Grom had a positive outlook for the retail sector, and said “sticking with retailers with positive traffic should allow some sales per square foot expansion over the next 3 to 4 years.”
He advised investors to stick to the defensive names but also have a little bit of beta in their portfolios.
Greenberger said investors should start buying consumer discretionary names during the late contraction phase of a recession as well as when the economy starts to show signs of a rebound.
“We do not think that a very large topline growth is coming back anytime soon, but inventories were so out of control among many retail companies that a way to make profit right now is by cutting inventories,” she said.
American Eagle Outfitters
Grom has investment banking clients who own shares of Kohl’s, Dollar Store, BJ’s and Wal-Mart.
Greenberger’s company or an affiliate received compensation for products and services other than investment banking from Urban Outfitters and American Eagle Outfitters in the past 12 months. A suit file by American Eagle Outfitters against Citigroup is currently pending in federal court.