American clothing retailer, Urban Outfitters has announced that it would be acquiring the Vetri Family Group, a Philadelphia-based Italian restaurant chain whose crown jewel is the Pizzeria Vetri that currently operates across nine locations.
Richard Hayne, chief executive at Urban Outfitters justified the diversification move by saying "Spending on casual dining is expanding rapidly, and thus, we believe there is tremendous opportunity to expand the Pizzeria Vetri concept."
Dave Ziel, chief development officer at Urban, opined that there was a need for retailing to become more experiential. "I think there's a craving for real socialization beyond social media."
Apart from running its own eponymous apparel chain, Urban also operates Anthropologie and Free People brands. It reported its latest quarterly results on Monday (16 November), according to which it raked in profits of $52m (£34.3m,€48.8m). Its revenues stood at $825m, which were not only below expectations, but also below what it reported in the same quarter last year.
The Philadelphia-headquartered company is not the only retailer to be hit by slowing sales. Many other peers such as Macy's and Nordstrom have also reported poor third quarter performance, due to reasons such as weak footfalls in stores.
Urban Outfitters has long believed that it should not have more than 200 to 250 stores each of Urban Outfitters and Anthropologie in the United States to avoid overexposure. Already running a portfolio of 240 Urban and 214 Anthropologie stores in the country, it seems to have achieved its self-imposed limit. This could be the reason for the company's diversification plans, which in recent times includes the launch of Terrain, a home goods brands and its bridal boutique, BHLDN.
This is not the first time that retailers have combined a restaurant with a shopping experience. While Urban itself operates a small number of restaurants, such as the one at its Herald Square location in New York, just earlier this year Ralph Lauren too opened its casual dining restaurant in NYC and Macy's, who have restaurants at the locations for decades.
However, investors did not seem to agree with the company's diversification plan as a move that would help the company improve its sales. This sent its stocks down by about 7% during regular trading hours.