UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM10-K

For the fiscal year ended January 31, 20142017

For the transition period from                  to                 

Commission FileNo. 000-22754

URBAN OUTFITTERS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Registrant’s telephone number, including area code:(215) 454-5500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x☒    No  ¨☐

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨☐    No  x☒

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K. x☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.

Indicate by a checkmark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).    Yes  ¨☐    No  x☒

The aggregate market value of the voting andnon-voting common equity held bynon-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, was $4,876,471,643.$2,672,127,210.

The number of shares outstanding of the registrant’s common stock on March 26, 201427, 2017 was 144,560,953.116,290,358.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Items 10, 11, 12, 13 and 14 is incorporated by reference into Part III hereof from portions of the Proxy Statement for the registrant’s 20142017 Annual Meeting of Shareholders.

TABLE OF CONTENTS

Certain matters contained in this filing with the United States Securities and Exchange Commission (“SEC”) may contain forward-looking statements and are being made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When used in this Annual Report on Form10-K, the words “project,” “believe,” “plan,” “will,” “anticipate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, overall economic and market conditions and worldwide political events and the resultant impact on consumer spending patterns, lowered levels of consumer confidence and higher levels of unemployment, lowered levels of consumer spending resulting from the continuing worldwide economic downturn and related debt crisis, any effects of terrorist acts or war, terrorism and civil unrest, natural disasters or severe weather conditions, increases in labor costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, the departure of one or more key senior executives, import risks, changes to U.S. and foreign trade policies, including potential disruptions and changesthe enactment of tariffs, border adjustment taxes or increases in duties tariffs andor quotas, the closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, risks associated with internet sales, response to new store concepts, our ability to integrate acquisitions, failure of our manufacturers and third-party vendors to comply with our social compliance program, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our filings with the SEC, including those set forth in Item 1A of this Annual Report on Form 10-K.10-K for the fiscal year ended January 31, 2017. We disclaim any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.

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

PART I

Item 1. Business

General

We areoffer lifestyle-oriented general merchandise and consumer products and services through a leading lifestyle specialty retail company that operates under the Urban Outfitters,portfolio of global consumer brands comprised of Anthropologie, Bhldn, Free People, Terrain and Bhldn brands.Urban Outfitters brands and our Food and Beverage division. We also operate a Wholesale segment under the Free People brand. We have over 4346 years of experience creating and managing retail stores that offer highly differentiated collections of fashion apparel, accessories and home goods in inviting and dynamic store settings. Our core strategy is to provide unified environments that establish emotional bonds with the customer. In addition to our retail stores, we offer our products and market our brands directly to the consumer through oure-commerce websites, mobile applications and also through our Urban Outfitters, Anthropologie and Free People catalogs. We have achieved compounded annual sales growth of approximately 11% over the past five years, with sales of approximately $3.1 billion during the fiscal year ended January 31, 2014.

We opened our first store in 1970 near the University of Pennsylvania campus in Philadelphia, Pennsylvania. We were incorporated in Pennsylvania in 1976, and opened our second store in Harvard Square, Cambridge, Massachusetts in 1980. The first Anthropologie store opened in a suburb of Philadelphia in October 1992. We started doing business in Europe in June 1998, with our first European Urban Outfitters store located in London. We opened our first Free People store in the Garden State Plaza Mall in Paramus, New Jersey in November 2002. We opened our first Terrain

garden center in Glen Mills, Pennsylvania in April 2008. We opened our first European Anthropologie store in London in October 2009. In August 2011, we opened our first Bhldn store in Houston, Texas.

In 1984 we established the Free People wholesale division to develop, in conjunction with Urban Outfitters,develops private label apparel lines of young women’s casual wear that could be effectivelyare sold at attractive pricesthrough better department and specialty stores, third-party websites and our own retail stores. The Food and Beverage division includes pizza and casual dining concepts. We have achieved compounded annual sales growth of approximately 7% over the past five years, with sales of approximately $3.5 billion during the fiscal year ended January 31, 2017.

Milestones in our Company’s growth are as follows:

Our omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. All available shopping channels are fully integrated, including stores, websites, mobile applications, catalogs, and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the omni-channel and not the separate store ordirect-to-consumer channels. Store sales are primarily fulfilled from that store’s inventory, but may also be shipped from any of our fulfillment centers or from a different store location if an item is not available at the original store.Direct-to-consumer orders are primarily shipped to our customers through our fulfillment centers, but may also be shipped from any store, or a combination of fulfillment centers and stores depending on the availability of particular items.Direct-to-consumer orders may also be picked up at a store location. Customers may also return certain merchandise purchased throughdirect-to-consumer channels at store locations. As our customers continue to shop across multiple channels, we have adapted our approach towards meeting this demand. Due to the availability of like product in a variety of shopping channels, we source these products utilizing single stock keeping units (“SKUs”) based on the omni-channel demand rather than the demand of the separate channels. These and other technological capabilities allow us to better serve our customers and help us complete sales that otherwise may not have occurred due toout-of-stock positions. As a result of changing customer behavior and the substantial integration of the operations of our store anddirect-to-consumer channels, we manage and analyze our performance based on a single omni-channel rather than separate channels and believe that the omni-channel results present the most meaningful and appropriate measure of our performance. Over the next several years we plan to continue to shift investment to thedirect-to-consumer channel to align with changing customer preferences.

Our fiscal year ends on January 31. All references to our fiscal years refer to the fiscal years ended on January 31 in those years. For example, our fiscal 20142017 ended on January 31, 2014.2017.

Our annual report on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K and amendments to those reports filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor relations website,www.urbanoutfittersinc.comwww.urbn.com/investor-relations, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We will voluntarily provide electronic or paper copies (other than exhibits) of our filings free of charge upon written request. You may also obtain any materials we file with, or furnish to, the SEC on its website atwww.sec.gov.

Our omni-channel strategy enhances our customers’ brand experience by providing a seamless approach to the customer shopping experience. We have substantially integrated all available shopping channels, including stores, websites (online and through mobile devices) and catalogs. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the omni-channel and not the separate store or direct-to-consumer channels. Store sales are primarily fulfilled from that store’s inventory, but may also be shipped from any of our fulfillment centers or from a different store location if an item is not available at the original store. Direct-to-consumer orders are primarily shipped to our customers through our fulfillment centers, but may also be shipped from any store, or a combination of fulfillment centers and stores depending on the availability of a particular item. As our customers continue to shop across multiple channels, we have adapted our approach towards meeting this demand. Due to the availability of like product in a variety of shopping channels, we now source these products utilizing single stock keeping units (“SKUs”) based on the omni-channel demand rather than the demand of the separate channels. These and other technological capabilities allow us to better serve our customers and help us to fill orders that otherwise may have been cancelled due to out-of-stock positions. As a result of changing customer behavior and the substantial integration of the operations of our store and direct-to-consumer channels, we manage and analyze our performance based on a single omni-channel rather than separate channels and believe that the omni-channel results present the most meaningful and appropriate measure of our performance.

