Urban Outfitters Inc. fell the most in three years after saying Glen Senk resigned as chief executive officer and that co-founder Richard Hayne would take over to try to reverse the retailer’s yearlong profit decline.
The shares tumbled 19 percent to $23.93 at the close in New York for the biggest decline since Dec. 11, 2008. The Philadelphia-based company’s stock dropped 23 percent last year.
Senk, 55, resigned Jan. 9, Urban Outfitters said yesterday in a statement after the markets closed. He will be the new CEO of David Yurman Inc., the New York-based jeweler and watchmaker said in a statement today.
The operator of Urban Outfitters, Anthropologie and Free People stores is turning to its co-founder after net income declined for four straight quarters. Hayne, 64, helped start the company in 1970 and has been chairman since it was incorporated six years later, Urban Outfitters said.
“The news is shocking and disappointing,” Anna Andreeva, an analyst at FBR Capital Markets in New York, said in a telephone interview yesterday. “Obviously, the company has been somewhat challenged under his leadership in the last year, but this challenges the recovery.”
Senk, who joined the company almost 18 years ago as president of Anthropologie, said in November that the retailer’s troubles stemmed from “a fashion issue, plain and simple.” The style choices that missed consumers’ tastes were forcing the retailer to cut prices to clear excess inventory, eating into its profit margins.
Adding to the earnings woes was a spate of bad publicity, triggering a backlash from many of its target shoppers in their teens and 20s.
In May, jewelry designer Stevie Koerner accused Urban Outfitters on her website of copying her “The World of Love Series,” which featured U.S. states cast in silver with cut-outs of hearts.
Users on Twitter, including singer Miley Cyrus, accused Urban of stealing and tried to start a boycott. Urban responded on its website that it would continue to sell the jewelry, saying that the idea of state-shaped necklaces wasn’t unique to Koerner and that several sellers on the craft website Etsy sold similar designs.
In June, the Navajo nation sent Urban a letter demanding that the company pull the Navajo name from a line of purses, t-shirts and underwear meant to evoke American Indian culture, and a petition on the website change.org asking the retailer to remove the clothing gathered more than 16,000 signatures.
A search of the word “Navajo” on the retailer’s website returns no items, and pieces previously in the collection are now simply labeled as “printed.”
“The company is in good hands with Richard Hayne,” Andreeva said. “But Glen Senk is seen as the driving force with inventory management, so this news is disappointing.”