Urban Outfitters Stock Falling Out of Fashion

Urban Outfitters Inc.’s (NASDAQ:URBN) products have lost their allure among customers and now its killing the company’s stock.

Called “bizarre” and “lackluster,” the stores’ fashions have contributed to the company’s 27 percent share decline this year. This represents the largest drop among U.S. specialty apparel retailers except for Aeropostale Inc. (NYSE:ARO).

Urban Outfitters’ chief executive offer Glen Senk said in the company’s third quarter earnings conference call this week, “This is a fashion issue, plain and simple. We need more compelling product.”

Some of the fashion mistakes have come from public accusations of style plagiarism and cultural insensitivity that have customers avoiding Urban Outfitters. For the past four quarters, the company’s net income has declined and it has increased discounts to get rid of slow-moving inventory.

With comparable retail segment net sales at the company brand adding  46 percent of 2010’s revenue, it came in flat for the third quarter after seeing 1 percent gains in 2011’s first two quarters.

Total inventories jumped 27 percent.

To combat his company’s earnings problems, Senk made management team changes earlier this month. He  named a new CEO at Anthropologie Group and a new chief merchandising officer for Urban Outfitters.

Analysts have noted retail companies have comeback after previous mishaps and only time will tell for this one.

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