Retail Segment

Urban Outfitters. Urban Outfitters targets young adults aged 18 to 28 through its unique merchandise mix, and compelling store environment.environment, websites and mobile applications. We have established a reputation with these young adults, who are culturally sophisticated, self-expressive and concerned with acceptance by their peer group. The product offering includes women’s and men’s fashion apparel, intimates, footwear, beauty and accessories, home goods, activewear and sporting apparelelectronics. A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of product designed internally and gear, as well as an eclectic mix of apartment wares and gifts. Apartment wares range from rugs, pillows and shower curtains to books, candles and novelties.designed in collaboration with third-party brands. Stores average approximately 8,8009,000 square feet of selling space, and typically carryspace. The brand offers an estimated 60,00065,000 to 65,000 SKUs.70,000 SKUs across the Retail segment. Our stores are located in large metropolitan areas, select university communities,

specialty centers and enclosed malls. Our stores accommodate our customers’ propensity not only to shop, but also to congregate with their peers.

As of January 31, 2014,2017, we operated 230242 Urban Outfitters stores, of which 176181 were located in the United States, 1418 were located in Canada and 4043 were located in Europe. We plan to open approximately 13four Urban Outfitters stores and close approximately two Urban Outfitters stores, globally, in fiscal 2015.2018. Urban Outfitters is at or close to our total store count in the United States and Canada. We plan for future new store growth to come from modest expansion internationally. Urban Outfitters operates websites and mobile applications in North America and Europe that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in our stores. Urban Outfitters offers a catalog in North America and Europe offering select merchandise, most of which is also available in our Urban Outfitters stores. Urban Outfitters’ North American and European Retail segment net sales accounted for approximately 36.3%32.5% and 8.1%7.4% of consolidated net sales, respectively, for fiscal 2014.2017.

Anthropologie.Anthropologie Group. The Anthropologie Group consists of the Anthropologie, Bhldn and Terrain brands. We initially operated the Bhldn and Terrain brands as standalone concepts and opened two Bhldn stores and two Terrain garden centers. We ultimately determined that the Bhldn and Terrain brands were complementary to the Anthropologie brand and integrated those brands into the Anthropologie Group during fiscal 2015 and 2016, respectively.

The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. Anthropologie’sThe Anthropologie brand’s unique and eclectic product assortment includes women’s casual apparel and accessories, intimates, shoes, beauty, home furnishings and a diverse array of gifts and decorative items. The brand offers registry services through

its website and mobile application and in all of its stores throughout the United States, allowing our customers to create gift registries for any occasion. In addition, the brand offers catalogs in North America and Europe that market select merchandise, most of which is also available in Anthropologie brand stores.

The Bhldn brand emphasizes every element that contributes to a wedding. The brand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations.

The Terrain brand is designed to appeal to women and men interested in a creative, sophisticated outdoor living and gardening experience. Terrain’s product offering includes lifestyle home furnishings range from furniture, rugs, lighting and garden products, antiques, to table top items, beddinglive plants, flowers, wellness products and gifts.accessories.

As of January 31, 2017, we operated 225 Anthropologie Group stores, of which 201 were located in the United States, 13 were located in Canada and 11 were located in Europe. Stores average approximately 7,1008,000 square feet of selling space, typically carryspace. The Anthropologie Group offers an estimated 45,00085,000 to 50,00090,000 SKUs andacross the Retail segment. Our stores are located in specialty retail centers, upscale street locations and enclosed malls. As of January 31, 2014, we operated 187 Anthropologie stores, of which 174 were located in the United States, nine were located in Canada and four were located in Europe. We plan to open approximately 13four Anthropologie Group stores globally,and close approximately two Anthropologie Group stores, all in North America, in fiscal 2015.2018. Some of the new stores will be expanded format stores, that will include all Anthropologie Group brands and allow us to present an expanded assortment of products in certain categories such as petites, jewelry and accessories, footwear, intimates, beauty and home furnishings. The Anthropologie Group is at or close to our total store count in the United States and Canada. Plans for future growth in those markets will come from relocation or the conversion of our existing stores to expanded format stores. We plan for future new store growth to come from modest expansion internationally. The Anthropologie Group operates websites in North America and Europe and a mobile application in North America that capture the spirit of the brandits brands by offering a similar yet broader selection of merchandise as found in our stores. The Anthropologie also offers a catalog in North America and Europe that markets select merchandise, most of which is also available in our Anthropologie stores. Anthropologie’sGroup’s North American and European Retail segment net sales accounted for approximately 39.8%39.3% and 1.2%1.5% of consolidated net sales, respectively, for fiscal 2014.2017.

Free People. Our Free People retail stores primarily offer private label branded merchandise targeted to young contemporary women aged 25 to 30. Free People offers a unique merchandise mix of casual women’s apparel, intimates, shoes, activewear, accessories, beauty and wellness, home products and gifts. Free People retail stores average approximately 1,5002,000 square feet of selling space, carry upspace. The brand offers an estimated 15,000 to 13,00020,000 SKUs andacross the Retail segment. Our stores are located in enclosed malls, upscale street locations and specialty retail centers. The retail channels of Free People expose both our wholesale accounts and retail customers to the full Free People product assortment and store environment.

As of January 31, 2014,2017, we operated 90127 Free People stores, of which 88121 were located in the United States and twosix were located in Canada. We plan to open approximately 12ten new Free People stores and close approximately three Free People stores in fiscal 2015.2018, all in North America. Some of our new stores will be expanded format stores that allow us to present an expanded assortment of intimates, shoes, party dresses and activewear. Free People has opportunity for additional new store count in the United States and Canada. In addition, we plan for future new store growth to come from modest expansion internationally. Free People operates websites and mobile applications in North America, Europe and EuropeAsia that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in our stores, as well as substantially all of the Free People wholesale offerings. Free People also offers a catalog offering select merchandise, most of which is

also available in our Free People stores. Free People’s Retail segment net sales accounted for approximately 7.7%10.6% of consolidated net sales for fiscal 2014.2017.

Terrain.Food and Beverage. Terrain is designed to appeal to women and men interested in a creative, sophisticated outdoor living and gardening experience. Terrain creates a compelling shopping environment through its large and free standing sites, inspired by the “greenhouse.” EachIn February 2016, we acquired six restaurants as part of our Terrain garden centers operates with an averageacquisition of approximately 18,000 square feetthe Vetri Family group of enclosed selling space as well as a large outdoor seasonal selling space used for its offering of lifestyle home and garden products,restaurants, which were combined with antiques, live plants, flowers, wellness productsour existing restaurants to form our Food and accessories. Both Terrain locations offerBeverage division. The Food and Beverage division provides a full-service restaurantdining experience that focuses on excellence in food, beverage, and coffee bar. Terrain also offers a variety of landscape and design service solutions to our customers.service. As of January 31, 2014,2017, we operated two Terrain garden centers

12 restaurants, all of which were located in the United States. We plan to open one restaurant in fiscal 2018. The Food and a website that offers customers a portion of the product assortment found at the Terrain garden centers. Terrain’s Retail segmentBeverage division net sales accounted for less than 1.0% of consolidated net sales for fiscal 2014.

Bhldn. The Bhldn brand emphasizes every element that contributes to a wedding. Bhldn offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations. The stores average approximately 3,300 square feet of selling space and are located in a specialty retail center and an upscale street location. As of January 31, 2014, we operated two Bhldn stores and a website that offers customers access to all product offerings of the Bhldn brand. We also operate shop-within-shop locations within our Anthropologie stores that offer a comparable product assortment to our standalone stores and website. Bhldn’s Retail segment net sales accounted for less than 1.0% of consolidated net sales for fiscal 2014.2017.

