What: After falling 7% on Monday, shares of Urban Outfitters (NASDAQ:URBN) dropped as much as 15% early Tuesday before settling down around 6% as of 11:15 a.m. after the clothing retailer announced mixed third quarter results. Urban Outfitters also announced an interesting acquisition.

So what: Quarterly revenue rose 1.3% year over year to $825.3 million, including a slight decline from the Urban Outfitters brand to $339.6 million, 2.5% growth from Anthropologie Group to $341.1 million, and a 2.4% increase at Free People to $144.5 million. Comparable retail segment sales increased 1%, including a 3% increase at Free People, 1% growth at Urban Outfitters, and a flat performance from the Anthropolgie Group. On a segment basis, retail revenue grew 1.9% to $765.5 million, while wholesale revenue declined 5.2% to $59.7 million.

On the bottom line, that translated to 10.3% growth in net income to $52 million, and -- helped by share repurchases over the past year -- a 20% increase in net income per diluted share to $0.42. Analysts, on average, were anticipating roughly the same earnings per share, but on significantly higher sales of $872 million. 

Nonetheless, Urban Outfitters CEO Richard Hayne insisted, "I am pleased we delivered sales, margin and profit growth in the third quarter despite weaker customer traffic. I believe the strong customer response to expanded category offerings at each brand bodes well for our future growth."

Finally, Urban Outfitters announced its rather curious decision to acquire "substantially all" of The Vetri Family group of restaurants, which notably includes the Pizzeria Vetri chain. The price of the transaction wasn't disclosed. But for perspective, Pizzeria Vetri's website currently lists three locations, including two in Philadelphia, and one in Austin, Texas. 

"It's a perfect match," stated Partner and Chef Marc Vetri, "URBN and the Vetri Family share the same singular goal, we pride ourselves on bringing the best possible experience to our customers and community." And that's fair enough, especially considering Food and Wine Magazine recently named Pizzeria Vetri the best Pizza restaurant in America.

Hayne elaborated, "Having known Marc for almost a decade and partnered with him through his charitable foundation, we are honored to have him, Jeff and the Vetri family join the URBN team. Spending on casual dining is expanding rapidly, and thus, we believe there is tremendous opportunity to expand the Pizzeria Vetri concept."

Now what: While management is excited about the acquisitions, Urban Outfitters is entering a crowded space in casual dining and the company is still left with the task of turning around the sluggish performance of its flagship clothing chains.

That's not to say Urban Outfitter's won't be able to find success with Pizzeria Vetri and simultaneously endure this retail slump. But given the uncertainty surrounding Urban Outfitters today, it's no surprise the market is taking a step back from the stock.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.