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Four analysts and top management from twenty-eight sector firms examine the consumer sector in this special 119-page Bear, Stearns & Co. 8th Annual Retail, Restaurants & Apparel Conference issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info501.htm

TWST: What do you include in your coverage area? What issues and trends bind them together?

Ms. Telsey: I cover the specialty stores and hardline segments of retailing — everything from apparel retailing to luxury goods to home furnishings retailing, office superstores, and the consumer electronics sector. I’ve been in the business for over 17 years and what binds my coverage together is the knowledge base that we have developed — of the people, the trends, and the historical ups and downs of all different types of retail segments. That knowledge base allows us to carefully analyze the strategies of companies and the changes that we believe are being made, will be made, and how they will impact the bottom line. We’re looking to assess the growth opportunities within these businesses in order to better analyze the future direction of their earnings.

TWST: Do all those adjustments make sense? Is that just being cautionary or do you think there’s a long-term message?

Ms. Telsey: The adjustments that are being made are reflective of the current economic reality. A lot of companies reach a stage in their life cycle where they just can’t keep opening stores anymore because the level of productivity at these new stores isn’t as great. You either need to find a new concept or you must enhance the productivity out of the existing store base.

TWST: Does that give some of the niche players — some of the smaller players — an opening as the larger players look to use their cash and capital to supplement these stalled growth strategies over the next few years?

Ms. Telsey: Yes. It does give opportunities to some of the niche players to evaluate their opportunities. As an example, we believe malls change demographically every five and 10 years. Demographics play a big role in determining what types of retailers do well. Just 10 years ago, malls had a lot of shoe stores in them. There was Wild Pair, Bakers, Leeds — a lot of the Edison Brothers’ chains. Merry-Go-Round stores also filled the malls.

TWST: Are they typical of the top-level brand name companies that you cover, insomuch as they do have the cash and capital on hand to meet that kind of a studied expansion program?

Ms. Telsey: Yes, they are. Another name similar to that which we also like a lot is Coach (NYSE:COH). Coach has less than 130 stores, and they’ve been able to reinvigorate their brand and widen their appeal over the past few years under the design direction of Reed Krakoff. Their newly updated stores are gaining wide acceptance, and they generate very high sales per square foot in excess of $700. They also have a Japanese customer who really adores the brand. Their balance sheet remains very strong, and they recently announced an $80 million share buyback.

TWST: What’s the international impact, or the international opportunity, for these companies in general — and for the ones you’ve specifically reviewed as far as their own outlooks?

Ms. Telsey: In terms of international, Tiffany (NYSE:TIF) and Coach are doing the most overseas. Tiffany has 28% of their sales in Japan and around 4% of their sales in Europe. Coach is first going to Japan in a major way through a joint venture arrangement. Typically, branded companies, where the name is known, will probably perform better. But there is so much domestic opportunity within the US for a lot of these companies, that is where they typically focus their operations.

This special conference issue includes:

1) Outlook for Restaurants - In an in-depth (3,100 words) Analyst Interview, Joseph T. Buckley, Senior Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

2) Specialty Stores & Hardline Retailing - In an in-depth (3,300 words) Analyst Interview, Dana Telsey, Senior Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

3) Food & Drug Retailing - In an in-depth (4,000 words) Analyst Interview, Deborah H. Weinswig, Managing Director covering Retailing/Food and Drugstores and Retailing/Department Stores at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

4) Outlook for Retail - In an in-depth (3,300 words) Analyst Interview, Brian Tunick, Associate Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of twenty-eight sector firms examine the outlook for their firm and the sector.