either expired or the Company no longer qualified for such programs in the United States and Canada, and as of the end of the third quarter of fiscal 2022, the Company no longer qualified for the majority of such programs in Europe. The Company recorded the benefit of the government assistance programs as an offset to selling, general and administrative expenses or store occupancy expenses in cost of sales based on the nature of the related expenses offset by such programs. Impact of the Coronavirus Pandemic and Macroeconomic Uncertainties on Future Operations The COVID-19 pandemic continues to impact the Company’s operations and related government and private sector responsive actions could continue to affect its business operations. The Company is also experiencing COVID-19 supply chain disruptions resulting in inventory receipt delays. Furthermore, the Company expects that our operations will continue to be influenced by general economic conditions resulting from COVID-19, such as labor shortages and the impact of inflation including higher wages, increased merchandise costs and higher inbound transportation costs. The Company cannot reasonably estimate the duration and severity of the COVID-19 pandemic, which has had and may continue to have a material impact on its business. As a result, current financial information may not be necessarily indicative of future operating results and the Company’s plans to address the impact of the COVID-19 pandemic may change. F-9 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) 2. Summary of Significant Accounting Policies Fiscal Year-End The Company operates on a fiscal year ending January 31 of each year. All references to fiscal years of the Company refer to the fiscal years ended on January 31 in those years. For example, the Company’s fiscal 2022 ended on January 31, 2022. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States (“GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents are defined as cash and short-term highly liquid investments with maturities of less than three months at the time of purchase. These short-term highly liquid investments are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. As of January 31, 2022 and 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. Marketable Securities All of the Company’s marketable securities as of January 31, 2022 and January 31, 2021 are classified as available-for-sale and are carried at fair value, which approximates amortized cost. Interest on these securities, as well as the amortization of discounts and premiums, is included in “Interest income” in the Consolidated Statements of Income. The Company records unrealized gains and losses on these securities (other than mutual funds held in the rabbi trust for the Urban Outfitters, Inc. Non-qualified Deferred Compensation Plan (See Note 4, “Marketable Securities”)) as a component of “Other comprehensive income (loss)” in the Consolidated Statements of Comprehensive Income and in “Accumulated other comprehensive loss” within “Shareholders’ equity” in the Consolidated Balance Sheets until realized, except when the Company considers declines in value to be other than temporary. Other than temporary impairment losses related to credit losses are considered to be realized losses. Mutual funds held in the rabbi trust have been accounted for under the fair value option, which results in all unrealized gains and losses being recorded in “Interest income” in the Consolidated Statements of Income. When available-for-sale securities are sold, the cost of the securities is specifically identified and is used to determine the realized gain or loss. Securities classified as current assets have maturity dates of less than or equal to one year from the balance sheet date. Securities classified as non-current assets have maturity dates greater than one year from the balance sheet date. Accounts Receivable Accounts receivable primarily consists of amounts due from the Company’s wholesale customers as well as credit card receivables outstanding with third-party credit card vendors. During the first quarter of fiscal 2021, the Company recorded an increase in allowance for doubtful accounts for Wholesale segment customer accounts receivables as a result of the significant disruption and uncertainty in the wholesale macro environment due to the COVID-19 pandemic, and during the remainder of fiscal 2021 and the first quarter of fiscal 2022, the Company reduced the allowance for doubtful accounts due to the collection of certain outstanding accounts receivables. The activity of the allowance for doubtful accounts for the years ended January 31, 2022, 2021 and 2020 was as follows: Balance at beginning of year Additions Deductions Balance at end of year Year ended January 31, 2022 $ 4,028 797 ( 3,477 ) $ 1,348 Year ended January 31, 2021 $ 880 9,534 ( 6,386 ) $ 4,028 Year ended January 31, 2020 $ 1,499 1,684 ( 2,303 ) $ 880 Inventory Inventory, which consists primarily of general consumer merchandise held for sale, is valued at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method and includes the cost of merchandise and import-related costs, including freight, import duties and taxes and agent commissions. A periodic review of inventory is performed in order to determine if F-10 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) inventory is properly stated at the lower of cost or net realizable value. Factors the Company considers in its review, such as future expected consumer demand and fashion trends, current aging, current and anticipated retail markdowns or wholesale discounts and class or type of inventory, are analyzed to determine estimated net realizable value. Criteria that the Company considers in its review of aging trends include average selling cycle and seasonality of merchandise, the historical rate at which merchandise has sold below cost during the prior 12 months and the value and nature of merchandise currently held in inventory and priced below original cost. A provision is recorded to reduce the cost of inventory to its estimated net realizable value, if appropriate. The Company assessed the value of its inventory in the Retail and Wholesale segments due to the impacts of the COVID-19 pandemic and recorded an increase in inventory obsolescence reserves during the first quarter of fiscal 2021, and as a result of disciplined inventory control and better than planned product performance, during the remainder of fiscal 2021, the Company decreased a portion of its inventory obsolescence reserves. The majority of inventory at January 31, 202 2 and 202 1 consisted of finished goods. Raw materials and work-in-process were not material to the overall inventory value . Property and Equipment Property and equipment are stated at cost and primarily consist of store leasehold improvements, furniture and fixtures, buildings and other operating equipment. Depreciation is computed using the straight-line method over the lesser of the lease term or useful life for leasehold improvements , five years for furniture and fixtures, 39 years for buildings and three to ten years for other operating equipment. Major renovations or improvements that extend the service lives of our assets are capitalized over the lesser of the extension period, life of the improvement, or the remaining term of the lease. Rental Product The cost of Nuuly Rent rental product is amortized to cost of sales based on the cost of each unit rented, which is estimated based on the number of times the unit is expected to be rented and the cost of the rental product. Lost, damaged and retired rental product is also charged to cost of sales. The Company makes assumptions as to the number of times each unit can be rented. If the actual number of times a unit can be rented were to vary significantly from our estimates, it could materially affect the amount of rental product amortization included in cost of sales. Amortization expense was $ 8,224 and $ 6,609 and $ 3,051 for fiscal 2022, 2021, and 2020, respectively. Impairment of Long-lived Assets The Company reviews the carrying values of its definite-lived, long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events that result in an impairment review include plans to close a retail location, distribution or fulfillment center, a significant decrease in the operating results of a long-lived asset or significant adverse changes in the business climate. 