Wholesale Segment

The Free People wholesale divisionWholesale segment was established in 1984 to develop, in conjunction with Urban Outfitters, private label apparel lines of young women’s casual wear that could be effectively sold at attractive prices in Urban Outfitters stores. In order to achieve minimum production lots, Free People wholesalestores and later began selling to other retailers throughout the United States.better department and specialty stores worldwide. We distribute our Free People products in certain department stores using a shop-within-shop sales model. We believe that the shop-within-shop model allows for a more complete merchandising of our Free People products, and will give us greater freedom in differentiating the presentation of our products and further strengthening of our brandthe brand’s image. During fiscal 2014,2017, Free People’s range of tops, bottoms, sweaters, dresses, intimates, shoes and dressesactivewear were sold worldwide through approximately 1,4001,900 better department and specialty stores worldwide, including Macy’s, Nordstrom, Bloomingdale’s, Lord & Taylor, Selfridges,Selfridge’s, third-party websites and our own Free People stores, and in Japan through an exclusive distribution and marketing agreement with World Co., Ltd.stores. We monitor the styles and products that are popular with our wholesale customers to give us insight into current fashion trends, which helpshelping us to better serve our retail customers. Free People presently maintains wholesale sales and showroom facilities are located in New York City,London, Los Angeles, Chicago London and Tokyo.New York City. Free People’s wholesale sales accounted for approximately 5.8%8.1% of consolidated net sales for fiscal 2014.2017.

Store Environment

We create a unified environment in our stores that establishes an emotional bond with the customer. Every element of the environment is tailored to the aesthetic preferences of our target customers. Through creative design, much of the existing retail space is modified to incorporate a mosaic of fixtures, finishes and revealed architectural details. In our stores, merchandise is integrated into a variety of creative vignettes and displays designed to offer our customers an entire look at a distinct lifestyle. This dynamic visual merchandising and display technique provides the connection among the store design, the merchandise and the customer. Essential components of the ambiance of each store may include playing music that appeals to our target customers, using unique signage and employing a staff that understands and identifies with the target customer.

Our Urban Outfitters, Anthroplogie,Anthropologie Group, and Free People stores are primarily located in upscale street locations, free-standing locations, enclosed shopping malls, and specialty retail centers. Our two Terrain garden centers are both free-standing locations. Our Bhldn stores are located in a specialty retail centerWe plan for our store environment and an upscale street location.location strategy to remain consistent over the next several years.

For our Anthropologie, Urban OutfittersBuying and Free People stores, we plan to implement a location expansion strategy in fiscal 2015 similar to our strategy in fiscal 2014.

BuyingDesign Operations

Maintaining a constant flow of fresh and fashionable merchandise for our Retail segment is critically important to our ongoing performance. We maintain our own buying groups that select and develop products to satisfy our target customers and provide us with the appropriate amount and timing of products offered. Merchandise managers may supervise several buyers and assistant buyers. Our buyers stay in touch with the evolving tastes of their target customers by shopping at major trade markets, attending national and regional trade shows and staying current with mass media influences, including social media, music, video, film, magazines and pop culture.

Merchandise

Our Urban Outfitters stores, websites and mobile applications and catalogs offer a wide array of eclectic merchandise, including women’s and men’s fashion apparel, intimates, footwear, beauty and accessories, sporting apparelhome goods, activewear and gearelectronics. Our Anthropologie brand stores, websites, mobile application and an eclectic mix of apartment wares and gifts. Productcatalog product offerings in our Anthropologie stores, on our websites and mobile applications and within our catalogs include women’s casual apparel and accessories, intimates, shoes, as well asbeauty, home furnishings and an eclectica diverse array of gifts and decorative accessories for the home, garden, bed and bath. Our Free People retail stores, websites, mobile applications and catalog offer a showcase for casual women’s apparel, intimates, shoes, accessories and gifts, primarily developed and designed by our Free People wholesale division. Our Terrain garden centers and website offer lifestyle home and garden products combined with antiques, live plants, flowers, wellness products and accessories.items. Our Bhldn retail stores and website offerbrand offers a curated collection of heirloom quality wedding gowns, bridesmaid frocks, party dresses, assorted jewelry, headpieces, footwear, lingerie and decorations. Our Terrain brand product offerings include lifestyle home and garden products, antiques, live plants, flowers, wellness products and accessories. Our Free People retail stores, websites, mobile applications and catalogs offer a showcase for casual women’s apparel, intimates, shoes, activewear, accessories, beauty and wellness, home products and gifts. Our merchandise is continuously updated to appeal to our target customers’ changing tastes and is supplied by a large number of domestic and foreign vendors, with new shipments of merchandise arriving at our stores and fulfillment centers almost daily.

The wide breadth of merchandise offered by our Retail segment includes a combination of national third-party brands, as well asexclusive product designed in collaboration with third-party brands and exclusive merchandise developed and designed internally by our brands. This selectioncombination allows us to offer fashionable merchandise and to differentiate our product mix from that of traditional department stores, as well as that of other specialty anddirect-to-consumer retailers. Merchandise designed and developed by our brands generally yields higher gross profit margins than third-party branded merchandise, and helps to keep our product offerings current and unique.

The ever-changing mix of products available to our customers allows us to adapt our merchandise to prevailing fashion trends, and together with the inviting atmosphere and experience of our stores and websites, encourages our core customers to visit our shopping channels frequently.

We seek to select price points for our merchandise that are consistent with the spending patterns of our target customers. As such, our stores carry merchandise at a wide range of price points that may vary considerably within product categories.

Store Operations

We have organized our retail store operations by brand into geographic areas or districts that each have a district manager. District managers are responsible for several stores and monitor and supervise

individual store managers. Each store manager is responsible for overseeing the daily operations of one of our stores. In addition to a store manager, the staff of a typical Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn store includes a combination of

some or all of the following positions: a visual manager, several department managers and full and part-time sales and visual staff. The staff of a typical Anthropologie brand store may also include a customer care manager who helps tailor the shopping experience to the needs of Anthropologie’s target customers. A Terrain garden centerAn Anthropologie Group store may also include merchandise care and maintenance staff. The staff of a Bhldn store also includes a product, bridal and event manager, appointment stylist, a bridal category specialist and a category specialist.merchandise care and maintenance staff to support the Bhldn and Terrain brands.

An essential requirement for the success of our stores is our ability to attract, train and retain talented, highly motivated store managers, visual managers and other key employees. In addition to management training programs for both newly hired and existing employees, we have a number of retention programs that offer qualitative and quantitative performance-based incentives to district-level managers, store-levelstore managers and full-time sales associates.

Marketing and Promotion

We believe we have highly effective marketing tools in our websites, mobile applications, catalogs, email campaigns and social media. We refresh this media as frequently as daily to reflect the most cutting edge changes in fashion and culture. We also believe that highly visible store locations, broad merchandise selection and creative and visual presentation within our stores, on our websites and on our mobile applications are key enticements forentice our customers to explore these channels and purchase merchandise. Consequently, we rely on these factors,elements, as well as the brand recognition created by our direct marketing activities, to draw customers to our omni-channel operations, rather than traditional forms of advertising such as print, radio and television media. Marketing activities for each of our brand’s retail store conceptsstores may include special event promotions and a variety of public relations activities designed to create community awareness of our stores and products. We also are active in social media and blogs. We believe that the traditional method of aone-way communication to customers is no longer enough. We believe that by starting a conversation and interacting directly with our customers, most notably via Facebook, Twitter, Pinterest, Instagram, Snapchat and our own mobile applications, we are more effective at understanding and serving their fashion needs. We also believe that our blogs continue this conversation. Not only do our blogs allow us to communicate what inspires us, they allow our customers to tell us what inspires them. This fosters our relationships with our customers and encourages them to continue shopping with us.

