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Four analysts and top management from two sector firms examine the broadline retailers & discounters sector in this special 31-page Broadline Retailers & Discounters issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info515.htm

TWST: Wayne, given the recession, the layoffs, and of course the events of September 11, have you been at all surprised by the level of consumer spending?

Mr. Hood: I was surprised by how well it’s held up. I think a lot of people felt that way after the events of September 11 when they saw the unemployment rate ticking up. I think we have to keep in mind that historically recessions have been broad-based and have cut across many geographic regions of the country. I think we’re finding recessions may not be as long or as deep given the diversity of our industries and the fact that technology helps us better manage inventory. So I think we could a have rolling economic recession, where you have a recession in the Tri-State area or in Northern California, but not the entire country.

TWST: Wayne, is there anything you’d like to add on the topic of mall traffic and the outlook for malls?

Mr. Hood: I think when you look at traffic and average ticket, in the first half of last year we started to see some slippage in the average ticket, although the count was still good, and that continued all the way into September 11, and then both traffic and count fell off. Since that time traffic remains pretty strong. Some people we’ve spoken to are indicating some slight improvement in average ticket, so we’ll wait and see what happens. I am encouraged by commentary from a number of retailers that are seeing some improvement in bridge and the better lines of apparel, when compared to moderate.

TWST: You mentioned Nordstrom (NYSE:JWN), May (NYSE:MAY) and Federated (NYSE:FD). Are you recommending those as stocks to buy today?

Mr. Hood: Yes. Nordstrom has had quite a bit of a move. Our target is 30, and it’s at 25 now. So I think that clearly, if it were to move back to 20, we would encourage those who missed it to get in. This is a company that over the years has perpetually been in an earnings turnaround, and we’ve been reluctant to recommend it. But we saw expense rate improvement in the second quarter of last year for the first time on a flat comp. That just hasn’t happened at Nordstrom. Then we saw further improvement in the third and fourth quarters, which really opened our eyes. So we believe the turnaround is for real now; if it’s not, they’ll probably end up selling the company. So we think you want to be there. This is a company that’s capable of earning 1.2 this year and 2 in the out years.

TWST: Wayne, we’ll give you the last word.

Mr. Hood: I don’t think it’s too different from what I’ve said before, and that is that we are still overweight the group, but believe we are in the ninth inning. So it does get trickier, which is what Shari and Jeff were talking about. I think I would just reemphasize that investors should try to find companies that have some kind of earnings turnaround story that is visible, that’s not four or five years out from now, where you can really have a nice earnings recovery.

This special issue includes:

1) Broadline Retailers & Discounters - In an in-depth (9,300 words) Analyst Roundtable, Shari Schwartzman Eberts, Vice President at J.P. Morgan Securities, Wayne Hood, Managing Director at Prudential Securities, Inc. and Jeffrey Stinson, Research Analyst at Midwest Research, examine the outlook for the sector including outlook for the economy, earings expectations and share specific stock recommendations.

2) Apparel & Footwear Stocks - In an in-depth (3,200 words) Expert Interview, Carol Pope Murray, Director at Salomon Smith Barney, examines the outlook for the sector and shares specific stock recommendations.

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