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. Newly opened retail locations may take time to generate positive operating and cash flow results. Factors such as store type (e.g., mall versus free-standing), location (e.g., urban area versus college campus or suburb), current marketplace awareness of our brands, local customer demographic data and current fashion trends are all considered in determining the time frame required for a retail location to achieve positive financial results. When events indicate that an asset may be impaired and the estimated undiscounted cash flows (based on forecasts of sales and gross profit) are less than the carrying amount of the asset, the impaired asset is adjusted to its estimated fair value and an impairment loss is recorded. The estimated fair value of the asset or asset group is based on future cash flows of the asset or asset group. For lease right-of-use assets, the Company determines the estimated fair value of the assets by comparing the discounted contractual rent payments to estimated market rent using an acceptable valuation methodology. During fiscal 2021, the Company recorded impairment charges for 42 retail locations, totaling $ 15,496 , with a carrying value after impairment of $ 101,836 primarily related to the right-of-use assets. The impairment charges in fiscal 2021 were primarily due to the impact of the mandated store closures as a result of the COVID-19 pandemic and lower store productivity once opened. During fiscal 2020, the Company recorded impairment charges for eight retail locations, totaling $ 14,611 with a carrying value after impairment of $ 51,900 primarily related to the right-of-use assets. During the Company’s assessment of current and future performance, it was determined that these retail locations would not be able to generate sufficient cash flow over the expected remaining lease term to recover the remaining carrying value of the respective retail location assets. Leases On February 1, 2019, the Company adopted the Financial Accounting Standards Board (“FASB”) accounting standards update that amended the existing accounting standards for lease accounting. This update requires lessees to recognize a right-of-use asset and lease liability for both operating and finance leases. The Company adopted the new guidance using a modified retrospective approach at the beginning of the period of adoption. F-11 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) The Company has operating leases for stores, distribution and fulfillment centers, corporate offices and equipment. The Company subleases certain properties to third parties. The Company has elected not to record a lease liability and right-of-use asset for leases with original terms of 12 months or less. The Company has elected the practical expedient to not separate non-lease components from lease components as it pertains to real estate leases. Store leases have remaining lease terms that range from less than one year up to 15 years , some of which contain options to extend the lease for one or two 5-year periods . Payments related to a renewal period are included in the lease liability and right-of-use asset only when the Company is reasonably certain that it will exercise the option to renew the lease for an extended period of time. Certain leases may contain variable lease payments such as rent based on a percentage of net sales. Variable lease payments may be subject to a breakpoint threshold of fixed rent. Variable lease payments, other than those that depend on an index or a rate, are not included in the measurement of the lease liability. The lease liability is calculated at the present value of certain future payments, discounted using the Company’s incremental borrowing rate, which approximates the rate of interest the Company would pay to borrow an amount equal to the lease payments on a fully collateralized basis over a similar term. Significant judgment is used in determining the incremental borrowing rate related to estimates for credit rating, credit spread and the impact of collateral. The Company developed incremental borrowing rates at a lease portfolio level. The right-of-use asset is initially equal to the value of the lease liability less any amounts received from the landlord as incentives or tenant improvement allowances. During fiscal 2022 and 2021, the Company received rent concessions for a number of our stores and continue to negotiate for additional rent concessions at various other store locations. To the extent the rent concessions do not result in a substantial increase in total payments in the existing lease, the Company has accounted for such rent concessions as negative variable rent. To the extent the rent concessions do result in a substantial increase in total payments in the existing lease, the Company has accounted for such rent concessions as a lease modification. Rent concessions recorded by the Company during fiscal 2022 and 2021, as either negative variable rent or lease modifications have not had a material impact on the Company’s Financial Statements. Revenue Recognition Merchandise: Merchandise is sold through retail stores, catalogs and the digital sales channel, as well as to wholesale customers, franchise partners and Nuuly customers. Revenue is recognized when control of the promised goods is transferred to the customer. The Company has elected to treat shipping and handling as fulfillment activities and not a separate performance obligation. Accordingly, the Company will recognize merchandise revenue for the Retail segment for its single performance obligation at the point of sale, when furniture is delivered or at the time of shipment for non-furniture merchandise, which is when transfer of control to the customer occurs. A Nuuly Rent customer may purchase merchandise in her possession that was included in the order that was delivered as part of the monthly subscription rental service. The Company recognize merchandise revenue for Nuuly Rent for its single performance obligation when the customer purchases the merchandise through the website or mobile application. Revenue does not include taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. Revenue is recognized net of estimated customer returns. Retail segment return policies vary by brand, but generally provide for no time limit on returns and the refund to be issued in either the form of original payment or as a gift card. Payment for merchandise is tendered primarily by cash, check, credit card, debit card, gift card or alternative payment methods. Uncollectible accounts receivable primarily results from unauthorized credit card transactions. The Company maintains an allowance for doubtful accounts for its Wholesale segment accounts receivable, which management reviews on a regular basis and believes is sufficient to cover potential credit losses and billing adjustments. Payment terms in the Wholesale segment vary by customer with the most common being a net 30 -day policy. Menus & Venues: Revenue from restaurant sales and events is recognized upon completion of the service, when the Company satisfies its single performance obligation. Customer deposits may be received in advance for events and that represent a contract liability until the Company satisfies its performance obligation. Subscription Fees: Revenue for Nuuly Rent is generated through monthly subscription fees and the purchase of merchandise in a customer’s possession. The monthly subscription rental fee is recognized as revenue on the date the customer is billed. A customer may pause the monthly subscription, at which point the customer will not be billed for future months until the subscription is no longer on hold. Merchandise sales to Nuuly Rent customers are discussed above under Merchandise. Gift Cards: The Company accounts for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer. At the time of issuance, the Company has an open performance obligation for the future delivery of promised goods or services. The liability remains outstanding until the card is redeemed by the customer, at which time the Company recognizes revenue. Over time, a portion of the outstanding gift cards will not be redeemed by the customer which we refer to as “breakage”. Revenue is recognized from breakage over time in proportion to gift card redemptions. Judgment is used in determining the amount of breakage revenue to be recognized and is based on historical gift card redemption patterns. Gift card breakage revenue is included in net sales and is not material. The Company’s gift cards do not expire. F-12 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Sales Return Reserve The Company records a reserve for estimated product returns where the sale has occurred during the period reported, but the return is likely to occur subsequent to the period reported. The reserve for estimated