Urban Outfitters Puts a Garden in Its Pocket

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Urban Outfitters (Nasdaq: URBN) hasn't been known for having an acquisitive nature, but it looks like that might be changing, given its planned purchase of Philadelphia's J. Franklin Styer Nurseries, also known as Styer's.

The company said, "Styer's is one of the oldest and most respected garden centers in the Philadelphia metropolitan area." (Philly happens to be Urban Outfitters' home turf.) Urban Outfitters will use the Styer's acquisition to launch its new Terrain concept, which will "transform the local garden center into an experience that celebrates the beauty and abundance of nature while offering an eclectic mix of garden-inspired products tailored for the contemporary customer."

Terrain was known as "Concept 4" until the company revealed its mission last May. You may recall that Urban Outfitters not only runs its name-brand retail stores, but also the Anthropologie and Free People concepts. The acquisition of Styer's will mark the first time Urban Outfitters has leaned on acquisition as opposed to growing its concepts organically.

Many retailers and consumer-goods companies seem to be busy dreaming up new concepts or acquiring ancillary brands in this time of economic turmoil. Recent word includes American Eagle Outfitters' (NYSE: AEO) plan for a brand for young children, and Volcom's (Nasdaq: VLCM) acquisition of an eyewear brand.

It makes sense that Urban Outfitters is acquiring its way into the upscale garden business, since its expertise has centered on fashionable apparel and home furnishings, and selling living things is significantly different. Back in October, CFO John Kyees said at a Wall Street conference that Terrain would cost about $2 million per year and wouldn't be a growth vehicle for three years. (The price tag for Styer's was not disclosed.) According to The Philadelphia Inquirer, similar acquisitions will be Terrain's mode of growth.

Acquisitive strategies to growth often make me nervous -- Talbots' (NYSE: TLB) purchase of J. Jill two years ago strikes me as a good example of one that so far hasn't helped the acquiring retailer -- but in this case, it would be more nerve-wracking for shareholders to wonder if Urban Outfitters could take a crash course in how to run a gardening retailer and adequately compete with big players like Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) on one end and venerable independents like Styer's -- steeped in expertise -- on the other. I trust Urban Outfitters' management to do the smart thing, and I can't wait to see how Urban Outfitters' garden grows.