Shares of Urban Outfitters (URBN.O) fell as much as 20 percent, as investors reacted sharply to the sudden exit of the retailer's chief executive amid a planned turnaround and the naming of its co-founder to the top post.
On Tuesday, Urban Outfitters said CEO Glen Senk, who was with the company since 1994, resigned. It named its chairman Richard Hayne as his replacement.
Senk will join privately held jeweller David Yurman, effective February 27. Senk will also take an ownership stake in the company, David Yurman said in a statement on Wednesday.
Paul Atkinson, head of US Equities at Aberdeen Asset Management, which has a 0.29 percent stake in Urban Outfitters, expressed doubts that Hayne would stay at the helm for long.
"I think they will bring in a new CEO and that will benefit the business," he said.
Citigroup analyst Jeff Black said he does not view the new CEO "as having had a strong hand in day-to-day management."
"Senk and CFO Eric Artz had begun to move (Urban) in the right direction on inventory, but ... organizational issues could remain a serious distraction over the next year," Black, who cut his rating on the stock to "sell" from "buy," said.
The Philadelphia-based company, which operates the Urban Outfitters, Free People and Terrain store chains, has been trying to turn around its product offering -- especially at its Anthropologie unit -- which has fallen out of favor with some customers.
Barclays Capital analyst Stacy Pak said the management change could further delay the turnaround past the first quarter of this year.
The stock, which fell to a two-month low of $23.42, later recouped some losses and were trading down 18 percent at $24.14 on the Nasdaq. More than 29 million shares changed hands by 1538 ET, about 12 times their daily average volume.
(Reporting by Nivedita Bhattacharjee in Chicago, Mihir Dalal and Ranjita Ganesan in Bangalore; Editing by Sriraj Kalluvila and Joyjeet Das)