Retail Picks and Pans for the New Year
The holiday retail season was a gloomy one, but luckily it is time to say goodbye to 2007 and turn the page to 2008.
Dana Telsey, chief research officer and retail analyst for the Telsey Advisory Group, shares her retail picks and pans for the new year.
“As we go into 2008, Gymboree is certainly one name that’s of interest. It’s growing its earnings at a mid-teens rate, it’s trading at a multiple of under right around ten times for 2008, has a new concept and also has a clean balance sheet.”
Another one of Telsey’s picks for 2008 is apparel store Abercrombie & Fitch. “With a potential pickup in square footage growth from their new concept and with their flagship stores happening to be doing so well and margins continuing to hold given that they remain at full price, that’s another name for 2008 that’s interesting.”
In addition to winners, Telsey also shared a few stocks on her 2008 loser list.
“Bebe’s is having a very tough time. They’re fashion appeal just isn’t what it used to be. We see some of their retail prices coming down a little bit and then becoming more promotional than they’ve been in the past, so that certainly is challenging for them.”
On the consumer electronics front, Telsey sees a clear winner and loser going into the new year.
“If you’re talking about the electronics war out there it’s all about Best Buy, and the fact that prices this year are holding more steady than they were last year, and inventory levels are also in a cleaner position, it certainly makes Best Buy the destination for consumer electronics. Circuit City is having a very tough time and we don’t see their ability to rebound in the near term.”