Urban Outfitters a big draw? Sure. Downtown savior? Maybe.

NORFOLK

Since Bobby Wright started buying property on Granby Street more than 10 years ago, he's chased Urban Outfitters.

Whenever he and his marketing staff collected information about Hampton Roads - from demographic surveys to the launch of light rail - they sent it to Urban Outfitters headquarters in Philadelphia. They hoped that, little by little, the retailer would build a thick file on the region.

About 10 days ago, their efforts paid off. The coveted fashion purveyor - known as much for its hipster image as its sales success - signed a lease to open a store where Time Lounge is now. The retailer will renovate the Wright-owned building at 271 Granby St. and open this summer, Wright said.

The developer and city leaders have pinned their hopes on Urban Outfitters as the savior of Granby Street retailing. Its three-story store will serve as a catalyst, many said when the deal was revealed last month, to turn that downtown corridor into a shopping destination and persuade other merchants to set up shop.

"They are an economic engine for any place they go," Wright said of Urban Outfitters, which has 194 stores in the United States, Canada and Europe.

Recently, however, the retailer has faced financial turbulence. Some stock analysts downgraded or maintained a negative rating on Urban Outfitters Inc.'s stock after the company announced Jan. 10 that its CEO had resigned.

"With his unexpected departure, we now see a cloud of uncertainty around the company's direction and the future," wrote Randal J. Konik and other retail analysts for Jefferies & Co. Inc. in a research note dated Jan. 11, which rated the stock "underperform."

Urban Outfitters' profit has fallen for four consecutive quarters. In the first nine months of its current fiscal year, its earnings fell 26 percent compared with a year earlier. Early this month, it announced that holiday sales for November and December in comparable stores, or those open at least a year, were flat.

Its stock dropped 19 percent when it announced its CEO's departure and is down 34 percent from its 52-week high of $38.50 last March. It closed Friday at $25.40 a share, off 51 cents.

"We see continued earnings risk here from a high level of markdowns and continued fashion issues," the Jefferies analysts wrote.

None of that concerns those championing the retailer's arrival in Norfolk.

The CEO's departure took place just before Urban Outfitters signed its Granby Street lease, which went forward as planned, said City Councilman Barclay C. Winn. "That tells me that they have a whole lot of confidence in the market."

Urban Outfitters' co-founder and chairman, Richard A. Hayne, is taking over as CEO, Wright said, putting it in solid and familiar hands. "They're not in trouble."

Few Urban Outfitters stores look alike. The retailer has some mall locations, including at Short Pump Town Center in the Richmond suburbs, but has opted for street-level storefronts in many markets. Its interiors have an edgy, industrial feel with exposed pipes and metal beams.

"Our Urban Outfitters stores are often located in unconventional retail spaces, including a former movie theater, a bank and a stock exchange," the company wrote in its most recent annual report, in April.

Urban Outfitters officials, via an email from spokeswoman Amanda Hershey, declined to answer questions about its operations or the Norfolk store.

The retailer is known as a merchandising maverick. Besides its trend-setting clothing for men and women, its stores sell sunglasses and shower curtains, cameras and candles, lingerie and body lotions, furniture and funny books, and novelties such as "South Park" television show figurines.

"The atmosphere in most stores is almost electric," said Margie Johnson, a national retail consultant who owns Shop Talk in Virginia Beach. "There's a sense of discovery when you go in their stores."

Urban Outfitters opened its first store near the University of Pennsylvania in 1970 and didn't open a second for 10 years. As the chain grew slowly, gaining popularity through the 1990s, it branched into new concepts. The company added the Anthropologie chain, which caters to sophisticated female shoppers with unique clothing and accessories, in 1992.

The company also owns the Free People and Leifsdottir lines of clothing and accessories, which it sells wholesale as well as in its own stores. Since 2008, it has launched two other retail brands: Terrain for home and garden décor and bridal vendor BHLDN. It accumulated $2.3 billion in sales in its last fiscal year.

Some of its trend-seeking styles and irreverent T-shirt images - including one of a Palestinian youngster holding an AK-47 rifle - have spurred consumer backlash. Last year, a Native American woman publicized her concerns about the chain denigrating tribal culture by using the Navajo name on inexpensive products that weren't produced by members of the Navajo Nation.

Urban Outfitters also took heat last year for selling necklaces that looked nearly identical to creations by an independent jewelry designer. In May, teen pop-music darling Miley Cyrus criticized the chain to her more than 4 million followers on Twitter.

Still, its fans are plentiful. Urban Outfitters describes its target customer as 18 to 28, but, Johnson said, a 14-year-old girl is just as likely to admire the same dress as a 40-year-old woman in one of its stores.

"It's more of a mentality" than an age group, she said.

When Trey Hannah opened the gift shop Elevation on Granby Street in 2003, he sought some of those Urban Outfitters-type customers and went for a similar vibe, selling kitschy stuff, novelty items and funky gifts. He could never gain traction with enough customers, however, and closed the store after five years.

If Urban Outfitters was open back then, Hannah said last week, Elevation might still be in business.

"It definitely would have helped," he said. "The street-level retailer was starting to go away."

Norfolk has struggled to stimulate retail interest in its downtown streets since the passing of the department store heyday. A few stalwarts, such as The Norfolk Stationery Co. and Prince Books, have held their ground for years. Some newcomers, including Details on Granby men's store and The Sassy Sunflower, selling gifts and home decor, have ventured in more recently.

Kara Laskowski and her mother, Dorine Laskowski, opened Flower Works floral and gift shop four months ago at 323 Granby St., a block up from the Urban Outfitters space.

She hopes Urban Outfitters will multiply the existing foot traffic, as well as draw more tenants to Granby's many vacant storefronts. Laskowski is open on weekends now only by appointment but plans to have regular weekend hours once the new store arrives. She expects it will draw shoppers from MacArthur Center. The mall's main entrance looks down Market Street to the front of the future Urban Outfitters.

"Hopefully, they'll venture this way and see all the other retailers that are here that they don't know about," Laskowski said.

Wright said new retail is the next step in downtown's maturing revitalization.

"The first part is you attract our restaurants and your bars," he said. "The second part is you attract your residents."

Retailers follow the bodies, Wright said.

"Urban Outfitters is a pioneering merchant in being able to see emerging markets," said H. Blount Hunter, a real estate and retail consultant based in Norfolk.

Still, he added, it's not quite as simple as build it and they will come.

The city's downtown properties remain a tough sell, mostly because of their age and condition. Many spaces need extensive renovations to morph into high-traffic stores, Hunter said. Because of the recession, forcing long-term vacancies and low rent, many downtown landlords cannot afford the necessary upgrades, he said.

Other retailers will wait to see how Urban Outfitters fares in Norfolk, Hunter said. Downtown's viability for national chains remains unproven.

"One would hope that Urban Outfitters has coattails, but those coattails will materialize after Urban Outfitters is open and doing well," Hunter said. "The next wave of retailers will wait to see the buzz that Urban creates, and they'll wait to hear the cash register ringing."

Carolyn Shapiro, 757-446-2270, carolyn.shapiro@pilotonline.com