Power Point: Big is the enemy of cool

August 29, 2008, 2:21 AM UTC

“Big is the enemy of cool.”

–Urban Outfitters CEO Glen Senk said this in the company’s recent earnings call. Urban Outfitters is one of the few winners in today’s punishing retail environment. Management reported a 79% increase in second-quarter net income.

Senk’s words echo the philosophy of J. Crew CEO Mickey Drexler, the subject of a cover story in the current issue of Fortune. But J. Crew isn’t sharing in the success of its competitor, reporting disappointing earnings yesterday. Drexler blamed a 12% drop in second-quarter net income partly on a systems upgrade that disrupted phone and Internet sales. He lowered J. Crew’s fiscal-year outlook.

Even as Wal-Mart is the world’s largest company, Sam Walton, its founder, subscribed to the “smaller is better” belief. (Power Point to come!) Low prices are vital to Wal-Mart’s success in this brutal economic downturn, but that ethos works in its favor too.