During fiscal 20142017, we circulated approximately 29.422.4 million catalogs across allmultiple brands. We plan for our catalog circulation to remain consistentdecrease in fiscal 2015.2018 as we increase our emphasis on digital marketing.

Suppliers

To serve our target customers and to recognize changes in fashion trends and seasonality, we purchase merchandise from numerous foreign and domestic vendors.vendors, the majority of which is settled in U.S. dollars. We also have arrangements with agents and third-party manufacturers to produce our private label merchandise. To keep our future inventory levels lean, we plan to quicken our supply chain capabilities, place more frequent orders of lower quantities and lower our weeks of supply. To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their merchandise, any event causing a disruption of imports, such as the imposition of import restrictions,increased security or regulatory requirements applicable to imported goods, war, public health concerns, acts of terrorism, natural disasters, port security considerations or labor disputes,

financial or political instability in any of the countries in which goodsmerchandise we purchase areis manufactured, changes to U.S. or foreign trade restrictions inpolicies, including the formenactment of tariffs, border adjustment taxes, or increases in duties or quotas, or both, disruption in the supply of fabrics or raw materials, increases in the cost of fuel or

decreases in the value of the U.S. dollar relative to foreign currencies could adversely affect our business. During fiscal 2014,2017, we purchased merchandise from approximately 4,700 vendors.5,000 vendors located throughout the world. No single vendor or manufacturer accounted for more than 10% of merchandise purchased during that time. While certain of our vendors have limited financial resources and production capabilities, we do not believe that the loss of any one vendor would have a material adverse effect on our business.

Company Operations

Distribution.We own a 291,000 square foot distribution facility in Lancaster County,Gap, Pennsylvania that receives and distributes approximately half of our retail store merchandise. This facility provides distribution services to our east coast retail stores at a favorable freight cost per unit, and provides for faster turnaround from selected vendors. This facility has a computerized material handling system and is located approximately 65 miles from our home officesmerchandise in Philadelphia, Pennsylvania.North America. We also lease a 214,500 square foot distribution center located in Reno, Nevada, that receives and distributes the remaining half of our retail store merchandise. This facility provides distribution services to our west coast retail stores at a favorable freight cost per unit, and provides for faster turnaround from selected vendors.

We leaseown and operate a 459,0001,000,000 square foot fulfillment center located in Trenton, South Carolina. This facility, which utilizes an automated material handling system, houses merchandise distributed through ourGap, Pennsylvania. Primary operations at the center include Retail and Wholesale segments. The center accommodates direct-to-consumersegment fulfillment related functions,services, including inventory warehousing, receiving and customer shipping.

In September 2012 we completed construction onWe also own and operate a 463,000 square foot fulfillment center located in Reno, Nevada. This facility which we own and operate, is used primarily to house and distribute merchandise to our western United Statesdirect-to-consumer customers, significantly improving our fulfillment capability. The facility also includes automated material handling systems as well as a data center.

We lease separate distribution and fulfillment facilities each located in Rushden, England. Our 98,000 square foot distribution facility supports our entire European store base and has an automated material handling system. Ourour 142,000 square foot fulfillment facility which supports our entire Europeandirect-to-consumer channel, has an advanced cross belt sorter. channel. We believe both of these facilities will support our European growthoperations for the next several years.

Information SystemsSystems.. Very early in our growth, we recognized the need for high-quality information in order to manage merchandise planning, buying, inventory management and control functions. We invested in a retail software package that metmeets our processing and reporting requirements. We utilizepoint-of-sale register systems connected by a digital subscriber linesecure data network to our home offices. Additionally, many of our stores have mobilepoint-of-sale devices whichthat have virtually the same functionality as our cash registers. These systems provide for register efficiencies, timely customer checkout and instant back office access to register information, as well as daily updates of sales, inventory data and price changes. Ourdirect-to-consumer channel, which includes the Anthropologie, Urban Outfitters, Free People, Terrainour websites, mobile applications and Bhldn retail websites and the Anthropologie, Free People and Urban Outfitters catalogs, maintains separate software systems that manage the merchandise and customer information for ourin-house customer contact center and fulfillment functions. The Free People wholesale divisionOur Wholesale segment uses a separate software system for customer service, order entry, and allocations, production planning and inventory management. We have a

second fully redundant data center located in our Reno fulfillment facilitycenter that functions as a redundant hostingdisaster recovery site for ourdirect-to-consumer, and data communication and other business critical systems. We have contracted with a nationally recognized company to provide disaster recovery services with respect to our key systems.

Competition

TheOur Retail and Wholesale segments compete with individual and chain fashion specialty retailstores as well as department stores, both in stores and the wholesale businesses are eachonline, in highly competitive in both the domestic and international markets. Our Retail segment competes on the basis of, among other things, the location of our stores, stores;

website, mobile applicationsapplication and catalog presentation,presentation; website design,and mobile application design; the breadth, quality, style, price and availability of our merchandise and the level of customer service offered. Although we believe that the eclectic mix of products and ourthe unique store and websitedigital experiences offered by our Retail segment help differentiate us, it also means that our Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn stores compete against a wide variety of smaller, independent specialty retailers, as well as department stores and national specialty chains. ManySome of our competitors have substantially greater name recognition as well as financial, marketing and other resources. Our Anthropologie Group and Free People and Bhldn stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers. In addition, some of our suppliersthird-party vendors offer products directly to consumers and certain of our competitors.

Along with certain Retail segment competitive factors noted above, other key competitive factors for ourdirect-to-consumer channel include the success or effectiveness of merchandise delivery, website and mobile application availability, the effectiveness of our merchandise delivery and customer lists. Ourdirect-to-consumer channel competes against numerous websites, mobile applications and catalogs, which may have a greater volume of circulation and web traffic or more effective marketing through online media and social networking sites.

Our Free People wholesale businessWholesale segment competes with numerous wholesale companies based on the basis of quality, price and fashion of our wholesale productmerchandise offerings. Many of our wholesale business competitors’ productsWholesale segment competitors have a wider product distribution network. In addition, certain of our wholesale competitors have greater name recognition and greater financial, marketing and other resources.resources than us.

Trademarks and Service Marks

We are the registered owner in the United States of certain service marks and trademarks, including, but not limited to “Urban Outfitters,” “Anthropologie,” “Free People,” “Bhldn,” “Terrain,” “BDG,” “Co-Operative,” “Deletta,” “Ecote,” “Eloise,” “Intimately Free People,” “Odille,” “Urban Renewal”“Vetri” and “Urbn.com.“BDG.” Each mark is renewable indefinitely, contingent upon continued use at the time of renewal. In addition, we currently have pending registration applications with the U.S. Patent and Trademark Office covering certain other marks. We also own marks that have been registered in foreign countries, and have applications for marks pending in additional foreign countries. We regard our marks as important to our business due to their name recognition with our customers. We are not aware of any valid claims of infringement or challenges to our right to use any of our marks in the United States.

Employees

As of January 31, 2014,2017, we employed approximately 22,90024,000 people, approximately 37%43% of whom were full-time employees. The number of part-time employees fluctuates depending on seasonal

needs. Of our total employees, approximately 3%1% work in the Wholesale segment and the remaining 97%99% work in our Retail segment. None ofExcept in certain international locations, our employees are not covered by a collective bargaining agreement, and weagreement. We believe that our relations with our employees are excellent.

