/DDS GYMB TJX WMT /ANL SAP/
10/30 Dillard,TJX -2-: Goldman Cuts (DJ) Retail Sector To Mkt Weighting NEW YORK (Dow Jones)--Goldman Sachs & Co. lowered its rating on Gymboree Corp. (GYMB) and Wal-Mart Stores Inc. (WMT) to market outperform from recommended for purchase.
The firm also lowered its rating on Dillard Department Stores Inc. (DDS) and TJX Cos. (TJX) to market performer from market outperformer.
Concurrently, Goldman reduced its rating on the retail sector, excluding food and drug, to a market weighting from an overweighting.
''We are now advocating a market-weighted stance on the group,
not a negative position, as evidenced by the relatively few stocks we are downgrading at this time,'' the firm's retail analysts said in a note.
Goldman said the decision reflected the group's significant year-to-date outperformance, combined with mixed signals from its lead indicators.
The analysts said their expectation of moderate consumer spending growth is based on continued strength in real wage growth, slowing installment credit growth and decelerating housing turnover. The acceleration in real wage growth is moderating, and the firm does
not anticipate the same boost to personal consumption expenditures
growth as was generated during the first half of 1996. ''Even so, the strength in wage growth should provide downside protection against further slowing in personal consumption expenditure growth,'' the firm said.
Installment credit, Goldman said, remains a signficant drag on consumer spending, and housing turnover has decelerated from 15% year-over-year growth in the spring of 1996 to an estimated flat performance in September. Given challenging comparisons, ''we expect this measure to be flat to down 5% over the next 6 months, assuming interest rates remain constant.'' The indicator is most relevant to big-ticket durable retailers, the firm said.
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