Q. What happened to Urban Outfitters Inc.? I thought it was such a hot company and stock. — L.R., via the Internet

A. The hip, teen-oriented retailer is feeling the pinch of the weak economy. Sales at existing stores declined one percent in November and December amid frequent markdowns of its apparel.

Although this was an abrupt change after several quarters of double-digit sales growth, chief executive Glen Senk said inventories are "clean and lean" and "well-positioned for the spring selling season". The chain often is praised for its tight inventory control, short merchandise lead times and efficient cost-cutting.

Nonetheless, its results trail the robust performance of apparel store competitor Buckle Inc., whose same-store sales rose 13.5 percent in December. The youth market is fickle and always in search of something new.

Shares of Urban Outfitters (URBN) declined 45 percent last year after a gain of 18 percent in 2007. The company remains in solid financial health, and fiscal third-quarter net income increased 31 percent. Its expansion has been paid for with little debt, and its ample cash is used to fund further growth.

The namesake Urban Outfitters brand of casual apparel, accessories and home decor for teenagers is sold in 130 stores in the US, Canada and Europe, while its Anthropologie brand that targets women 30 and older has 100 stores in the US. For "free spirits" favouring a casual country look, the Free People brand is sold in its wholesale stores and distributed to retailers. There also are catalogue and Internet sales.

There is a wide range of opinions on Urban Outfitters stock, due in part to varying projections about the economy and how well retailers will weather it.

Opinions among Wall Street analysts on Urban Outfitters consist of nine "strong buys," eight "buys," seven "holds," one "underperform" and one "sell," according to Thomson Financial.

The company continues to innovate, with the high-end Leifsdottir apparel line now sold through department stores as one example. It is thinking long-term.

The estimate for the fiscal year ending in January 2010 is a 7 percent earnings growth rate. The projected five-year annualised return of 22 percent compares to the expectation of 12 percent for the apparel stores industry.

Q. Legg Mason Value Fund used to be a standout. What has gone wrong? — J.H., via the Internet

A. Talk about being in the wrong place at the wrong time.

The fund was hammered by troubled financial holdings such as American International Group Inc., Freddie Mac and Washington Mutual Inc. after having missed out on energy stocks when they made their powerful run.

It was a dramatic turn of events for portfolio manager Bill Miller and his shareholders. Miller gained celebrity status as he beat the Standard & Poor's 500 index each year from the time he took over the fund in 1990 through 2005. Many investors considered him to be infallible.

The $4 billion Legg Mason Value Trust fund (LMVTX) has suffered a 12-month decline of 54 percent and has a three-year annualised decline of 26 percent. Both results rank in the lowest two percent of all large growth and value funds.

"We like this fund, but given how much it has fallen and seeing the damage that can result in an unfavourable period, it is tough to recommend it as a core holding," said Bridget Hughes, an analyst with Morningstar Inc. in Chicago. "I think it is a bold fund and will continue to be one, but it does better around the edges of your portfolio."

The Legg Mason Value Trust portfolio has been eclectic, with bets on turnaround plays, traditional growth stocks, Internet stocks and financials. Miller, with more than $1 million of his own money invested in the fund, tends to hold large positions in individual stocks at times, which has increased risk.

The fund continues to aggressively seek out historically reasonably priced, cash-generating stocks as it always has, Hughes said, but increasingly is considering dividends and balance sheets to reduce volatility. Mary Chris Gay, a large-cap value specialist, was named co-manager in 2006.

Consumer services and financial services each represent about one-fifth of the fund; health care and technology hardware are other significant concentrations. Its top holdings recently were Amazon.com Inc., AES Corp., Aetna Inc., Citigroup Inc., UnitedHealth Group Inc., Sears Holdings Corp., eBay Inc., General Electric Co., JPMorgan Chase & Co. and Eastman Kodak Co.

The "no-load" (no sales charge) fund requires a $1,000 minimum investment and a 1.68 percent annual expense ratio.

Andrew Leckey answers questions only through the column. Address inquiries by e-mail to andrewinv@aol.com.