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TWST: How have the stocks of the food and drug retailers performed over the past six to 12 months, and for the most part, have they been able to hold their own over the past difficult month? Have any of the stocks been under pressure?

Mr. Currie: By and large, the last year has been a successful one for supermarkets. They’ve benefited, one, because they had a bad year a couple of years ago when valuations plummeted. So they’ve been recovering from that. But also there has been a drive into more defensive names and supermarkets have popped up as one of those classically defensive sectors that investors need for protection. And of course, demand for food is much more stable than in most other retail categories. However, we believe the supermarket sector is showing signs of increasing competition. My background is that of a UK analyst. I spent 10 years looking at UK retailers, which has been one of the most difficult sectors of the last 10 years in the UK stock market, because while there are some fantastic retailers in the UK, they were going through a competitive phase in their cycle. They had come out of a consolidation phase and entered into a much more aggressive market share-eating phase, and we saw operating margins hit quite drastically. And as a result, the share price performance of that group through the 1990s was extremely poor. We believe that US retailers are also coming out of that quite intense consolidation phase, and we think there are signs that they’re entering a much more competitive phase. And of course, when those things happen it doesn’t really matter what stage of an economic recovery or slowdown you’re in because the fundamentals take over.

TWST: What is the outlook for pricing? Is there any indication that inflation is picking up?

Mr. Currie: Not at the moment. It’s a very tough retail market overall. Inflation for some years now has been negligible. And from what we’re seeing in terms of increased competition, inflation is getting lower.

TWST: Do you see the Europeans that have already established a base here, such as Ahold, such as Sainsbury and Marks & Spencer, trying to make further inroads in the US food retailing market?

Mr. Currie: Let’s take them individually. I think Ahold (NYSE:AHO) has done a very good job of consolidating down the eastern side of the US. There also are two other European retailers that we believe have half an eye, if not one eye, on the US, and they are Tesco (OTC BB:TSCDY.OB) and Carrefour. I regard these two retailers as possibly the best food retailers in the world, particularly Tesco. After eight to 10 years of success in a difficult UK market, and difficulty with its share price, the company appears to have finally hit the right growth formula. Tesco has entered various emerging markets in Europe and Asia very successfully and its share price is riding high. We think that the company might agree with my view that if it wants to be a truly global retailer, it has to be in the US. It really depends on what it wants to be in the US, whether it wants to be a supermarket player or a supercenter operator, because outside of its UK base, Tesco is more of a supercenter operator. We think Tesco would attempt to adopt a multi-format strategy in the US because it is very successful at doing that in its home market. Tesco operates everything from gas stations to convenience stores, regular supermarkets and full-sized supermarkets. In the US the company could have an opportunity to follow a similar multi-format approach.