Financial Information about Operations

We aggregate our operations into two reportable segments, the Retail segment and the Wholesale segment. See Note 15,16, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form10-Kfor additional information.

Financial Information about Geographical Areas

See Note 15,16, “Segment Reporting,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form10-K for information regarding net sales and long-lived assets from domestic and foreign operations and long-lived assets.operations.

Seasonality

Our business is subject to seasonal fluctuations in net sales and operatingnet income, with a more significant portion typically realized from August 1 to December 31in the second half of each year (the back-to-school andpredominantly due to theyear-end holiday periods).period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory. See Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality and Quarterly Results for additional information.

Item 1A. Risk Factors

Our reportable segments are sensitive to economic conditions, consumer spending, shifts in fashionmarket disruptions and industry and demographic conditions.other business factors.

We are subject to seasonal variations and face numerous business risk factors. Consumer purchases of discretionary retail items and specialty retail products, including our products, may decline during recessionary periods and also may decline at other times when disposable income is lower. A prolonged economic downturn could have a material adverse impact on our business, financial condition or results of operations. There is a risk that consumer sentiment may decline due to economic and/or geo-political factors, which could negatively impact our financial position and results of operations.

Our performance is subject to worldwide economic conditions and their impact on levels of consumer spending remains uncertain and may remain depressed for the foreseeable future.uncertain. Some of the factors impacting discretionary consumer spending include general economic conditions, wages and employment, consumer debt, reductions in net worth based on severe market declines, residential real estate and mortgage markets, taxation, fuel and energy prices, interest rates, consumer confidence, the European political and economic crisiscrises and other macroeconomic factors. Consumer purchases of discretionary items, including our merchandise, generally decline during recessionary periods and other periods where disposable income is adversely affected. The current economyThese factors may continue to affect consumer purchases of our merchandise and adversely impact our results of operations and continued growth. The economic conditions may also affect the number of specialty retail businesses and their ability to purchase merchandise from our Wholesale segment. It is difficult to predict how long the current uncertainnear term and/or future economic, capital and credit market conditions will continue and what impact they will have on our business.

In addition, there is a risk that consumer sentiment may decline as a result of market disruptions caused by severe weather conditions, natural disasters, health hazards, terrorists activities, political crises or other major events or the prospect of these events which could negatively impact our financial position and results of operations. The recovery we receive under any insurance we maintain for these purposes may be delayed or may be insufficient to fully offset potential losses.

We rely heavily on our ability to identify changes in fashion.

Customer tastes and fashion trends are volatile and can change rapidly. Our success depends in part on our ability to effectively predict and respond to changing fashion tastes and consumer demands, and to translate market trends into appropriate, saleable product offerings. Our inabilityIf we are unable to effectively determine these changespredict or respond to changing styles or trends successfully or if we misjudge the market for products or new product lines, our sales may leadbe impacted and we may be faced with a substantial amount of unsold inventory or missed opportunities. In response, we may be forced to higher seasonalrely on additional markdowns or promotional sales to dispose of excess, slow-moving inventory, levels and a future need to increase markdowns to liquidatewhich could decrease our inventory.revenues or gross profit margins. Compared to our Retail segment, our Wholesale segment is more sensitive to changes in fashion trends because of longer lead times in the manufacturing and sale of its apparel. Our fashion decisions, if unsuccessfully forecasted, constitute a material risk and may have an adverse effect on our financial condition and results of operations.

We may not be successful in expanding our business, opening new retail stores or extending our existing store leases.

Our growth strategy depends on our ability to open and operate new retail stores on a profitable basis. We also must be ablebasis and to effectively extend our existing store leases. As part of this strategy, we plan to open

additional expanded format Anthropologie Group and Free People stores that will allow us to present a broader product offering and to expand certain categories. There can be no assurance that these stores will achieve long term success.

Our operating complexity will increase as our store base grows, and we may face challenges in managing our future growth. Such growth will require that we continue to expand and improve our operating capabilities, and expand, train and manage our employee base. We may be unable to hire and train a sufficient number of qualified personnel or successfully manage our growth.

Our expansion prospects also depend on a number of other factors, many of which are beyond our control, including, among other things,

competition, the availability of financing for capital expenditures and working capital requirements and the availability of suitable sites for new store locations on acceptable lease terms. There can be no assurance that we will be able to achieve our store expansion goals, nor canis there be any assurance that our newly opened stores will achieve revenue or profitability levels comparable to those of our existing stores in the time periods estimated by us, or at all. If our stores fail to achieve, or are unable to sustain, acceptable revenue, profitability and profitabilitycash flow levels, we may incur additional store asset impairment charges, significant costs associated with closing those stores.stores or both, which could adversely affect our results of operations and financial condition.

Existing and increased competition in the specialty retail and wholesale apparel industries may reduce our net revenues, profits and market share.

The specialty retail and wholesale apparel industries are each highly competitive. Our retail stores compete on the basis of, among other things, location, the breadth, quality, style, and availability of merchandise; the level of customer service offered and merchandise price. Our Anthropologie, Free People and Bhldn stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers. Additionally, the internet and other new technologies facilitate competitive entry and comparison shopping in our Retail segment. We offer an omni-channel shopping experience for our customers and use social media and mobile applications as a way to interact with them to enhance their shopping experiences. Omni-channel retailing is constantly evolving and we must keep pace with changing customer expectations and new developments by our competitors. In addition, some of our third-party vendors offer products directly to consumers and certain of our competitors. Our Wholesale segment competes with numerous wholesale companies, many of whose products have a wider distribution, based on the quality, fashion and price of its product offerings. Many of our competitors have greater name recognition and greater financial, marketing and other resources than us. We cannot assure you that we will continue to be able to compete successfully against existing or future competitors. Due to a difficult economic and retail environment our competitors may force a markdown or promotional sales environment which could impair our ability to achieve our historical profit margins. Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations.

We may not be successful expanding our business internationally.

Our current growth strategy includes plans to continue to open new stores, expand our digital marketing and grow our wholesale customer base and retail presence internationally over the next

several years. We have limited prior experience operatingAs we seek to expand internationally, where we face competition from more established international competitors. InternationalIn addition, international stores have different operational characteristics, including employment and labor, transportation, logistics, real estate and legal requirements. Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ internationally, and as a result, sales of our merchandise may not be successful, or the margins on those sales may not be in line with those we currently anticipate. Additionally, our ability to conduct business internationally may be adversely impacted by political and economic risks, as well as the global economy. Any differenceschallenges that we encounter as we expand internationally may divert financial, operational and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations.

To the extent we expand internationally under franchise or joint venture arrangements, we may face counterparty and/or operational risk. In addition, we are increasingly exposed to foreign currency exchange rate risk with respect to our revenue, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We currently do not utilize hedging instruments to mitigate these foreign currency risks. In the future, however we may initiate strategies to hedge certain foreign currency risks that may not succeed in offsetting all of the negative impact of foreign currency exchange rate movements on our business and results of operations.

As we continue to expand our international operations, we are subject to certain U.S. laws, including the Foreign Corrupt Practices Act, as well as the laws of the foreign countries in which we operate. We are required to use all commercially reasonable efforts to ensure compliance with these laws. Violations of these laws could subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results.

Existing and increased competition in the specialty retail, direct-to-consumer and wholesale apparel businesses may reduce our net revenues, profits and market share.

