"The development shakes out faith that a turn in the business is imminent. Senk and CFO Eric Artz had begun to more Urban Outfitters in the right direction on inventory, but the lack of C-level tenure at the divisional level suggests that organizational issues could remain a serious distraction over the next year," Black wrote in a note.
There's also a question about how long Hayne, 64, will retain the role. While Hayne has been a strong guiding presence at the company, Black said he doesn't view him as having a strong hand in day-to-day management.
Hayne has been more focused on the growth of the company's newest concept, Terrain.
"We believe Hayne is well qualified for the position, but question his long-term commitment to the position given his age and recent limited workload at the company," Stifel Nicolaus analyst Richard Jaffe wrote in a note.Customer Growth Partners President Craig Johnson said Hayne may serve as CEO for a few years to get the company stabilized and during that time bring in another leader to groom to take over the post. While Urban Outfitters may be a risk in the near term, analysts are still convinced the stock is a good long-term bet. "Longer term, we are positive on Urban Outfitters as a scarce international growth story, with a clean balance sheet and multiple differentiated concepts," Baird analyst Erika Maschmeyer wrote in a note. "While we believe near-term uncertainty exists as Urban Outfitters reworks its merchandise offerings and the changes put in place by the new CEO take time to materialize, we remain positive on the long-term outlook for the company," Jaffe echoed. "This is based on a recently strengthened management team, previous merchandising strength, strong cash flow and visibility for continued square-footage growth." -- Reported by Jeanine Poggi in New York
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV