Urban shrink?

Chain Store Age editor-in-chief Marianne Wilson and I go to great lengths to report new store openings on Chainstoreage.com. We pore through convoluted retail financial statements – sometimes twice daily – to uncover news that a chain has its sights set on even a little net new store growth for the year ahead.

I reported earlier today that Urban Outfitters, despite a challenging fourth quarter that saw profits cut nearly in half from the year before, was planning as many as 60 new stores in fiscal 2013.

That’s good news for all of our real estate readers, as well as our design and construction folks, who look for indications of forward momentum.

But at least one analyst is openly questioning Urban Outfitters’ expansion plans, going so far as to ask if opening more stores is altogether the wrong move for the operator of Anthropologie, Free People and Urban Outfitters banners.

Brean Murray Carrett retail analyst Eric Beder wrote in a note to investors that “while Urban bulls will point to better inventories and more full price selling [in this quarter] as compared to the disaster [last quarter], we believe the fashion looks remain weak and that near-term results will remain under pressure.”

He challenged Urban’s contention that more stores will lead to more sales by suggesting that the dollars haven’t followed the new shops.

Beder accuses last year’s 57 openings as a desperate play to grow, as well as a way to portray a turnaround story.

What’s a chain to do? Last year’s right-sizing buzz seems to be giving way to a more progressive strategic-growth mantra. If Urban Outfitters were to twiddle its thumbs during 2013, direct competitors like American Eagle, Abercrombie & Fitch, Gap and Aeropostale would likely continue to gain market share on the hipster.

Thoughts?  Should Urban Outfitters continue to plot growth, or stand still and regain a more solid footing? Feel free to leave a comment below.


Past Blog Entries by Katherine Field Boccaccio

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