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Urban Outfitters, Fashion Victim

The chain misjudged customers' tastes. Can it recalibrate its edginess detector?

Heather Fauland is your typical Urban Outfitters (URBN ) shopper. Usually clad in jeans and a witty T-shirt, the 21-year-old Tucson college student turns to Urban for the fashion flair that sets her apart from Gap-ified mainstream teens: a flowing skirt, a blue-and-green striped wallet, and, in reference to the month she spent as a vegan in high school, a red tee with a pig that says: "Please Don't Eat Me, I Love You." But since Christmas, she says, Urban has gone from reliably edgy to simply outré. When passing by the Urban Outfitters near the University of Arizona's Tucson campus, she sniffs at the mannequins sporting tight leggings, a tank top worn over a button-down shirt over a sweater with odd cuts and capped sleeves. "I just don't seem to like their kind of edgy right now," says Fauland. "It looks kind of funny."

In the language of hipster retailing, that is a devastating critique. Urban Outfitters' success lies in its ability to pinpoint exactly what kind of edge its hip -- but not too hip -- customers want. And judging by the past few months, the chain badly misjudged its shoppers' sensibilities. Last fall, in its 95 stores worldwide, Urban's buyers proved too quick to embrace new styles. The fashion avant-garde may have been willing to part with distressed jeans and peasant shirts in favor of '80s-style peg-legged pants and baggy V-shaped tops, but Urban's customers balked. (Executives declined comment for this story.)