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Three analysts and top management from ten sector firms examine the apparel sector in this special 54-page Apparel Retailers issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info441.htm

TWST: What is there about the over-35 demographic that makes that group attractive?

Ms. Brunner: The population growth of that group looks very solid for the next few years. We also believe there is a shift away from the department stores to the specialty segment. The 35 and over woman is the department store shopper. But the consensus among shoppers that we are hearing now is that they really believe the specialty stores are more convenient than the department stores. So we believe that shift is going to become more powerful over time and is one of the more interesting developments in specialty retail currently.

TWST: What are you predicting for consumer spending on apparel through the end of this year and for 2002?

Ms. Brunner: We don’t have to make those predictions fortunately. We focus on fashion and traffic. In a tough environment where overall spending on apparel gets compressed, there will be a retailer, maybe two retailers that get the fashion right, and therefore they are well positioned to take market share from others who are struggling in a difficult period. So there can be winners even in a depressed market.

TWST: Are there any fashion trends that could create enough excitement to drive consumers into the stores? Is there a hot fashion?

Ms. Brunner: We’re in an environment where promotions are the major traffic influencer because the fashion on the men’s side of the business is boring and there’s no prevailing image that the women are following either. The women are seeing western styles, retro styles, urban styles and revealing styles in the stores currently and no idea is really sticking out in terms of a “gotta-have” fashion. There’s no new fashion in the stores in October because it’s the end of the season and a clearance month on fall product so we expect the retailers to get very promotional for the remaining two weeks of the month.

TWST: What changes do you expect to see in the competitive environment for the apparel retailers over the next 12 to 24 months?

Ms. Brunner: For the time being, much will depend on the economy and the consumer’s state of mind. The department stores are at a crucial stage of the game in our view. We’ve seen some closures for a few of the lower-end retailers such as Montgomery Ward. In general, the department stores is a group that we would be looking at to see whether they’re going to pull back on expansion or whether they can recreate themselves. Some of these retailers are trying to drive their business through the creation or evolution of proprietary labels, rather than selling so much of the manufacturer’s product. So if that works, the department stores may be able to make a good comeback, and may be able to build and expand again. That to us is really the sector that people need to focus on. It’s sort of a make or break situation in our mind.

TWST: I’m not familiar with Christopher & Banks. Would you start off with a profile of the company?

Ms. Brunner: This is the company formerly known as Braun’s. They are a women’s 35 and over specialty retailer. They have specialty stores in the malls. The stores are about 3,000 square feet. They are after the lower half of the baby boomer demographic; those women are the same age as the Talbots’(NYSE:TLB) customers but have a different household income. Christopher & Banks (Nasdaq:CHBS) typically competes with the J.C. Penneys (NYSE:JCP) of the world, and are actually positioned near the J.C. Penneys to catch some of that traffic, and it’s a concept that is growing very rapidly. They’re growing square footage at about 30% this year and 25% next year, and they have a new concept that they launched in the last year that is called C.J. Banks. This concept is aimed at the larger size customer, the size 14 and over customer.

This special issue includes:

1) Softline Retailers - In an in-depth (2,900 words) Analyst Interview, Mercedes Sanchez, Vice President in the Equity Research Department at Raymond James & Associates, examines the outlook for the sector and shares specific stock recommendations.

2) Outlook for Apparel Retailers - In an in-depth (4,200 words) Analyst Interview, Lauri A. Brunner, Vice President of Equity Research Analyst at Dain Rauscher Wessels, examines the outlook for the sector and shares specific stock recommendations.

3) Apparel Stocks - In an in-depth (4,200 words) Analyst Interview, Stacy Pak, First Vice President at Prudential Securities, examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of nine sector firms examine the outlook for their firm and the sector.