The specialty retail segment and the wholesale apparel businesses are each highly competitive. Our retail stores compete on the basis of, among other things, location, the breadth, quality, style, and availability of merchandise and the level of customer service offered and merchandise price. Our Anthropologie, Free People and Bhldn stores also face competition from small boutiques that offer an individualized shopping experience similar to the one we strive to provide to our target customers. Additionally, the internet and other new technologies facilitate competitive entry and comparison shopping in our Retail segment. We strive to offer a multichannel shopping experience for our direct-to-consumer customers and use social media and mobile applications as a way to interact with our customers and enhance their shopping experiences. Multichannel retailing is rapidly evolving and we must keep pace with changing customer expectations and new developments by our competitors. In addition, some of our suppliers offer products directly to consumers and certain of our competitors. Our Free People wholesale business competes with numerous wholesale companies based on the quality, fashion and price of its wholesale product offerings, many of whose products have a wider distribution. Many of our competitors have substantially greater name recognition as well as financial, marketing and other resources. We cannot assure you that we will continue to be able to compete successfully against existing or future competitors. Due to difficult economic conditions our

competitors may force a markdown or promotional sales environment which could hurt our ability to achieve our historical profit margins. Our expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could have a material adverse effect on our business, financial condition and results of operations.

Our business depends on effective marketing and high customer traffic.

We have many initiatives in our marketing programs particularly with regard to our websites, mobile applications and mobile applications.our social media presence. If our competitors increase their spending on marketing, if our marketing expenses increase, if our marketing becomes less effective than that of our competitors, or if we do not adequately leverage technology and data analytics capabilities needed to generate concise competitive insight, we could experience a material adverse effect on our results of operations. A failure to sufficiently innovate or maintain adequate and effective marketing strategies could inhibit our ability to maintain brand relevance and drive increased sales. In addition, U.S. and foreign laws and regulations that make it more difficult or costly to digitally market, such as the EU General Data Protection Regulation, may impact our ability to maintain brand relevance and drive increased sales.

We depend on key personnel and may not be able to retain or replace these employees or recruit additional qualified personnel, which would harm our business.

We believe that we have benefited substantially from the leadership and experience of our senior executives, including ourco-founder, Chairman of the Board and Chief Executive Officer, and President, Richard A. Hayne. The loss of the services of any of our senior executives could have a material adverse effect on our business and prospects, as we may not be able to find suitable management personnel to replace departing executives on a timely basis. In addition, if our senior executives do not fully integrate within the structure of our management team and core business, we may be adversely affected. We do

not have an employment agreement with Mr. Hayne,our Chief Executive Officer or any of our other key personnel. In addition, as our business expands, we believe that our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for personnel in the retail industry. Our inability to meet our staffing requirements in the future could impair our ability to increase revenue and could otherwise harm our business.

Increases in labor costs, including wages, could adversely impact our operational results, financial condition, and results of operations.

Our retail store operations are subject to laws governing such matters as minimum wages, working conditions and overtime pay. As minimum wage rates increase or related laws and regulations change, we may need to increase not only the wage rates of our minimum wage employees, but also the wages paid to our other hourly or salaried employees. Any increase in the cost of our labor could have an adverse effect on our operating results, financial condition and results of operations. In addition, wage actions by other retailers may require us to increase wage rates in order to attract and retain talented employees. Labor shortages, increased employee turnover and our inability to successfully implement our expanded format store strategy could also increase our labor costs. This in turn could lead us to increase prices, which could adversely impact our sales. We are also subject to risks related to other store expenses and operational costs. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our profitability may decline.

We could be materially and adversely affected if any of our distribution or fulfillment centers are closed.damaged or closed or if their operations are diminished.

We operate six distribution and fulfillment facilities worldwide to support our Retail and Wholesale segments in the United States, Western Europe and Canada, and forincluding the fulfillment of catalog, website and websitemobile application orders around the world. We also utilize a third-party distributor for certain home furnishings. The merchandise purchased for our United States and Canadian retail store operations is shipped directly to our distribution centers in Lancaster County,Gap, Pennsylvania, and Reno, Nevada. Merchandise purchased for ourdirect-to-consumer operations is shipped directly to our fulfillment centers in Trenton, South CarolinaGap, Pennsylvania and Reno, Nevada. Merchandise purchased for our wholesale operations is shipped directly to our fulfillment center in Trenton, South Carolina.Gap, Pennsylvania. The merchandise purchased for our Western Europe retail anddirect-to-consumer operations is shipped to Rushden, England. IfDamage to, or disruption of the operations at, any of these facilities due to work stoppages, system failures, accidents, economic or weather conditions, natural disasters, demographic and population changes, as well as other unforeseen events and circumstances could have a material adverse effect on our financial condition, results of operations or cash flows. In addition, if any of our distribution or fulfillment centers were to close unexpectedly or operate significantly below historical efficiency levels for any reason,an extended period of time, the other distribution centers may not be able to support the resulting additional distributionvolume demands. As a result, we could incur significantly higher costs and longer lead times associated with distributing our products to our stores and customers during the time it takes for us tore-open or replace the center.

We rely significantly on international sources of production.

We receive a substantial portion of our apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources.sources,

the majority of which is settled in U.S. dollars. To the extent that our vendors are located overseas or, in the case of third-party vendors, rely on overseas sources for a large portion of their products, any event causing a disruption of imports, including the imposition of import restrictions,increased security or regulatory requirements applicable to imported goods, war, public health concerns, acts of terrorism, and natural disasters and port security considerations or labor disputes could adversely affect our business. New initiatives may be proposed that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, could increase the cost of products purchased from suppliers in such countries or restrict the importation of products from such countries. Changes to U.S. and foreign trade policies, including the enactment of tariffs, border adjustment taxes or increases in duties or quotas applicable to the products we sell could also affect the importation of those products and could increase the cost and reduce the supply of products available to us. If imported goodsforeign sourced products become difficult or impossible to bring into the United States due to significant labor issues, such as strikes at any of our ports in the United States, and if we cannot obtain such merchandise from other sources at similar costs, our sales and gross profit margins may be adversely affected. The flow of merchandiseproducts from our vendors could also be adversely affected by financial or political instability in any of the countries in which the goodsproducts we purchase are manufactured, if the instability affects the production or export of merchandise from those countries. Moreover, in the event of a significant disruption in the supply of the fabrics or raw materials used by our vendors in the manufacture of our products, our vendors may not be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all. Trade restrictions in the form of tariffs or quotas, or both, applicable to the products we sell could also affect the importation of those products and could increase the cost and reduce the supply of products available to us. The cost of fuel is a significant component in transportation costs, therefore, increases in the petroleum productsprices can adversely affect our gross margins.profit. In addition, decreases in the value of the U.S. dollar relative to foreign currencies could increase the cost of products we purchase from overseas vendors.

On August 22, 2012, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd-Frank Act”), the SEC adopted new requirements for companies that manufacture products that contain certain minerals and metals, known as conflict minerals. Some of these conflict minerals are commonly used in many products, and may be used in some of the products we offer. These requirements will generally require companies to investigate, disclose and report annually whether or not conflict minerals, if used in the manufacture of the products offered by the company, originated from the Democratic Republic of Congo or adjoining countries. The implementation of these requirements could adversely affect the sourcing, availability and pricing of conflict minerals used in the manufacture of certain of the products we offer. In addition, we may incur additional costs to comply with the disclosure requirements.