product returns is based on the Company’s most recent historical return trends. If the actual return rate is materially different than the Company’s estimate, sales returns would be adjusted in the future. The costs of returns are recorded as a current asset rather than net with the sales return reserve liability. As of January 31, 2022, 2021 and 2020, the sales return reserve was $ 69,817 , $ 82,004 and $ 51,360 , respectively. Cost of Sales Cost of sales includes the following: the cost of merchandise; merchandise markdowns; obsolescence and shrink provisions; store occupancy costs, including rent and depreciation; delivery expense; inbound and outbound freight; customs related taxes and duties; inventory acquisition and purchasing costs; design costs; warehousing and handling costs; the amortization of rental product; the net amortized cost of rental product at time of purchase by a customer; and other inventory and rental product acquisition related costs. Selling, General and Administrative Expenses Selling, general and administrative expenses includes expenses such as direct selling and selling supervisory expenses; marketing expenses; various corporate expenses such as information systems, finance, loss prevention, talent acquisition, home office and executive management expenses; share-based compensation expense; and other associated general expenses. Shipping and Handling Revenues and Costs The Company includes shipping and handling revenues in net sales and shipping and handling costs in cost of sales. The Company’s shipping and handling revenues consist of amounts billed to customers for shipping and handling merchandise. Shipping and handling costs include shipping supplies, related labor costs and third-party shipping costs. Advertising The Company expenses the costs of advertising when the advertising occurs, except for certain digital channel advertising, which is capitalized and expensed when the catalog is mailed or the content is published on the Company’s websites and mobile applications. Advertising costs primarily relate to Retail segment marketing expenses which are comprised of web marketing, catalog printing, paper, postage and other costs related to production of photographic images used in the Company’s catalogs, websites, mobile applications and social media campaigns. If there is no expected future benefit, the cost of advertising is expensed when incurred. Advertising costs reported as prepaid expenses were $ 1,306 and $ 408 as of January 31, 2022, and 2021, respectively, and are included in “Prepaid expenses and other current assets” in the Consolidated Balance Sheets. Advertising expenses were $ 254,073 , $ 184,465 and $ 161,879 for fiscal 2022, 2021 and 2020, respectively. In addition, the Company incurred web creative expenses of $ 59,746 , $ 44,562 and $ 45,849 for fiscal 2022, 2021 and 2020, respectively. Advertising expenses and web creative expenses are both included in “Selling, general and administrative expenses” in the Consolidated Statements of Income. Store Opening Costs The Company expenses all store opening and organization costs as incurred, including travel, training, recruiting, salaries and other operating costs, and all such costs are included in “Selling, general and administrative expenses” in the Consolidated Statements of Income. Website Development Costs The Company capitalizes applicable costs incurred during the application and infrastructure development stage and expenses costs incurred during the planning and operating stage. During fiscal 2022, 2021 and 2020, capitalized costs related to internally generated internal-use software were not material. Income Taxes The Company utilizes a balance sheet approach to provide for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of net operating loss carryforwards and temporary differences between the carrying amounts and the tax bases of assets and liabilities. Investment tax credits or grants are accounted for in the period earned. The Company files a consolidated United States federal income tax return (see Note 10, “Income Taxes,” for a further discussion of income taxes). The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. F-13 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Net Income Per Common Share Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares and common share equivalents outstanding. Common share equivalents include the effect of stock options, stock appreciation rights (“SAR’s”), restricted stock units (“RSU’s”) and performance stock units (“PSU’s”). Comprehensive Income and Accumulated Other Comprehensive Loss Comprehensive income is comprised of two subsets—net income and other comprehensive income (loss). Amounts included in accumulated other comprehensive loss relate to foreign currency translation adjustments and unrealized gains or losses on marketable securities. The foreign currency translation adjustments are not adjusted for income taxes because these adjustments relate to non-U.S. subsidiaries for which foreign earnings have been designated as permanently reinvested. Accumulated other comprehensive loss consisted of foreign currency translation losses of $ 22,204 and $ 16,950 as of January 31, 2022 and January 31, 2021, respectively, and unrealized (losses) gains, net of tax, on marketable securities of ($ 2,626 ) and ($ 170 ) as of January 31, 2022 and January 31, 2021, respectively. The tax effect of the unrealized (losses) gains on marketable securities recorded in comprehensive loss was ($ 1,249 ), ($ 236 ) and $ 202 during fiscal 2022, 2021 and 2020, respectively. Gross realized gains and losses are included in “Interest income” in the Consolidated Statements of Income and were not material to the Company’s Consolidated Financial Statements for all three years presented. Foreign Currency The financial statements of the Company’s foreign operations are translated into U.S. dollars. Assets and liabilities are translated at current exchange rates as of the balance sheet date, equity accounts at historical exchange rates, while income statement accounts are translated at the average rates in effect during the year. Translation adjustments are not included in determining net income, but are included in “Accumulated other comprehensive loss” within “Shareholders’ equity.” Remeasurement gains and losses included in operating results for fiscal years 2022, 2021 and 2020 were not material. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities and accounts receivable. The Company manages the credit risk associated with cash, cash equivalents and marketable securities by investing in high-quality securities held with reputable trustees and, by policy, limiting the amount of credit exposure to any one issuer or issue, as well as providing limitations on investment maturities. The Company’s investment policy requires that its cash, cash equivalents and marketable securities are invested in corporate and municipal bonds rated “BBB” or better, commercial paper and federally insured or guaranteed investment vehicles such as certificates of deposit, United States treasury bills and federal government agencies. Receivables from third-party credit cards are processed by financial institutions, which are monitored for financial stability. The Company regularly evaluates the financial condition of its Wholesale segment customers. The Company’s allowance for doubtful accounts reflects current market conditions and management’s assessment regarding the collectability of its accounts receivable. The Company maintains cash accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses from maintaining cash accounts in excess of such limits. Management believes that it is not exposed to any significant risks related to its cash accounts. Commitments and Contingencies From time to time, the Company is named as a defendant in legal actions arising from normal business activities. The Company records a reserve for estimated losses when information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Recent Accounting Pronouncements The Company has considered all new accounting standards updates issued by the FASB and has concluded that there are no recent accounting standard updates that will have a material impact on its consolidated financial statements and related disclosures. 