NEW YORK (TheStreet) -- Ring the alarms, one brand that continues to open cool-looking bi-level stores with a hipster feel in busy towns is failing. That brand: Urban Outfitters (URBN). Sales growth turned negative during the holidays for the first time in 16 quarters. Execs have shuffled up the team responsible for the brand, yet are unsure when the situation will turn brighter.
What is going on here? The Urban Outfitters brand isn't suffering from "Too Many Stores Syndrome" as are rivals Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), and Aeropostale (ARO). From far away, the clothes appear snazzy and on trend, similar to those found at the hot fast fashion retailers Forever 21 and H&M.
In under two minutes, we will share four reasons, gleaned from a walkthrough of a new store, as to why brand Urban Outfitters is failing.
Fast Fast-Like Quality, Nordstrom-Like Prices
Bottom line is that Urban Outfitters remains badly overpriced in the marketplace given: (1) its product quality; and (2) the lack of versatility of the merchandise. A 25 year old could scoop up three head to toe outfits at H&M for the price of one at Urban Outfitters. CEO & Founder Richard Hayne acknowledged this on the March earnings call by shouting out improving fashion and quality as key areas of focus in 2014.
The Losses are Killing the Wins
Urban Outfitters wins when it's releasing new fashions customers won't see anywhere else, and actually want to plunk down a good chunk of digital cash to wear that fashion. The reality: Urban's creative magic has been stifled by a lack of internal communication between teams, and that will take time to correct.