Our operating results fluctuate from period to period.

Our business experiences seasonal fluctuations in net sales and operating income, with a more significant portion of operatingnet income typically realized duringin the five-month period from August 1 to December 31second half of each year (the back-to-school andpredominantly due to theyear-end holiday periods).period. Historically, and consistent with the retail industry, this seasonality also impacts our working capital requirements, particularly with regard to inventory. Any decrease in sales or marginsgross profit during this period, or in the availability of working capital needed in the months preceding this period, could have a more material adverse effect on our business, financial condition and results of operations than in other periods. Seasonal fluctuations also affect our inventory levels, as we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant amount of inventory, especially before the back-to-school and holiday selling periods. If we are not successful in selling our inventory during this period, we may be forced to rely on markdowns or promotional sales to dispose of the excess inventory or we may not be able to sell the inventory at all, which could have a material adverse effect on our business, financial condition and results of operations.

We may be unable to protect our trademarks and other intellectual property rights.

We believe that our trademarks and service marks are important to our success and our competitive position due to their name recognition with our customers. We devote substantial

resources to the establishment and protection of our trademarks and service marks on a worldwide basis. We are not aware of any valid claims of infringement or challenges to our right to use any of our trademarks and service marks in the United States. Nevertheless, there can be no assurance that the actions we have taken to establish and protect our trademarks and service marks will be adequate to

prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of the trademarks, service marks and intellectual property of others. Also, others may assert rights in, or ownership of, our trademarks and other intellectual property and we may not be able to successfully resolve these types of conflicts to our satisfaction.

In addition, we face additional risks as we continue to expand our business outside the United States. Effective trademark and service mark protection may not be available in every country in which we sell our products, or the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. This could increase the risk that our intellectual property is misappropriated. We may also encounter jurisdictions in which one or more third parties have apre-existing trademark registration. This may prevent us from registering our own marks in those jurisdiction, and could adversely affect our ability to effectively operate our business or market certain products.

War, acts of terrorism, civil unrest or the threat of eitherother violence may negatively impact availability of merchandise and/or otherwise adversely impact our business.

In the event of war, terrorism, civil unrest or acts of terrorism, or if either are threatened,other violence, our ability to obtain merchandise available for sale in our stores or on our websites may be negatively impacted. A substantial portion of our merchandise is imported from other countries, see ““—We rely significantly on international sources of production.”If commercial transportation is curtailed or substantially delayed, our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution and fulfillment centers and stores, as well as fulfilling catalog, website and websitemobile application orders. Our stores are located in public areas where large numbers of people typically gather. Terrorist attacks, threats of terrorist attacks or civil unrest involving public areas could cause people not to visit areas where our stores are located. In the eventaddition, other types of warviolence in malls or actsin other public areas could lead to lower customer traffic in areas in which we operate stores. If any of terrorism, or the threat of either,these events were to occur, we may be required to suspend operations in some or all of our stores in the impacted areas, which could have a material adverse impact on our business, financial condition and results of operations.

We may not be successful in introducing additional store concepts or brands.

We may, from time to time, seek to develop and introduce new concepts or brands in addition to our established brands, Urban Outfitters, Anthropologie and Free People.brands. Our ability to succeed in Terrain, Bhldn, and otherthe early stages of new concepts could require significant capital expenditures and management attention. Additionally, any new concept is subject to certain risks, including customer acceptance, competition, product differentiation, challenges relating to economies of scale in merchandise sourcing and the ability to attract and retain qualified personnel, including management and designers. There can be no assurance that we will be able to develop and grow these or any other new concepts to a point where they will become profitable, or generate positive cash flow. If we cannot successfully develop and grow these new concepts, our financial condition and results of operations may be adversely impacted.

We may develop new store concepts through acquisitions and we may not be successful in integrating those acquisitions.

Acquisitions involve numerous risks, including the diversion of our management’s attention from other business concerns, the possibility that current operating and financial systems and controls may be inadequate to deal with our growth and the potential loss of key employees.

We also may encounter difficulties in integrating any businesses we may acquire with our existing operations. The success of these transactions depends on our ability to:

In addition, there may be liabilities that we fail, or are unable, to discover in the course of performing due diligence investigations on any company that we may acquire, or have recently acquired. Also, there may be additional costs relating to acquisitions including, but not limited to, possible purchase price adjustments. Any of our rights to indemnification from sellers to us, even if obtained, may not be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business or property acquired. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business and financial condition.

We rely on information technology systems and a material disruption or failure of such systems or technologies could adversely affect our business.

Our operations, in particular ourdirect-to-consumer sales, are subject to numerous risks, including reliance on third-party computer hardware/software, rapid technological change, diversion of sales from our stores, liability for online content, violations of state or federal laws, including those relating to online privacy, credit card fraud, risks related to the failure of the information technology systems that operate our websites, including computer viruses, telecommunications failures and electronicbreak-ins and similar disruptions. In addition, we regularly evaluate our information technology systems and have implemented modifications and/or upgrades to the information technology systems that support our business. Modifications include replacing legacy systems with successor systems, making changes to legacy systems or acquiring new systems with new functionality. There are inherent risks associated with replacing and modifying these systems, including inaccurate system information and system disruptions, which we may not be able to alleviate through testing, training, staging implementation andin-sourcing certain processes, or by securing appropriate commercial contracts with third-party vendors supplying such replacement and redundancy technologies. If our information systems or other technologies are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations in the interim. Although we have not experienced any interruptions or shutdowns of our systems for any material length of time for the reasons described above, such disruptions could lead to delays in our business operations and, if significant, affect our sales and profitability.

If we are unable to safeguard against security breaches with respect to our information technology systems our business may be adversely affected.

During the course of business, we obtain and transmit confidential customer information through our information technology systems. The protection of customer, employee and Company data is critical. The regulatory environment surrounding information security and privacy is demanding, with the frequent imposition of new and changing requirements and heightened public awareness and scrutiny. While, to the best of our knowledge, we have not experienced any material misappropriation,

loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a security breach or cyber-attack,cyber attack that could materially increase financial risk to the Company or our customers, such a security breach or cyber-attackcyber attack could adversely affect our business and operations, including damaging our reputation and our relationships with our customers, employees and investors and exposing us to risks of litigation and liability. While we believe we are diligent in selecting vendors, systems and procedures to enable us to maintain the integrity of our systems, we recognize that there are inherent risks and we cannot assure that any future interruptions, shutdowns or unauthorized disclosures will not occur.

Manufacturer complianceManufacturers and third-party vendors may not comply with our social compliance program requirements.requirements, which could adversely affect our reputation.

We have a manufacturer compliance program that is monitored on a regular basis by our buying offices. Our production facilities are either certified as in compliance with our program, or areas of improvement are identified and correctivefollow-up action is taken. All manufacturing facilitiesmanufacturers are required to follow applicable national labor laws, as well as international compliance standards regarding workplace safety, such as standards that require clean and safe working environments, clearly marked exits and paid overtime. We believe in protecting the safety and working rights of the people who manufacture the products we sell, while recognizing and respecting cultural and legal differences found throughout the world. We require our outsidethird-party vendors to register through an online website and agree that they and their suppliers will abide by certain standards and conditions of employment.

Our results can If our third-party vendors fail to comply with our social compliance program, our reputation may be adversely affected by market disruptions.affected.

