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Urban Outfitters to enter pizza market with new deal

Urban Outfitters is swapping crop tops for mozzarella as part of its latest deal.

The retailer announced Monday it is entering the pizza business with plans to acquire the Vetri Family group of restaurants, a Philadelphia restaurant group that includes Pizzeria Vetri.

Pedestrians pass in front of an Urban Outfitters store in New York.
Scott Mlyn | CNBC
Pedestrians pass in front of an Urban Outfitters store in New York.

"Spending on casual dining is expanding rapidly, and thus, we believe there is tremendous opportunity to expand the Pizzeria Vetri concept," said Urban Outfitters CEO Richard Hayne in a release.

The move marks a departure from Urban's retail roots. The company currently operates 240 locations of its namesake brand, 214 Anthropologie stores and 112 Free People locations.

In a note out Monday, Stifel analysts wrote adding Pizzeria Vetri to select stores could be a traffic driver for the chain.

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"While we are surprised by the announcement, we believe there is cross-shopping potential between URBN retail stores and Pizzeria Vetri, given the similar customer demographic," they wrote in a note to clients.

Still, they note operating a new business and successfully incorporating it into the company is not an insignificant challenge.

Urban, like many of its retail rivals, has struggled this year. Shares are down more than 35 percent year to date.