Ms. Tsai: I cover teen and children apparel retail. I cover seven names. Those are the teen retailers, Abercrombie & Fitch (ANF), American Eagle (AEO), Aeropostale (ARO), Pacific Sunwear (PSUN), and the children's apparel retailers, Tween Brands (TWB), Children's Place (PLCE) and Gymboree (GYMB).
TWST: Why those segments?
Ms. Tsai: Those segments I initiated back in late September mostly because I see
it as more of a defensive segment relative to women's apparel retailing. There
is a lot more competition between the department stores and all the different
specialty retail concepts. And also teens tend to be better insulated from
downturns and consumer spending.
TWST: Let's look at the teen segment. How did it do in 2007 from a business
perspective?
Ms. Tsai: Starting in the second half of the year, you began to see a slowdown
pretty much across retail. Most of the names in my space didn't do too well. The
only ones that ended up for the year were Aeropostale and Abercrombie & Fitch.
Aero was up nearly 30% for the year and A&F was up about 15%. The rest of them
had a more difficult time. Given retailers saw a slowdown coming throughout the
year, they invested in their operations, not only for expansion but also to
become more efficient. We are starting to see some of those efficiencies pan
out, which is positioning some of these retailers better as they head into 2008
amidst a weaker spending environment.
Tickers included in this excerpt: AEO, ANF, ARO, PLCE, PSUN, TWB
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