3. Revenue from Contracts with Customers Contract receivables occur when the Company satisfies all of its performance obligations under a contract and recognizes revenue prior to billing or receiving consideration from a customer for which it has an unconditional right to payment. Contract receivables arise from credit card and other electronic payment transactions and sales to the Company’s Wholesale segment customers and franchisees. For the year ended January 31, 2022, the opening and closing balance of contract receivables, net of allowance for doubtful accounts, F-14 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) was $ 89,952 and $ 63,760 , respectively. For the year ended January 31, 202 1 , the opening and closing balance of contract receivables, net of allowance for doubtful accounts, was $ 88,288 and $ 89,952 , respectively. Contract receivables are included in “Accounts receivable, net of allowance for doubtful accounts” in the Consolidated Balance Sheets. During the first quarter of fiscal 2021, the Company recorded an increase in allowance for doubtful accounts for Wholesale segment customer accounts receivables as a result of the significant disruption and uncertainty in the wholesale macro environment due to the COVID-19 pandemic, and during the remainder of fiscal 2021 and the first quarter of fiscal 2022 , the Company reduced the allowance for doubtful accounts due to the collection of certain outstanding accounts receivables. Contract liabilities represent unearned revenue and result from the Company receiving consideration in a contract with a customer for which it has not satisfied all of its performance obligations. The Company’s contract liabilities result from customer deposits, customer loyalty programs and the issuance of gift cards. Gift cards are expected to be redeemed within two years of issuance, with the majority of redemptions occurring in the first year. For the year ended January 31, 2022, the opening and closing balance of contract liabilities was $ 61,986 and $ 78,717 , respectively. For the year ended January 31, 2021, the opening and closing balance of contract liabilities was $ 52,926 and $ 61,986 , respectively. Contract liabilities are included in “Accrued expenses, accrued compensation and other current liabilities” in the Consolidated Balance Sheets. During the year ended January 31, 2022, the Company recognized $ 30,071 of revenue that was included in the contract liability balance at the beginning of the period. During the year ended January 31, 2021, the Company recognized $ 27,721 of revenue that was included in the contract liability balance at the beginning of the period. See Note 17, “Segment Reporting,” for additional information including net sales recorded by reportable segment and net sales from contracts with customers by merchandise category. 4. Marketable Securities During all periods shown, marketable securities are classified as available-for-sale. The amortized cost, gross unrealized gains (losses) and fair values of available-for-sale securities by major security type and class of security as of January 31, 2022 and 2021 are as follows: Amortized Cost Unrealized Gains Unrealized (Losses) Fair Value 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 As of January 31, 2021 Short-term Investments: Corporate bonds $ 38,695 $ 1 $ ( 48 ) $ 38,648 Municipal and pre-refunded municipal bonds 127,097 11 ( 53 ) 127,055 Commercial paper 8,992 — — 8,992 174,784 12 ( 101 ) 174,695 Long-term Investments: Corporate bonds $ 59,890 $ 3 $ ( 129 ) $ 59,764 Municipal and pre-refunded municipal bonds 53,134 17 ( 46 ) 53,105 Mutual funds, held in rabbi trust 10,827 20 ( 54 ) 10,793 123,851 40 ( 229 ) 123,662 $ 298,635 $ 52 $ ( 330 ) $ 298,357 F-15 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Proceeds from the sales and maturities of available-for-sale securities were $ 280,701 , $ 396,260 and $ 428,508 in fiscal 2022, 2021 and 2020, respectively. The Company included in “Interest income,” in the Consolidated Statements of Income, a net realized gain of $ 11 during fiscal 2022, a net realized loss of $ 419 during fiscal 2021 and a net realized gain of $ 39 during 2020. Amortization of discounts and premiums, net, resulted in a reduction of “Interest income” of $ 6,614 , $ 1,574 and $ 706 for fiscal 2022, 2021 and 2020, respectively. 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 “Interest income” in the Consolidated Statements of Income. The following tables show the gross unrealized losses and fair value of the Company’s marketable securities with unrealized losses that are not deemed to have credit losses, aggregated by the length of time that individual securities have been in a continuous unrealized loss position, at January 31, 2022 and 2021, respectively. January 31, 2022 Less Than 12 Months 12 Months or Greater Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 212,861 $ ( 2,661 ) $ 14,110 $ ( 17 ) $ 226,971 $ ( 2,678 ) Municipal and pre-refunded municipal bonds 162,081 ( 1,162 ) 7,118 ( 23 ) 169,199 ( 1,185 ) US Treasury securities 20,137 ( 84 ) — — 20,137 ( 84 ) Mutual funds, held in rabbi trust 11,813 ( 606 ) — — 11,813 ( 606 ) Federal government agencies 345 ( 5 ) — — 345 ( 5 ) Total $ 407,237 $ ( 4,518 ) $ 21,228 $ ( 40 ) $ 428,465 $ ( 4,558 ) January 31, 2021 Less Than 12 Months 12 Months or Greater Total Description of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 91,432 $ ( 177 ) $ — $ — $ 91,432 $ ( 177 ) Municipal and pre-refunded municipal bonds 90,308 ( 99 ) — — 90,308 ( 99 ) Mutual funds, held in rabbi trust 10,793 ( 54 ) — — 10,793 ( 54 ) Total $ 192,533 $ ( 330 ) $ — $ — $ 192,533 $ ( 330 ) As of January 31, 2022 and 2021, there were a total of 656 and 184 securities with unrealized loss positions within the Company’s portfolio, respectively. 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. F-16 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) 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 January 31, 2022 Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ — $ 231,215 $ — $ 231,215 Municipal and pre-funded 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 January 31, 2021 Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ — $ 98,412 $ — $ 98,412 Municipal and pre-refunded municipal bonds — 180,160 — 180,160 Mutual funds, held in rabbi trust 10,793 — — 10,793 Commercial paper — 8,992 — 8,992 $ 10,793 $ 287,564 $ — $ 298,357 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 January 31, 2022 and January 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 January 31, 2022 and 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. The fair value of debt approximates its carrying value as it is all variable rate debt. 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 and, in the case of goodwill, an annual assessment is performed. 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. Goodwill has been assigned to reporting units for purposes of impairment testing. The Company evaluates goodwill to determine if the carrying value exceeds the fair value of the reporting unit. During fiscal 2021 and 2020, the Company determined that certain long-lived assets at the Company’s retail locations were unable to recover their carrying value. The impairment charges in fiscal 2021 were primarily due to the impact of the mandated store closures as a result of the COVID-19 pandemic and lower store productivity once opened. These assets were written down to a fair value resulting in impairment charges of $ 15,496 and $ 14,611 in fiscal 2021 and 2020, respectively. During fiscal 2020, the Company evaluated the fair F-17 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) value of the Menus & Venues brand as compared to the carrying value and determined that the goodwill assigned to the reporting unit is impaired in full, resulting in a goodwill impairment charge of $ 13,911 . 6. Property and Equipment Property and equipment is summarized as follows: January 31, 2022 2021 Land $ 56,166 $ 56,400 Buildings 469,188 413,001 Furniture and fixtures 425,021 416,204 Leasehold improvements 856,410 860,963 Other operating equipment 451,285 369,001 Construction-in-progress 269,596 195,661 2,527,666 2,311,230 Accumulated depreciation ( 1,382,581 ) ( 1,343,808 ) Total $ 1,145,085 $ 967,422 Depreciation expense for property and equipment in fiscal 2022, 2021 and 2020 was $ 99,058 , $ 102,197 and $ 111,550 , respectively. 