NEW YORK (The Deal) -- When it comes to apparel retail, one bad apple really does spoil an entire bunch.

Four companies, each with several brands doing well, are being punished because one brand in the corporate barrel is struggling. Urban Outfitters (URBN) - Get Report, Gap (GPS) - Get Report, Ascena Retail Group (ASNA) - Get Report and Chico's FAS (CHS) - Get Report all could be driven to asset sales or spinoffs to separate healthy businesses from dead weight. And while L Brands (LB) - Get Report isn't really being punished, it could be doing even better by continuing a breakup it began several years ago.

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Philadelphia-based Urban Outfitters saw its market capitalization fall when it warned on Oct. 17 that it would report a 7.1% decline in same-store sales at its namesake banner for the quarter ended Oct. 31. Same-store sales increased 14.8% at Free People and 2.2% at Anthropologie, two other brands in the retailer's portfolio.

While Urban Outfitters stock has been up recently to trade at about $44 on April 1 from about $28 on Nov. 18, one industry watcher said that history could have convinced the retailer that a breakup might be warranted. That's because the retailer has managed to have all of its banners performing well simultaneously only for short periods of time. And separating them to focus on the challenges or opportunities each presents would make each strategy easier to execute.

Separating the company into at least two parts, one housing Urban Outfitters and the other including both Free People and Anthropologie would not only make it easier to focus and manage each of the brands, but also create shareholder value. By that logic, splitting the group into the three separate marques might make even more sense.

San Francisco-based Gap likewise saw its stock price drop on Oct. 9 to around $36 to $37 from around $41 to $42 after revealing on Oct. 8 that comparable sales at its flagship brand were down 3%, compared with gains for its Banana Republic and Old Navy chains.

Investors are also leery of Mahwah, N.J.-based Ascena, whose Justice banner, the former Limited Too, aimed at the tween demographic, has struggled in recent months. When Ascena said last September same-store sales for Justice declined 10% for tis quarter ended in July, investors bid down the parent's stock from between $16 to $17 per share to around $14 per share in one day.

In addition to Justice, Ascena operates the Dressbarn, Maurices, Catherines and Lane Bryant banners. The retail group could be split into four parts, one consisting of Dressbarn, a second that focuses on Maurices, a third unit comprised of Justice and a fourth that operates the plus-sized apparel businesses of Lane Bryant and Catherines.

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Chico's -- whose brands include not only its namesake, but also women's apparel chain White House/Black Market, lingerie brand Soma Intimates and online retailer Boston Proper -- is another obvious breakup candidate. The Fort Myers, Fla.-based retail group's stock has risen on speculation that it might be a buyout target. But whether it stays public or goes private, value could be enhanced by separating the disparate businesses.

And while L Brands has also seen its stock climb over the past year -- it now trades over $93 per share, near its 52-week-high -- the former Limited Brands also has distinct businesses that might be better off as separate, sharply focused entities. Those banners include intimates brands Victoria's Secret, Pink and La Senza, as well as personal-care retailer Bath & Body Works and luxury accessories boutique Henri Bendel. While none of the brands is lagging, personal care is different than lingerie, which is different than a small chain of luxury accessory boutiques that doesn't move the needle for a company as large as L Brands. And there aren't many benefits from running them under the same roof.

Columbus, Ohio-based L Brands has a history of spinning off and selling: Limited Stores LLC is now owned by private-equity firm Sun Capital Partners, while Express (EXPR) - Get Report and Abercrombie & Fitch (ANF) - Get Report are now separate publicly traded entities. L Brands sold a majority stakes in both Limited and Express in 2007 to Sun Capital and Golden Gate Capital, respectively and then sold the remainder in 2010. Abercrombie & Fitch's split-off was completed in 1998, after L Brands had bought it 10 years earlier. It might be time to get back into that kind of groove.

None of the retailers responded to requests for comment.  

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