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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: hjz who wrote (73479)	11/28/1999 3:05:00 PM
From: kendall harmon	Read Replies (1) \| Respond to of 120523

Retailing stocks and Christmas--from the chicago tribune << Holiday season looks bright for retailing stocks By Andrew Leckey Tribune Media Services November 27, 1999 Holiday retail sales will likely be up this year, perhaps 6 percent according to some estimates, due to joyous consumer confidence and a merry economy. Savvy investors in retailing stocks have been receiving presents throughout 1999 in the form of strong price performance. Following spirited earnings results in the third quarter, there could be even more pleasant surprises. Will the upstart Internet now become a Grinch stealing Christmas from traditional retailers? Not likely this year. "The estimates range from $6 billion and $12 billion worth of goods being bought over the Internet this holiday season," said Sara Zeilstra, e-commerce analyst with Warburg Dillon Read. "Some of that is certainly going to come at the expense of traditional retailers, but a lot is from traditional retailers setting up on-line sites themselves." Indeed, each day brings a launch of an on-line sales site by one well-known retailer or another. Buying on-line through a trusted name goes a long way in instilling confidence in on-line shopping. The established retailer also doesn't have to shell out the big bucks to gain name recognition. "We'll hear more before the year is out about a surge in on-line selling, but that surge still represents very, very tiny numbers relative to the sales we see in stores," added Dorothy Lakner, specialty retail analyst for CIBC Oppenheimer. Internet purchases now account for only about 1 percent of total retail sales. "With 200 million people on the Internet and 6 billion people on the planet, we're not even close to on-line shopping being a serious portion of total sales," asserted Alan Mak, retail analyst with Argus Research. While the on-line threat is not yet overwhelming, another trend is well in place. Discount chains and specialty stores continue to take big chunks of business away from department stores. J.C. Penney, the nation's fourth-largest retailer, saw its net income drop 24 percent in its fiscal third quarter, while No. 2 retailer Sears Roebuck experienced a 10 percent profit decline. Taking aim at a youthful target audience with well-chosen merchandise, Abercrombie & Fitch and Gap (owner of Gap, Banana Republic and Old Navy stores) are specialty store stocks highly recommended by Lakner and Mok. On the women's side, AnnTaylor Stores enjoyed a 52 percent jump in profits in the third quarter, while Talbots jumped 57 percent. Another key investment choice, luxury-goods retailer Tiffany, has been one of the most consistent chains in terms of sales gains over the past decade, said Lakner. Its net income jumped 81 percent in the just-completed fiscal third quarter. Its marketing campaigns have effectively broadened its customer base, with jewelry priced as low as $100 now available in the stores. Furthermore, Tiffany's No. 2 market, Japan, has shown a 10 percent gain in sales. Intimate Brands, with its Victoria's Secret chain, is another outstanding clothing retailer, believes Mak. Meanwhile, consumer electronics chains Circuit City Group and Best Buy stand to benefit considerably from attractive products this holiday season, according to Mak. DVD players have dropped below $200, VCRs have dropped below $100 and other items such as big-screen televisions and digital camcorders, have all declined in price. Taking the high road with quality choices makes sense in retailing stocks. The stocks of top-tier retailers Wal-Mart Stores and Home Depot should sit comfortably in most portfolios because investors can confidently trust their quality of execution, management team and future prospects, Mak said. You'll pay high prices for these stocks because you can expect them to do well and report better-than-expected results.>> chicagotribune.com