January 11, 2012
Wall Street Spooked By Urban Outfitter CEO’s Resignation
Shares of Urban Outfitters’ stock dropped 15 percent in after-hours trading on the news that CEO Glen Senk had resigned "to pursue another opportunity." What makes the strong reaction so unusual is that Urban Outfitters’ business has been struggling over the past year.
"The news is shocking and disappointing," Anna Andreeva, an analyst at FBR Capital Markets, told Bloomberg News. "Obviously, the company has been somewhat challenged under his leadership in the last year, but this challenges the recovery."
Urban Outfitters announced that Richard Hayne, chairman of the board and president, would assume Mr. Senk’s duties immediately. The news was not greeted warmly by the street.
According to Reuters, Liz Dunn, an analyst with Macquarie, wrote in a note to investors, "We have low confidence that Dick Hayne will be the right leader to usher in the new ‘big company’ era Urban needs to embrace."
- Urban Outfitters, Inc. Announces Resignation of Glen Senk and Appointment of Richard Hayne as Chief Executive Officer – Urban Outfitters, Inc./Globe Newswire
- Urban Outfitters Reports Record Holiday Sales – Urban Outfitters, Inc./Globe Newswire
- Urban Outfitters CEO resigns, stock falls 15 percent – Reuters
- Urban Outfitters Tumbles After CEO Resigns – Bloomberg News
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Discussion Questions
Discussion Questions: What do you make of Wall Street’s reaction to Glen Senk resigning as CEO of Urban Outfitters? What kind of leader will the company need to right the ship?
Poll
This is startling news! Glen Senk has done a masterful job of growing the different Urban Outfitter brands and will be sorely missed. Great merchants are few and far between these days and those retailers fortunate to be headed by one should take care not to lose them.
Urban Outfitters has struggled a bit over the past year or so and for sure, as the leader, Mr. Senk takes the hit for it. Fashion retail is a quirky business, and all the greats have stumbled a time or two, but the smart retailers stay the course and allow these merchants to right the ship.
I believe the single greatest example of this misguided action is Mickey Drexler and Gap. I bet they regret the day they let Mr. Drexler slip through their fingers.
It’s obviously a period of uncertainty for Urban, not just because of its recent sales performance but also because of a failed transition at the top of the company. It’s also hard to say whether Mr. Hayne (the founder and former CEO of the company) is in place as a transitional figure before turning over the reins, or plans to stick around for awhile.
We’ve seen this sequence of events in many other companies: The founder can’t find a suitable successor, or he is unwilling to walk away. Without knowing the internal politics at URBN, it’s clear that the company is losing share in an environment where many other junior/trend retailers are doing well.
My experience with Urban Outfitters as a shopper adds up to an operation with wonderful merchandising but spotty product quality. I realize the junior/teen apparel trends are in and out fast, but let’s be honest, the clothes are not supposed to fall apart at the seams mid-season, are they?
That said, the stores are usually a pleasure to browse because they are typically so well-merchandised. Maybe the product sourcers, not the talented merchant, should be the ones taking the hit for poor performance?
You know me, I’m the one who always asks in these scenarios: “Did anyone get any feedback from the shoppers?” I’m sure there are reasons and potential solutions in what they have to say.
I was shocked to see the news this morning too. I haven’t been tracking the merchandise strategy or the financial results too closely, but have been watching their technology strategy — probably one of the more publicly scrutinized tech strategies out there — and Mr. Senk has been one of the most vocal proponents of it. From that perspective all I can do is hope that his departure had nothing to do with the technology experiment that UO is busily conducting in its stores.
But I guess this just proves: you can’t win with just customer service, and you can’t win with just great products. And I’d hazard a guess that shoppers will hold their noses and put up with bad service to get cool stuff, but they won’t give your great service a shot at all if you don’t have anything worth buying.
If Wall Street reacted like this whenever a CEO resigned, stocks might become affordable for the average buyer.
Anyone who knows anything about Wall Street knows that Wall Street doesn’t like surprises. Wall Street likes predictability. Glen Senk’s resignation was not predicted, which leaves questions regarding the operating direction of a retailer who is experiencing problems. Wall Street obviously doesn’t have any confidence in Richard Hayne being able to connect with UO’s target customers.
My question is, who is the lucky retailer (or venture) that will get Glen?
I think the reaction to this resignation points to the importance of vision and passion in leadership. UO represents a unique, distinctive and singular retailing vision. Much of that is clearly attributable to Glen Senk.
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This is startling news! Glen Senk has done a masterful job of growing the different Urban Outfitter brands and will be sorely missed. Great merchants are few and far between these days and those retailers fortunate to be headed by one should take care not to lose them.
Urban Outfitters has struggled a bit over the past year or so and for sure, as the leader, Mr. Senk takes the hit for it. Fashion retail is a quirky business, and all the greats have stumbled a time or two, but the smart retailers stay the course and allow these merchants to right the ship.
I believe the single greatest example of this misguided action is Mickey Drexler and Gap. I bet they regret the day they let Mr. Drexler slip through their fingers.
It’s obviously a period of uncertainty for Urban, not just because of its recent sales performance but also because of a failed transition at the top of the company. It’s also hard to say whether Mr. Hayne (the founder and former CEO of the company) is in place as a transitional figure before turning over the reins, or plans to stick around for awhile.
We’ve seen this sequence of events in many other companies: The founder can’t find a suitable successor, or he is unwilling to walk away. Without knowing the internal politics at URBN, it’s clear that the company is losing share in an environment where many other junior/trend retailers are doing well.
My experience with Urban Outfitters as a shopper adds up to an operation with wonderful merchandising but spotty product quality. I realize the junior/teen apparel trends are in and out fast, but let’s be honest, the clothes are not supposed to fall apart at the seams mid-season, are they?
That said, the stores are usually a pleasure to browse because they are typically so well-merchandised. Maybe the product sourcers, not the talented merchant, should be the ones taking the hit for poor performance?
You know me, I’m the one who always asks in these scenarios: “Did anyone get any feedback from the shoppers?” I’m sure there are reasons and potential solutions in what they have to say.
I was shocked to see the news this morning too. I haven’t been tracking the merchandise strategy or the financial results too closely, but have been watching their technology strategy — probably one of the more publicly scrutinized tech strategies out there — and Mr. Senk has been one of the most vocal proponents of it. From that perspective all I can do is hope that his departure had nothing to do with the technology experiment that UO is busily conducting in its stores.
But I guess this just proves: you can’t win with just customer service, and you can’t win with just great products. And I’d hazard a guess that shoppers will hold their noses and put up with bad service to get cool stuff, but they won’t give your great service a shot at all if you don’t have anything worth buying.
If Wall Street reacted like this whenever a CEO resigned, stocks might become affordable for the average buyer.
Anyone who knows anything about Wall Street knows that Wall Street doesn’t like surprises. Wall Street likes predictability. Glen Senk’s resignation was not predicted, which leaves questions regarding the operating direction of a retailer who is experiencing problems. Wall Street obviously doesn’t have any confidence in Richard Hayne being able to connect with UO’s target customers.
My question is, who is the lucky retailer (or venture) that will get Glen?
I think the reaction to this resignation points to the importance of vision and passion in leadership. UO represents a unique, distinctive and singular retailing vision. Much of that is clearly attributable to Glen Senk.