In mid-January 2012, the retail world was taken by surprise when Urban Outfitters Chief Executive Officer Glen Senk abruptly resigned his post. While Urban Outfitters had dealt with a rocky 2011, the company seemed poised for a turnaround after reporting a slight increase in holiday sales. The management shift had an immediate effect on the stability of the company’s stock and may have a long-term effect on the company’s sales in the US and Europe. Along with the company’s namesake stores, Urban Outfitters, Incorporated, also operates the retail chain stores Anthropologie and Free People.
Why Senk resigned
Senk did not give his exact reasons for resigning as CEO but Urban Outfitters’ incoming CEO, company founder Richard Hayne, said that Senk left on his own to “pursue another opportunity”. In a press release regarding the resignation, Hayne praised Senk’s loyalty and long-term service with the company. Said Hayne, “Glen joined the company nearly 18 years ago when the Anthropologie business was a single-store prototype. We are forever grateful for his passion, creativity, and leadership in building the Anthropologie brand to what it is today.”
During 2011, Urban Outfitters saw its profits decline considerably due in part to the economic recession and some bad publicity. The company got into a design disagreement with a jeweller, which lead to some celebrity backlash. Later in the year, the store started carrying products with designs that were reminiscent of Native American motifs with the name “Navajo”. The company later dropped the name after concerns over racial and cultural insensitivity.
Possible effect on the retail world
It is unclear how Senk’s resignation will directly affect other retail store operations. For the time being, more stores may consider making management changes to try to stem the tide of declining profits and mounting losses. Another potential effect on retail companies is the realization of what consumer dissatisfaction can do to a store’s bottom line. If enough shoppers are displeased with the practices of a company, they may well stop patronizing the store, directly affecting the company profits.
Urban and out
Urban Outfitters only made its debut in Europe recently, opening its first Anthropologie stores on the continent in 2010 to go along with the 18 Urban Outfitters stores that already existed in Europe. Since both the UO expansion and the Anthropologie expansion were accomplished during Senk’s tenure at the company, it is unknown how his departure will affect the store’s operations in Europe. Originally, UO decided to make the move to Europe to take advantage of the continent’s high-cost retail sector.
According to company Chief Investor Relations Officer John Kyees, UO plans to establish as many as 100 stores in Europe by 2020 and there are no indications that this plan will be affected by Senk’s resignation. Kyees also reported that 10 per cent of corporate profits came from Europe in 2010, making Urban Outfitters’ Europe plans a significant development in the health of the company.