Are Those ‘Navajo’ Undies To Blame for Urban Outfitters’ Financial Woes?

By Haley Phelan

Urban Outfitters Drinking 'Navajo' flask and 'Navajo' pantys. Recently, the name was changed to Printed.

Things aren’t looking good for Urban Outfitters. The retail chain made the news three times this year–and for all the wrong reasons, including insensitively (and illegally) labelled “navajo” undies, allegedly knocked-off state necklaces and using an underage model in “salacious” photos. Now, it looks like all that controversy has finally taken a toll on business.

According to Businessweek, Urban Outfitters’ shares have dropped 27 percent this year and the retailer is losing investors’ confidence fast. What’s to blame? According to Urban’s CEO Glen Senk, it’s “a fashion issue, plain and simple.” Besides selling styles that are “simply off” (Businessweek dedicates a paragraph to both flares and “baggy tops,” which the industry weekly says, gasp!, don’t go together), the retailer’s recent controversies aren’t helping the situation.

The article goes on to site the state necklace incident, which had shoppers–including Miley Cyrus–trying to instigate a boycott against the retailer, as well as the controversial use of the word “Navajo,” which resulted in a petition that garnered 16,000 signatures to remove the items. Urban Outfitters has since removed all items labelled “Navajo” from their store, but it looks like the damage may have already been done.

Urban, however, is not discouraged. The company recently hired Charles Kessler, formerly of Coach Inc. and Abercrombie & Fitch Co., as chief merchandising officer for their namesake brand, and is doing everything they can to get back on the wagon. Analysts quoted in the piece, including Christine Chen of Needham & Co., and Linda Tsai, of ITG Investment Research, agreed that Urban will likely rebound. “Fashion missteps happen to everyone sometimes,” Tsai said.

Right, let’s just hope Urban can learn from their mistakes, and think twice before producing culturally-insensitive clothing items. Who knows? Maybe even Forever21, who recently shilled an “Oriental Girl” necklace, will follow their example.