Oddball Deal for Urban Outfitters

Jan 24, 2008 5:25 AM  By

Apparel and home decor merchant Urban Outfitters announced Jan. 18 it was acquiring J. Franklin Styer Nurseries. Why? Nobody is quite sure.

On the face of it, the only thing in common between the two companies is geography: J. Franklin Styer Nurseries is located in Concordville, PA, about 20 miles outside Urban Outfitters’ Philadelphia headquarters.

Styer’s 10-acre nursery sells indoor and outdoor plant materials, garden supplies, and home products; it also includes a garden café, and a range of landscape design and construction services.

Urban Outfitters’ flagship brand includes operates 122 stores in the U.S., Canada, and Europe, two Websites, and a catalog;
its Anthropologie brand has 106 stores in the U.S., a Website
and a catalog; and Free People, the company’s wholesale division, also includes 14 stores, a Website and a catalog.

Calls to Urban Outfitters and Styer Nurseries were not returned, but according to a release, Styer’s Nursery will launch Urban Outfitters’ fourth brand – Terrain. The brand is best described as an experiential retail concept for garden lovers.

In the release, Richard A. Hayne, chairman/founder of Urban Outfitters, said: “We are delighted to welcome Styer’s into the URBN family. We look forward to growing Styer’s existing business and integrating it into our Terrain brand. We believe Terrain at Styer’s will become one of the premier contemporary garden centers in the country.”

Stuart Rose, managing director with Wellesley, MA-based investment bank Tully & Holland, doesn’t understand the deal. “I’m not familiar with the Styer customer, but I wonder whether it is the same hip, urban customer found at Urban Outfitters and Anthropologie. Odd is a good word when thinking about this deal, but Urban Outfitters is a good retailer and merchandiser. I will give them the benefit of the doubt.”

Sharing Rose’s sentiments is Chris Shannon, managing director with New York-based investment bank Berkery, Noyes & Co. “The Urban Outfitters/Styer Nurseries seems like an odd deal to me,” he says. “Urban Outfitters’ base clients are young and hip and usually in cities, not a lot of focus on outdoor gardens.”

Shannon admits that the Styer deal is one way for Urban Outfitters to extend its brand. “But I always get a little concerned when a brand stretches far.”