Market disruptions due to severe weather conditions, natural disasters, health hazards, terrorist activities, financial crises, political crises or other major events or the prospect of these events can affect consumer spending and confidence levels and adversely affect our results or prospects in affected markets. The receipt of proceeds under any insurance we maintain for these purposes may be delayed or the proceeds may be insufficient to fully offset our losses.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such asincluding but not limited to revenue recognition, asset impairment,leases, impairment of goodwill and other intangible assets, inventories, lease obligations, self-insurance, tax mattersinventory, income taxes and litigation, are highly complex and involve many subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change or increase volatility of our reported or expected financial performance or financial condition. See Note 2, “Summary of Significant Accounting Policies,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form10-K for a description of recently issued accounting pronouncements.

Changes in our effective income tax rate could adversely affect our net income.

A number of factors influence our effective income tax rate, including changes in tax law, tax treaties, interpretation of existing laws, changes in generally accepted accounting principles and related accounting pronouncements, and our ability to sustain our reporting positions on examination. Changes in any of those factors could change our effective tax rate, which could adversely affect our net income. In addition, our operations outside of the United States may cause greater volatility in our effective tax rate.

We are subject to numerous regulations and legal matters that could adversely affect our business.

We are subject to customs, child labor, tax, employment, privacy,truth-in-advertising,e-commerce and other laws, including consumer protection regulations and zoning and occupancy ordinances that regulate retailers generally and/or govern the importation, promotion and sale of merchandise and the operation of retail stores and distribution and fulfillment centers. Additional legal and regulatory requirements, and the fact that foreign laws occasionally conflict with domestic laws, have increased the complexity of the regulatory environment and the cost of compliance. If these laws change without our knowledge, or are violated by importers, designers, manufacturers or distributors, we could experience delays in shipments and receipt of goodsproducts or be subject to fines or other penalties under the controlling regulations, any of which could adversely affect our business. Moreover, legal actions may be filed against us from time to time, including class actions. These actions may assert commercial, tort, intellectual property, customer, employment, data privacy, securities or other claims. We may also be impacted by litigation trends, including class action lawsuits involving former employees, consumers and shareholders, thatwhich could have a material adverse effect on our reputation, the market price of our common shares, or our results of operations, financial condition and cash flows.

Regulations related to “conflict minerals” will require us to incur additional expenses and could limit the supply and increase the cost of certain metals used in manufacturing our products.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains provisions to improve transparency and accountability concerning the supply of minerals originating from the conflict zones of the Democratic Republic of Congo and adjoining countries. As a result, the SEC adopted requirements for companies that manufacture products that contain certain minerals and metals, known as “conflict minerals,” that are necessary to the functionality or production of products manufactured or contracted to be manufactured by public companies. We have developed a framework and management system and continuously undertake due diligence efforts on our supply chain. We have and expect to continue to incur additional costs to comply with these disclosure requirements, including costs related to determining the sources of the specified minerals used in our products, in addition to the cost of any changes to products, processes, or sources of supply as a consequence of such verification activities, which may adversely affect our business. In addition, the number of suppliers who provide “conflict-free” minerals may be limited, which may make it difficult to satisfy customers who require that all of the components of our products be certified as conflict-free, which could place us at a competitive disadvantage if we are unable to do so. There is also uncertainty relating to the requirements of the regulations as a result of ongoing litigation challenging the constitutionality of portions of the regulations, proposed regulatory actions and recent statements by the SEC. Most recently, we filed our annual Specialized Disclosure Report on Form SD with respect to these minerals on May 31, 2016, as required by the rules.

Item 1B. Unresolved Staff Comments

We have no outstanding comments with the staff of the SEC.

Item 2. Properties

Since 2006, our home office has been located in several buildings on one campus in the historic core of the Philadelphia, Pennsylvania Navy Yard. The consolidated offices at the Navy Yard campus allow for an efficient operation of our Philadelphia-based offices and will help to support our growth needs for the foreseeable future. We currently occupyDuring fiscal 2015, we completed construction on a 93,000 square foot building that expanded our home offices to approximately 404,000497,000 square feet. We hold options onIn addition, we own several adjacent buildings that are available for at least the next ten years towould allow for additional

expansion if necessary. During fiscal 2014, we began construction on two buildings that will expand our home offices an additional 133,000 square feet to accommodate our growth. One of these buildings was completed in fiscal 2014 and we anticipate the other to be completed during fiscal 2015. In addition, during fiscal 2014 we purchased another building in the Navy Yard that consists of approximately 122,000 square feet for future expansion. This building is currently leased to a third party.

Our European home offices are located in London, England and consist of threefour leased properties totaling approximately 13,00025,000 square feet. The leased properties have varying lease term expirations ranging from 2019 through 2024.

Our North American retail stores are supported by two distribution facilities. We own a 291,000 square foot distribution center in Lancaster County,Gap, Pennsylvania, which supports approximately half of our retail stores. We lease a 214,500 square foot distribution facility in Reno, Nevada. The Nevada facility is approximately 214,500 square feet andthat supports the remaining half of our retail stores. The term of this operating lease is set to expire in 2017June 2027 with Company options to renew for up to an additional tentwenty years.

We operateIn fiscal 2016, we opened a 459,0001,000,000 square foot fulfillment center in Trenton, South Carolina,Gap, Pennsylvania, which houses merchandise distributed through ourwe own and operate. The facility primarily fulfills Retail and Wholesale segments. The operating lease for the Trenton center is set to expire in 2016.segment customer orders.

In September 2012, we completed the construction ofWe own and operate a 463,000 square foot fulfillment center in Reno, Nevada that we ownis used primarily to house and operatedistribute merchandise to support the Retail segment. In fiscal 2014, we relocated our western United Statesdirect-to-consumer customers.

We lease an approximately 40,000 square foot customer contact center toin Martinez, Georgia. This leased facility consists of approximately 40,000 square feet and has aThe lease term expiringexpires in fiscal 2019 with three five yearfive-year renewal options.

We lease separate distribution and fulfillment centersfacilities in Rushden, England to support our retail anddirect-to-consumer channels in Europe. The distribution centerfacility occupies approximately 98,000 square feet and the fulfillment centerfacility occupies approximately 142,000 square feet, which also includes our European customer contact center. The term of both of these leases are set to expire in September 2020.

Improvements in recent years, including those in fiscal 2014as described in Item 7: Management’s Discussion and Analysis—Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources, were necessary to adequately support our growth. We believe we may need to further expand the square footage of our home office and distribution facilities to support our growth over the next several years. For more information on our distribution center properties, see Item 1: Business—Company Operations—Distribution. We believe that our facilities are well maintained and in good operating condition.

All of our Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn stores are leased, well maintained and in good operating condition. Our retail stores are typically leased for a term of ten years with renewal options for an additional five to ten years. Total estimated selling square feet for stores open, under lease as of January 31, 2014,2017, by Urban Outfitters, the Anthropologie Group and Free People Terrain and Bhldn was approximately 2,031,000, 1,318,000, 131,000, 36,0002,182,000, 1,693,000, and 6,700,257,000, respectively. Terrain also utilizes outdoor space to sell seasonal items, live plants, accessories and outdoor furniture. The average store selling square feet is approximately 8,8009,000 for Urban Outfitters, 7,1008,000 for the Anthropologie Group and 1,5002,000 for Free People. Selling square feet can sometimes change due to floor moves, use of staircases, cash register configuration and other factors.

The following table shows the location of each of our existing retail stores, as of January 31, 2014:2017: