The retail business looks pretty shabby these days. Urban Outfitters (NASDAQ:URBN) had managed to buck the sector's nasty trends until now, but its latest quarter proved a bit frayed around the edges.

Fourth-quarter net income dropped 24% to $40.5 million, or $0.24 per share. Total sales increased 9% to $508 million, and same-store sales dipped 1%. Comps rose 3% at the namesake stores, while the company's other major concepts, Anthropologie and Free People, saw comps drop 6% and 13%, respectively.

The fourth quarter was tough for many retailers, marred by mournful merchandise markdowns, and Urban Outfitters was no exception. Gross profit dropped to 34% of sales, from 39.6% this time last year.

Even if this wasn't the greatest fourth-quarter earnings report I've ever seen (and let's face it, the holiday quarter was tough for most retailers), I'm still willing to hold this stock for the long term. Urban Outfitters has a smart and savvy management team that knows its demographic well. Daring to be different has always given Urban Outfitters an edge over its cookie-cutter competition.

For example, does Gap (NYSE:GPS) bring anything exciting to the table? It's been ages since its merchandise set the world on fire, and I'd argue that Gap's only real investment thesis is its huge cash trove. True, it can at least stay alive during our troubled economic times, but it's not getting any better at attracting customers.

I'd rather bank on a retailer that goes out of its way not to be like everybody else -- like Urban Outfitters. In dismal economic times, I can think of little more depressing than seeing everybody dressed alike. Even if consumers are being more careful with their money, I suspect they might make more thoughtful, individualistic purchases to lift their spirits.

Meanwhile, plenty of other retailers are not only struggling to turn their businesses around, but also suffocating beneath too much debt. Talbots (NYSE:TLB) springs to mind, and even major department stores like Bon-Ton (NASDAQ:BONT) and Saks (NYSE:SKS) are flailing in this environment. Compare them to Urban Outfitters, with a strong balance sheet boasting $366 million in cash and no debt.

The stock's gotten a drubbing today, and it now trades at just 13 times trailing earnings. I believe Urban Outfitters is one of those stocks investors would do well to pick up now for the long term. It's a high-quality company getting beaten down by massive pessimism.

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Alyce Lomax owns shares of Urban Outfitters. The Fool has a disclosure policy. Try any of our Foolish newsletter services free for 30 days.