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auther: date:2013-06-27
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A slip on cutting edge of fashion By Jayne O'Donnell,NFL Jerseys Free Shipping USA TODAY There's such a thing as being painfully hip, as the folks at Urban Outfitters (URBN) know all too well. The company, which owns the stores Urban Outfitters, Anthropologie and Free People, prides itself on being on fashion's cutting edge. Last fall, that became a tough place to be as it filled its often-quirky stores with the latest styles, and many buyers bolted. Last month, the company acknowledged disappointment in its first-quarter performance, which showed declines in same-store sales for two of its three brands and the effects of heavy markdowns needed to move slow-selling merchandise. Tuesday, Matrix Investment Research's Ivan Feinseth downgraded the stock from hold to sell. Much of the blame for the poor performance stems from what the company says was a "tectonic shift" in women's fashion. After a decade of wide skirts and short, fitted shirts think triangles the hot, yet controversial new look became pencil-thin pants and skirts and big tops. Urban Outfitters says the move to an "inverted triangle" was embraced by some "early adopters" but shunned by others. The company makes no apologies for staying on top of the trends. "We should be fashion forward, " says Urban Outfitters CFO John Kyees. "That's who we are. " Retail analyst Christine Chen, who follows and owns stock in Urban Outfitters, agrees that the Anthropologie and Urban Outfitters stores "need to be fashion leaders. " Chen says the stores wound up with more inventory than they could sell without deep discounts because many customers weren't ready to go back to peg-leg pants. "They certainly moved in that direction, and when you move, there's always risk, " says Chen of Pacific Growth Equities. But the self-described "fashion hound" says it's the only place she's bought clothes this summer, along with "some great little red specs" for reading glasses. Liebmann says the "French flea market approach" Anthropologie takes to home furnishings in its 81 stores is a big draw: "They are more able to catch that shopper who has a real need to spend money around clothing items and also is interested in doing things for her home. One goes in there and looks for a skirt on sale and sees a great high-impulse item, like a doggie bowl or door knobs for cabinets. " Chen says, "Anthropologie has improved, looks great and continues to get better. Right now, the problem is at Urban Outfitters. " Urban Outfitters, which caters to teenage and twentysomething men and women, has 18 of its 89 stores in the USA near college campuses. That's in keeping with the company's launch near the University of Pennsylvania campus in 1970. Like Anthropologie, it combines offbeat home (well, dorm) decor with trendy fashions. Urban Outfitters acknowledged the stores have been slower to recover because many of their accessories didn't keep up with new trends. Mary Ann Campbell, who lives near Milwaukee, loves Anthropologie for its "unique, sophisticated clothing and accessories" and Urban Outfitters for its "kitschy and off-the-wall products that you don't see at other retailers. " Free People, the name of the original store that later became Urban Outfitters, is now a sophisticated clothing line for twentysomething women sold in specialty and department stores and six stand-alone boutiques. Same-store sales increased 14% in the first quarter, a marked contrast with Urban Outfitters, where same-store sales dropped 4%, and Anthropologie, down 2%. The company opened 33 stores for the three brands last year and is planning to open up to 38 more this year. This rapid growth is one of the reasons Feinseth downgraded the stock. He complains that the company is "investing more and more money in something that's producing a lower and lower return. " Again, Kyees isn't apologizing. "This is the first quarter in the last five years that we've had a problem with our earnings. We think one of the best uses of our capital is opening new stores, which are profitable from the day they open. " Kyees says the merchandise mix is far more appealing to shoppers than it was at the start of the year. "The consumer is starting to understand the fashion a bit better, " Kyees says. "But you can never blame the consumer for not accepting your fashion, because our job is to satisfy them. "
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