Urban Outfitters Shocker
I have to admit it: I was shocked when I heard the news this week that Glen Senk, the widely-admired CEO of Urban Outfitters, was resigning. Sure, the company wasn’t coming off the best of years, having battled lackluster sales throughout much of 2011. A series of fashion misses — nothing new in the always dicey world of women’s apparel — had taken their toll on profit as the retailer sought to clear slow-moving merchandise with deep discounts. Senk is succeeded at the hipster clothing chain by Richard Hayne, the company’s founder and president, who also has a 22% ownership stake in the company.
But one not-so-great year does not diminish Senk’s achievements. All told, he was with Urban Outfitters for 18 years, during which time it grew about 23% annually. The fact is the $2.4 billion company has, over the past decade, turned in one of the industry’s best track records, and Senk is largely responsible for it. His sudden and abrupt departure took the entire industry by surprise. That he was leaving to pursue ‘another opportunity” led to all sorts of speculation. Some had going to Gap Inc., others to Talbots, and there were even those who had him going to Apple stores.
But the rumors didn’t have much time to percolate. The announcement came out some 24 hours later that Senk was taking the chief executive role—and an ownership stake — at the privately owned, fine-jewelry company David Yurman Inc., where he already sits on the board and has a close relationship with founders David and Sybil Yurman. The company has 26 wholly-owned stores, and its line is distributed to some 450 stores around the globe.
While Urban Outfitters’ stock took a beating following Senk’s resignation, not everyone was dismayed by the change at the top.
Sterne Agee analyst Margaret Whitfield said she believes Urban Outfitters under Hayne will be better run, citing his operating experience as a positive over Senk’s expertise as a merchant.
“We believe the management change could improve the company's fortunes,” she wrote.
I hope she’s right. Urban Outfitters has carved a strong niche for its brands in recent years, and pulled off the enviable feat of being a chain operator whose individual stores always felt unique and distinct from one another. The merchandise also had a distinct edge to it. Whether it can continue on that path is the million-dollar (or billion dollar) question going forward.