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: January 31, 2022 2021 Sales return reserves $ 69,817 $ 82,004 Gift cards and merchandise credits 58,147 48,171 Accrued sales and VAT taxes 32,107 19,104 Accrued rents, estimated property taxes and other property expenses 32,316 26,740 Federal, state and foreign income taxes 3,870 3,313 Accrued construction 57,041 38,569 Accrued investments in transit 1,194 52,800 Other current liabilities 96,506 88,546 Total $ 350,998 $ 359,247 8. Debt On June 29, 2018 , the Company and its domestic subsidiaries entered into an amended and restated credit agreement (the “Amended Credit Agreement”) that amended the Company’s asset-based revolving credit facility with certain lenders, including JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as joint lead arrangers and co-book managers. The Amended Credit Agreement extended the maturity date of the senior secured revolving credit facility to June 2023 (the “Amended Credit Facility”). The Amended Credit Facility provides for loans and letters of credit up to $ 350,000 , subject to a borrowing base that is comprised of the Company’s eligible accounts receivable and inventory. The Amended Credit Facility includes a swing-line sub-facility, a multicurrency sub-facility and the option to expand the facility by up to $ 150,000 . The funds available under the Amended Credit Facility may be used for working capital and other general corporate purposes. The Amended Credit Facility provides for interest on borrowings, at the Company’s option, at either (i) adjusted LIBOR, CDOR, SONIA or EURIBOR plus an applicable margin ranging from 1.125 % to 1.375 %, or (ii) an adjusted ABR plus an applicable margin ranging from 0.125 % to 0.375 %, each such applicable margin depending on the level of availability under the Amended Credit Facility. Depending on the type of borrowing, interest on the Amended Credit Agreement is payable monthly, quarterly or at the end of the interest period. A commitment fee of 0.20 % is payable quarterly on the unused portion of the Amended Credit Facility. All obligations under the Amended Credit Facility are unconditionally guaranteed by the Company and certain of its U.S. subsidiaries. The obligations under the Amended Credit Facility are secured by a first-priority security interest in inventory, accounts F-18 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) receivable and certain other assets of the Company and certain of its U.S. subsidiaries. The obligations of URBN Canada Retail, Inc. are secured by a first-priority security interest in its inventory, accounts receivable, and certain other assets. The Amended Credit Agreement contains customary representations and warranties, negative and affirmative covenants and provisions relating to events of default. As of January 31, 2022, the Company had $ 0 in borrowings under the Amended Credit Facility. The Company borrowed and subsequently repaid $ 220,000 during fiscal 2021 in order to preserve financial flexibility and maintain liquidity and flexibility in response to the COVID-19 pandemic. As of January 31, 2022, the Company was in compliance with the terms of the Amended Credit Agreement. The Company expects to remain in compliance with all terms, including covenants, of the Amended Credit Agreement. Outstanding stand-by letters of credit, which reduce the funds available under the Amended Credit Facility, were $ 13,140 . Interest expense for the Amended Credit Facility was $ 1,046 , $ 2,720 , and $ 1,046 for the years ended January 31, 2022, 2021, and 2020, respectively, which was included in “Interest expense,” in the Consolidated Statements of Income. 9. Leases The Company has operating leases for stores, distribution and fulfillment centers, corporate offices and equipment. The Company subleases certain properties to third parties. Total operating lease costs were $ 268,863 , $ 275,493 and $ 272,430 during fiscal 2022, 2021 and 2020, respectively. Total variable lease costs were $ 109,525 , $ 89,833 and $ 126,492 during fiscal 2022, 2021 and 2020, respectively. Short-term lease costs and sublease income were not material during fiscal 2022, 2021 and 2020. Other information related to leases was as follows: Other information Fiscal Year Ended January 31, Cash paid for amounts included in the measurement of lease liabilities: 2022 2021 2020 Operating cash flows from operating leases $ 303,577 $ 247,539 $ 295,658 Right-of-use assets obtained in exchange for new operating lease liabilities 112,572 $ 149,586 $ 106,131 Weighted-average remaining lease term - operating leases 6.0 years 7.0 years Weighted-average discount rate - operating leases 5.8 % 6.1 % The following is a schedule by year of the maturities of operating lease liabilities with original terms in excess of one year, as of January 31, 2022: Fiscal Year Operating Leases 2023 $ 297,586 2024 255,091 2025 218,167 2026 183,383 2027 130,596 Thereafter 357,805 Total undiscounted future minimum lease payments 1,442,628 Less imputed interest ( 255,233 ) Total discounted future minimum lease payments $ 1,187,395 As of January 31, 2022, the Company had commitments of approximately $ 12,589 not included in the amounts above related to seven executed but not yet commenced store leases. Certain store leases provide for contingent rentals when sales exceed specified breakpoint levels, in lieu of a fixed minimum rent, that are not reflected in the above table. Additionally, there are 84 locations where a percentage of sales are paid, in lieu of a fixed minimum rent, that are not reflected in the above table. Total rent expense related to these 84 locations was approximately $ 9,487 for fiscal 2022. 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 January 31, 2022 and January 31, 2021 were included in “Current portion of operating lease liabilities” in the Consolidated Balance Sheets. During fiscal 2022 and 2021, the Company received rent concessions for a number of our stores and continue to negotiate for additional rent concessions at various other store locations. To the extent the rent concessions do not result in a substantial increase in F-19 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) total payments in the existing lease, the Company has accounted for such rent concessions as negative variable rent. To the extent the rent concessions do result in a substantial increase in total payments in the existing lease, the Company has accounted for such rent concessions as a lease modification. Rent concessions recorded by the Company during fiscal 202 2 and 2021 , as either negative variable rent or lease modifications have not had a material impact on the Company’s Consolidated Financial Statements. 10. Income Taxes The components of income (loss) before income taxes are as follows: Fiscal Year Ended January 31, 2022 2021 2020 Domestic $ 389,059 $ 13,103 $ 233,742 Foreign 15,572 ( 9,590 ) 5,978 $ 404,631 $ 3,513 $ 239,720 The components of the provision for income tax expense/(benefit) are as follows: Fiscal Year Ended January 31, 2022 2021 2020 Current: Federal $ 75,533 $ 11,623 $ 50,507 State 18,972 894 13,525 Foreign 2,205 4,030 6,141 $ 96,710 $ 16,547 $ 70,173 Deferred: Federal $ ( 4,151 ) $ ( 7,801 ) $ ( 3,260 ) State 498 ( 3,325 ) ( 772 ) Foreign 958 ( 3,144 ) 5,483 ( 2,695 ) ( 14,270 ) 1,451 $ 94,015 $ 2,277 $ 71,624 The following table reflects the differences between the statutory U.S. federal income tax rate and the Company’s effective tax rate: Fiscal Year Ended January 31, 2022 2021 2020 Expected provision at statutory U.S. federal tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal tax benefit 3.8 ( 88.1 ) 4.2 Foreign taxes ( 1.8 ) 56.9 4.0 Uncertain tax positions 0.1 28.8 0.5 Stock compensation ( 0.1 ) 36.1 0.2 Tax rate changes 0.1 8.5 0.1 Prior year adjustments 0.1 15.7 ( 0.3 ) Federal tax credits ( 0.2 ) ( 16.0 ) ( 0.2 ) Nondeductible expenses 0.1 8.6 0.2 Tax exempt income — ( 3.4 ) — Other 0.1 ( 3.3 ) 0.2 Effective tax rate 23.2 % 64.8 % 29.9 % The variance in percentages for the components of the effective tax rate for fiscal 2021 as compared to fiscal 2022 and 2020 are primarily due to the ratio of foreign taxable losses to global taxable profits and lower income before income taxes in fiscal 2021. F-20 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) The significant components of deferred tax assets and liabilities as of January 31, 2022 and 2021 are as follows: January 31, 2022 2021 Deferred tax liabilities: Prepaid expense $ ( 3,132 ) $ ( 2,191 ) Depreciation ( 50,674 ) ( 34,476 ) Operating lease right-of-use assets ( 233,299 ) ( 250,292 ) Other temporary differences ( 365 ) ( 906 ) Gross deferred tax liabilities ( 287,470 ) ( 287,865 ) Deferred tax assets: Operating lease liabilities 272,953 296,413 Deferred rent 14,176 6,685 Inventory 19,896 18,279 Accounts receivable 1,252 1,930 Net operating loss carryforwards 20,873 11,359 Tax uncertainties 1,135 1,611 Accrued salaries and benefits 25,249 16,711 Income tax credits 4,714 4,494 Other temporary differences 28,000 15,548 Gross deferred tax assets, before valuation allowances 388,248 373,030 Valuation allowances ( 30,852 ) ( 18,689 ) Net deferred tax assets $ 69,926 $ 66,476 Net deferred tax assets are attributed to the jurisdictions in which the Company operates. As of January 31, 2022 and 2021, respectively, $ 38,718 and $ 34,037 were attributable to U.S. federal, $ 19,190 and $ 19,084 were attributed to state jurisdictions and $ 12,018 and $ 13,355 were attributed to foreign jurisdictions. As of January 31, 2022, certain non-U.S. subsidiaries of the Company had net operating loss carryforwards for tax purposes of approximately $ 7,710 that expire from 2022 through 2031 and approximately $ 65,193 that do not expire. Certain U.S. subsidiaries of the Company had state net operating loss carryforwards for tax purposes of approximately $ 31,304 that expire from 2022 through 2042 and approximately $ 11,218 that do not expire. Certain U.S. subsidiaries of the Company had state credit carryforwards for tax purposes of approximately $ 5,925 that expire from 2022 through 2031 . As of January 31, 2022, the Company had full and partial valuation allowances for certain foreign and state net operating loss carryforwards and a partial valuation allowance against state credit carryforwards where it was uncertain the carryforwards would be utilized. The Company had no valuation allowance for certain other foreign and state net operating loss carryforwards where management believes it is more-likely-than-not the tax benefit of these carryforwards will be realized. As of January 31, 2022, approximately $ 153,700 of cash and cash equivalents were held by the Company’s non-U.S. subsidiaries for which no deferred taxes have been provided. The Company has accumulated undistributed earnings generated by foreign subsidiaries of approximately $ 430,495 . Since such earnings have previously been subject to the one-time deemed repatriation transition tax required by the U.S. Tax Cuts and Jobs Act or other U.S. tax requirements on undistributed foreign earnings, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. The Company continues to believe that foreign earnings are indefinitely reinvested excluding earnings that have previously been subject to the one-time deemed repatriation transition tax required by the U.S. Tax Cuts and Jobs Act. With respect to outside basis differences in all other non-U.S. subsidiaries, the Company expects that either (i) such basis differences will not reverse in the foreseeable future, or (ii) such basis differences will reverse in a tax-neutral manner. F-21 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: January 31, Tax Benefit Reconciliation 2022 2021 2020 Balance at the beginning of the period $ 22,259 $ 21,924 $ 21,406 Increases in tax positions for prior years 28 476 661 Decreases in tax positions for prior years ( 3,178 ) ( 51 ) ( 101 ) Increases in tax positions for current year 249 41 125 Settlements — — — Lapse in statute of limitations ( 413 ) ( 131 ) ( 167 ) Balance at the end of the period $ 18,945 $ 22,259 $ 21,924 The total amount of net unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $ 21,288 and $ 23,497 as of January 31, 2022 and 2021, respectively. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Income, which is consistent with the recognition of these items in prior reporting periods. During the years ended January 31, 2022, 2021 and 2020, the Company recognized expense/(benefit) of $ 630 , $ 950 and $ 1,038 , respectively, related to interest and penalties. The Company accrued $ 3,440 and $ 2,810 for the payment of interest and penalties as of January 31, 2022 and 2021, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is under audit in certain state and foreign jurisdictions. Certain federal, foreign and state jurisdictions are subject to audit from fiscal 2010 to 2021. It is possible that a state or foreign examination may be resolved within 12 months. Due to the potential for resolution of federal and foreign audit and state examinations, and the expiration of various statutes of limitation, it is possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $ 911 . 11. Share-Based Compensation The Company’s 2017 Stock Incentive Plan (the “2017 Plan”) authorized up to 10,000,000 common shares, which can be granted as restricted stock, RSU’s, PSU’s, incentive stock options, nonqualified stock options, SAR’s and stock grant awards. As of January 31, 2022, there were 6,862,703 common shares available to grant under the 2017 Plan. The Company’s 2008 Stock Incentive Plan (the “2008 Plan”) authorized up to 10,000,000 common shares, which can be granted as RSU’s, unrestricted shares, incentive stock options, nonqualified stock options, PSU’s or SAR’s. As of January 31, 2022, there were 5,464,830 common shares available to grant under the 2008 Plan. Pursuant to the terms of the 2008 Plan, certain awards may not be granted after February 25, 2018. Awards under the 2017 Plan and the 2008 Plan generally expire seven or ten years from the date of grant, thirty days after termination of employment or six months after the date of death or termination due to disability of the grantee. The Company elects to account for forfeitures as they occur rather than estimate the expected forfeitures. Share-based compensation expense, included in “Selling, general and administrative expenses” in the Consolidated Statements of Income, for the fiscal years ended January 31, 2022, 2021 and 2020 was as follows: Fiscal Year Ended January 31, 2022 2021 2020 Stock Options $ — $ 471 $ 1,737 Performance Stock Units (1) 4,067 181 3,483 Restricted Stock Units 21,674 19,648 15,889 Total $ 25,741 $ 20,300 $ 21,109 (1) Includes: (i) the reversal of $ 1,017 of previously recognized compensation expense in fiscal 2021, related to 87,997 PSU’s that were not projected to vest as the achievement of the related performance target was deemed not probable, of which $ 364 related to 41,332 PSU’s was subsequently recognized in fiscal 2022 due to the Company’s better than projected performance that resulted in the performance target being achieved; and (ii) the reversal of $ 803 of previously recognized compensation expense in fiscal 2020, related to 54,356 PSU’s that will not vest as the achievement of the related performance target is not probable. The total tax benefit associated with share-based compensation expense for the fiscal years ended January 31, 2022, 2021 and 2020 was $ 6,311 , $ 4,899 and $ 5,230 , respectively. The tax benefit realized from share-based compensation for the fiscal years ended January 31, 2022, 2021 and 2020 was $ 5,573 , $ 2,528 and $ 4,425 , respectively. F-22 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Stock Options The Company may grant stock options that generally vest over a period of one year . Stock options become exercisable over the vesting period in installments determined by the Company, which can vary depending upon each individual grant. Stock options granted to non-employee directors generally vest over a period of one year . There were no stock options granted in the fiscal year ended January 31, 2022 and 2021, as beginning in fiscal 2021, the Company began to grant restricted stock units to non-employee directors instead of stock options. A Black-Scholes model was used to estimate the fair value of stock options granted in the fiscal year ended January 31, 2020. The model uses assumptions including the risk-free rate of interest, expected volatility of the Company’s stock price and expected life of the awards. The Company uses historical data on exercise timing to determine the expected life assumption. The risk-free rate of interest for periods within the contractual life of the award is based on U.S. Government Securities Treasury Constant Maturities over the expected term of the equity instrument. The expected volatility is based on a weighted-average of the implied volatility and the Company’s most recent historical volatility. The following weighted-average assumptions were used in the models to estimate the fair value of stock options at the date of grant: Fiscal Year Ended January 31, 2022 2021 2020 Expected life, in years — — 5.3 Risk-free interest rate — — 1.9 % Volatility — — 37.6 % Dividend rate — — — The following table summarizes the Company’s stock option activity for the fiscal year ended January 31, 2022: Shares Weighted- Average Exercise Price Weighted- Average Contractual Terms (years) Aggregate Intrinsic Value Awards outstanding at beginning of year 515,000 $ 31.45 3.0 $ 1,249 Granted — — Exercised ( 120,000 ) 27.42 Forfeited or Expired ( 40,000 ) 46.42 Awards outstanding at end of year 355,000 31.12 2.5 $ 1,126 Awards outstanding fully vested and expected to vest 355,000 31.12 2.5 $ 1,126 Awards exercisable at end of year 355,000 $ 31.12 2.5 $ 1,126 The following table summarizes other