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Why I Finally Sold Urban Outfitters

Alyce Lomax
August 30, 2012

About six years ago, I bought some shares of hipster retailer Urban Outfitters (Nasdaq: URBN  ) . It was one of the well-run, exciting retail stocks I believed would be a great stock to hold for the very, very long term. However, times change, and opinion on a stock can sour for many different reasons. Here's mine: I thought Abercrombie & Fitch (NYSE: ANF  ) had the corner on the market for mean-spirited marketing, but Urban Outfitters seems to be trying to give it a run for the money lately.

Given my 2006 purchase, I've held my handful of Urban Outfitters shares through thick and thin. I held them during a recession. I held them while the company struggled through a serious fashion miss, and many thought it would never turn its fortunes around and regain its cool cred with shoppers. I even held when many social investors were getting on the company's case for lack of board diversity, and I counseled investors not to despair when CEO Glen Senk departed.

That's it!
My final straw -- and I hinted that it was coming in May -- has been the litany of mean-spirited stunts and other public relations nightmares that have emanated from the retailer over the last year or so. Granted, Urban Outfitters has long gotten into some hot water for merchandise once in a while, but this year the barrage has resulted in a pretty constant stream of negative headlines. Urban Outfitters' latest controversy is a T-shirt line that celebrates alcohol and makes pretty awful implications, like that "beer goggles" make a fine fashion statement for teens.

I've had it. As I said, Abercrombie has usually been the teen retailer that somehow managed to weave meanness and sometimes even downright discrimination into its business and marketing. If Urban Outfitters plans on going from South Park-type satirical humor to being downright mean and low-down, then there's no good future for the retailer. I have a feeling its target clientele is a little smarter than that.

Speaking of public relations, founder and current CEO Richard Hayne has occasionally made the news for his campaign contributions to conservative candidates and causes. Of course he's free to hold whatever political beliefs he wishes, but there's a point where it's simply undeniable that his beliefs could cause customer defections, particularly at the core Urban Outfitters brand. Many yout