information related to stock options during the years ended January 31, 2022, 2021 and 2020: Fiscal Year Ended January 31, 2022 2021 2020 Weighted-average grant date fair value—per share $ — $ — $ 8.67 Intrinsic value of awards exercised $ 1,156 $ 187 $ 307 Net cash proceeds from the exercise of stock options $ 3,290 $ 495 $ 974 There were no unrecognized compensation costs of stock options granted, but not yet vested, as of January 31, 2022. Performance Stock Units The Company may grant PSU’s that vest based on the achievement of various company performance targets and external market conditions. The fair value of the PSU’s awarded during fiscal 2022, 2021 and 2020 equaled the stock price on the date of the grant. The Company makes certain estimates about the number of awards that will vest. Once the Company determines that it is probable that the performance targets will be met, compensation expense is recorded for these awards. If any of these performance targets are not met, the awards are forfeited. Each PSU is equal to one common share with varying maximum award value limitations. PSU’s typically vest over a two to five-year period. F-23 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) The following table summarizes the Company’s PSU activity for the fiscal year ended January 31, 2022: Shares Weighted- Average Fair Value Non-vested awards outstanding at beginning of year 270,003 $ 27.32 Granted 213,750 38.15 Vested ( 70,001 ) 26.54 Forfeited ( 29,999 ) 30.19 Non-vested awards outstanding at end of year 383,753 $ 33.27 The weighted-average grant date fair value of PSU’s awarded during the fiscal years ended January 31, 2022, 2021 and 2020 was $ 38.15 , $ 25.84 and $ 30.19 , per share, respectively. Unrecognized compensation cost related to unvested PSU’s as of January 31, 2022 was $ 6,671 , which is expected to be recognized over a weighted-average period of 2.2 years. Restricted Stock Units The Company may grant RSU’s that vest based on the achievement of specified service conditions. The fair value of the RSU’s awarded during fiscal 2022, 2021 and 2020 equaled the stock price on the date of the grant. RSU’s typically vest over a two to five-year period. The following table summarizes the Company’s RSU activity for the fiscal year ended January 31, 2022: Shares Weighted- Average Fair Value Non-vested awards outstanding at beginning of year 2,109,385 $ 28.65 Granted 1,075,250 37.30 Vested ( 613,299 ) 29.66 Forfeited ( 284,748 ) 30.41 Non-vested awards outstanding at end of year 2,286,588 $ 32.37 The weighted-average grant date fair value of RSU’s awarded during the fiscal years ended January 31, 2022, 2021 and 2020 was $ 37.30 , $ 25.31 and $ 29.92 , per share, respectively. The aggregate grant date fair value of RSU’s vested during the fiscal years ended January 31, 2022, 2021 and 2020 was $ 29.66 , $ 31.11 and $ 26.80 , respectively. Unrecognized compensation costs related to unvested RSU’s as of January 31, 2022, was $ 33,444 , which is expected to be recognized over a weighted-average period of 2.1 years. 12. Shareholders’ Equity Share repurchase activity under the Company’s share repurchase programs is as follows: Fiscal Year Ended January 31, 2022 2021 Number of common shares repurchased and subsequently retired 1,959,159 482,003 Total cost $ 55,765 $ 7,036 Average cost per share, including commissions $ 28.46 $ 14.60 On August 22, 2017, the Company’s Board of Directors authorized the repurchase of 20,000,000 common shares under a share repurchase program. On June 4, 2019, the Company’s Board of Directors authorized the repurchase of an additional 20,000,000 common shares under a share repurchase program. As of January 31, 2022, 23,892,795 common shares were remaining under the programs. Subsequent to January 31, 2022, the Company repurchased and subsequently retired a total of 1,194,699 common shares for approximately $ 31,802 , at an average price of $ 26.62 per share, including commissions. In addition to the common shares repurchased under the share repurchase programs, during the fiscal years ended January 31, 2022 and 2021, the Company acquired and subsequently retired 229,082 and 161,335 common shares at a total cost of $ 7,790 and $ 3,876 , respectively, from employees to meet payroll tax withholding requirements. F-24 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) 13. Other Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss The following tables present the changes in “Accumulated other comprehensive loss,” by component, net of tax, for the fiscal years ended January 31, 2022 and 2021, respectively: Fiscal Year Ended January 31, 2022 Foreign Currency Translation Unrealized Gains and (Losses) on Available-for- Sale Securities Total Beginning Balance $ ( 16,950 ) $ ( 170 ) $ ( 17,120 ) Other comprehensive income (loss) before reclassifications ( 5,254 ) ( 2,467 ) ( 7,721 ) Amounts reclassified from accumulated other comprehensive income (loss) — 11 11 Net current-period total other comprehensive income (loss) ( 5,254 ) ( 2,456 ) ( 7,710 ) Ending Balance $ ( 22,204 ) $ ( 2,626 ) $ ( 24,830 ) Fiscal Year Ended January 31, 2021 Foreign Currency Translation Unrealized Gains and (Losses) on Available-for- Sale Securities Total Beginning Balance $ ( 28,328 ) $ 324 $ ( 28,004 ) Other comprehensive income (loss) before reclassifications 11,378 ( 75 ) 11,303 Amounts reclassified from accumulated other comprehensive income (loss) — ( 419 ) ( 419 ) Net current-period total other comprehensive income (loss) 11,378 ( 494 ) 10,884 Ending Balance $ ( 16,950 ) $ ( 170 ) $ ( 17,120 ) All unrealized gains and losses on available-for-sale securities reclassified from accumulated other comprehensive loss were recorded in “Interest income” in the Consolidated Statements of Income. 14. Net Income Per Common Share The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net income per common share: Fiscal Year Ended January 31, 2022 2021 2020 Basic weighted-average common shares outstanding 98,022,583 97,817,651 99,833,011 Effect of dilutive options, stock appreciation rights, restricted stock units and performance stock units 1,246,122 705,125 755,666 Diluted weighted-average shares outstanding 99,268,705 98,522,776 100,588,677 For the fiscal years ended January 31, 2022, 2021 and 2020, awards to purchase 165,000 common shares ranging in price from $ 35.85 to $ 46.42 , awards to purchase 467,500 common shares ranging in price from $ 18.81 to $ 46.42 and awards to purchase 406,250 common shares ranging in price from $ 28.47 to $ 46.42 , respectively, were excluded from the calculation of diluted net income per common share because the impact would be anti-dilutive. As of January 31, 2022 and 2021, 60,001 and 470,815 contingently issuable awards, respectively, were excluded from the calculation of diluted net income per common share as they did not meet certain performance criteria. 15. Commitments and Contingencies Purchase Commitments As of January 31, 2022, the Company has commitments for unfulfilled purchase orders for merchandise ordered from our vendors in the normal course of business, which are primarily satisfied within 12 months, as well as commitments for products and services including information technology contracts, of $ 941,847 . The majority of the Company’s merchandise commitments are cancellable with no or limited recourse available to the vendor until the merchandise shipping date. As of January 31, 2022, the Company had outstanding trade letters of credit of $ 50,564 . As of January 31, 2022, the Company also has commitments related to construction and distribution equipment contracts that are fully satisfied upon the completion of construction or installation of $ 97,941 , of which $ 61,273 is due within one year and $ 36,668 is due in more than one year. Construction and distribution equipment contracts include $ 96,626 related to the omni-channel fulfillment center in Kansas City, Kansas. F-25 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Benefit Plans Full and part-time U.S. based employees who are at least 18 years of age are eligible after three months of employment to participate in the Urban Outfitters 401(k) Savings Plan (the “Plan”). Under the Plan, employees can defer 1 % to 25 % of compensation as defined. The Company makes matching contributions in cash of $ 0.50 per employee contribution dollar on the first 6 % of the employee contribution. The employees’ contribution is 100 % vested while the Company’s matching contribution vests at 20 % per year of employee service. The Company’s contributions were $ 7,406 , $ 6,677 and $ 7,094 for fiscal years 2022, 2021 and 2020, respectively. The NQDC provides certain employees who are limited in their participation under the Plan the opportunity to defer compensation as defined within the NQDC. Deferred compensation under the NQDC consists of elective deferral credits, if any, made by the participant and discretionary contribution credits made by the Company. Employee contributions are 100 % vested on the contribution date and the Company’s discretionary contribution is 100 % vested upon crediting to participants’ accounts on an annual basis. The Company made a matching contribution of $ 47 , $ 66 and $ 56 during fiscal years 2022, 2021 and 2020, respectively. The NQDC obligation was $ 11,813 and $ 10,793 as of January 31, 2022 and 2021, respectively. The Company has purchased investments to fund the NQDC obligation. The investments had an aggregate market value of $ 11,813 and $ 10,793 as of January 31, 2022 and 2021, respectively, and are included in “Marketable securities” in the Consolidated Balance Sheets (see Note 4, “Marketable Securities”). Contingencies The Company is 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 the Company’s financial position, results of operations or cash flows. 16. Related Party Transactions Faegre Drinker Biddle & Reath LLP, a law firm, provided general legal services to the Company. Fees paid to Faegre Drinker Biddle & Reath LLP during fiscal 2022, 2021 and 2020 were $ 1,027 , $ 1,018 and $ 495 , respectively. Harry S. Cherken, Jr., a director of the Company, is Senior Counsel at Faegre Drinker Biddle & Reath LLP. Amounts due to Faegre Drinker Biddle & Reath LLP as of January 31, 2022 and 2021 were approximately $ 104 and $ 67 , respectively. Todd R. Morgenfeld, a director of the Company, is Chief Financial Officer and Head of Business Operations of Pinterest, Inc., which provided digital marketing services to the Company in fiscal 2022 and 2021 and is expected to continue to do so in the future. The amount paid to Pinterest, Inc. for such digital marketing services was financially immaterial to Pinterest, Inc. and is unrelated to Mr. Morgenfeld’s compensation from Pinterest, Inc. Mr. Morgenfeld did not provide and was not involved in the provision of digital marketing services by Pinterest, Inc. to the Company, and he does not intend to provide or be involved in the provision of such services by Pinterest, Inc. in the future. The Board of Directors considered these matters in determining Mr. Morgenfeld’s independence. 17. 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 Anthropologie, Bhldn and Terrain brands make up the Anthropologie Group. The Free People and FP Movement brands make up the Free People Group. As of January 31, 2022, there were 261 Urban Outfitters stores, 238 Anthropologie Group stores, 173 Free People Group stores, 10 Menus & Venues restaurants, two Urban Outfitters franchisee-owned stores, and one Anthropologie franchisee-owned store. Each of, Urban Outfitters, the Anthropologie Group and the Free People Group, including their Company-owned and franchisee-owned store and digital channels, and Menus & Venues restaurants, are considered an operating segment. Net sales from the Retail segment accounted for approximately 93.4 %, 93.6 % and 91.6 % of total consolidated net sales for fiscal 2022, 2021 and 2020, respectively. The 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 F-26 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) shopping channels are fully integrated, including retail locations , websites, mobile applications, catalogs and customer contact centers. The Company’s investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. The Company manages and analyzes its performance based on a single Retail segment omni-channel rather than separate channels and believes that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance. 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 Wholesale segment primarily designs, develops and markets young women’s contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People Group and the BDG and other own brand apparel collections under the Urban Outfitters brand. The Urban Outfitters wholesale division was established in fiscal 2019. The Anthropologie brand exited the wholesale business in the third quarter of fiscal 2021. Our Wholesale segment net sales accounted for approximately 5.5 %, 5.7 % and 8.2 % of total consolidated net sales for fiscal 2022, 2021 and 2020, respectively. The 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. 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 and less than 1.0 % of consolidated net sales for fiscal 2021 and 2020, respectively. 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. 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. Other assets are comprised primarily of general corporate assets, which principally consist of cash and cash equivalents, marketable securities, deferred taxes and prepaid expenses, and are typically not allocated to the Company’s segments. The Company accounts for intersegment sales and transfers as if the sales and transfers were made to third parties making similar volume purchases. The accounting policies of the reportable segments are the same as the policies described in Note 2, “Summary of Significant Accounting Policies.” 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: Fiscal Year 2022 2021 2020 Net sales Retail operations $ 4,248,681 $ 3,228,200 $ 3,648,938 Wholesale operations 267,576 216,937 340,869 Nuuly operations 47,724 24,336 8,001 Intersegment elimination ( 15,218 ) ( 19,724 ) ( 14,019 ) Total net sales $ 4,548,763 $ 3,449,749 $ 3,983,789 Income (loss) from operations Retail operations $ 449,453 $ 68,384 $ 256,540 Wholesale operations 32,937 ( 10,180 ) 42,315 Nuuly operations ( 20,150 ) ( 18,367 ) ( 19,639 ) Intersegment elimination 1,643 ( 494 ) 257 Total segment operating income 463,883 39,343 279,473 General corporate expenses (1) ( 55,317 ) ( 35,371 ) ( 47,548 ) Total income from operations $ 408,566 $ 3,972 $ 231,925 (1) General corporate expenses during fiscal 2021 benefitted from the recognition of COVID-19 related government relief packages. F-27 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Fiscal Year 2022 2021 2020 Depreciation expense for property and equipment Retail operations $ 94,099 $ 97,911 $ 109,622 Wholesale operations 547 545 578 Nuuly operations 4,412 3,741 1,350 Total depreciation expense for property and equipment $ 99,058 $ 102,197 $ 111,550 Inventory Retail operations $ 507,510 $ 348,797 Wholesale operations 62,189 40,821 Total inventory $ 569,699 $ 389,618 Rental product, net (1) Nuuly operations $ 32,075 $ 11,857 Total rental product, net $ 32,075 $ 11,857 (1) Rental product, net is included in "Deferred income taxes and other assets" in the Consolidated Balance Sheets. Property and equipment, net Retail operations $ 1,113,294 $ 938,020 Wholesale operations 1,458 2,096 Nuuly operations 30,333 27,306 Total property and equipment, net $ 1,145,085 $ 967,422 Cash paid for property and equipment Retail operations $ 254,921 $ 155,343 $ 189,904 Wholesale operations 69 390 633 Nuuly operations 7,439 3,509 26,896 Total cash paid for property and equipment $ 262,429 $ 159,242 $ 217,433 The following tables summarize net sales and percentage of net sales from contracts with customers by merchandise category: Fiscal Year 2022 2021 2020 Net sales Apparel (1) 2,912,901 2,111,828 2,596,926 Home (2) 852,379 731,237 649,184 Accessories (3) 543,337 411,927 517,219 Other (4) 240,146 194,757 220,460 Total net sales 4,548,763 3,449,749 3,983,789 As a percentage of net sales Apparel (1) 64 % 61 % 65 % Home (2) 19 % 21 % 16 % Accessories (3) 12 % 12 % 13 % Other (4) 5 % 6 % 6 % Total net sales 100 % 100 % 100 % (1) Apparel includes intimates and activewear (2) Home includes home furnishings, electronics, gifts and decorative items (3) Accessories includes footwear, jewelry and handbags (4) Other includes beauty, shipping and handling, the Menus & Venues brand and the Nuuly segment F-28 URBAN OUTFITTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (in thousands, except share and per share data) Apparel, Home, and Accessories are sold through both the Retail and Wholesale segments. Revenue recognized from the Other category is primarily attributable to the Retail segment. 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: Fiscal Year 2022 2021 2020 Net Sales Domestic operations $ 3,950,381 $ 3,040,778 $ 3,485,383 Foreign operations 598,382 408,971 498,406 Total net sales $ 4,548,763 $ 3,449,749 $ 3,983,789 Property and equipment, net Domestic operations $ 965,777 $ 768,440 Foreign operations 179,308 198,982 Total property and equipment, net $ 1,145,085 $ 967,422 F-29