Buying Retail

Analyst Liz Dunn identifies merchants that are boosting their consumer (and investor) appeal

Liz Dunn (Photo by Lonnie C. Major)

If you want to know how the American shopper feels from one month to the next you can peruse a stack of consumer sentiment surveys—or you can chat with Liz Dunn. Since graduating from Spelman College in 1996, Dunn has steeped herself in the retail industry’s most vital statistics. She has worked in corporate finance positions at Gap Inc. and Liz Claiborne, studied the sector’s ups and downs for investment clients at Prudential Equity Group, and worked as an investment banker in the consumer sector at Bear Stearns. As a managing director and retail equity analyst at Thomas Weisel Partners in New York, one of the frequent questions Dunn hears from investors these days is: “Can the economy—two-thirds of which is driven by consumer spending—rebound while Americans are still nursing post-recession shell-shock?” Dunn spoke to black enterprise recently about the economy and a handful of retailers prepared to capitalize on value-driven shoppers.

What’s your general forecast for market performance during the rest of 2010?

I think we’re going to continue to see some ups and downs. But, generally, directionally we should continue to move up. A number of my clients were concerned about the possibility of a double dip in the recession. Now, the consensus is shifting away from that. We’re probably headed for a more gradual recovery. As large funds position themselves for that—as opposed to the double dip—they’re going to continue to buy stock.

As far as economic recovery, economists are saying a real rebound can’t happen without job growth, which would give consumers confidence to start spending again. Is that your view?
Yes. But what we saw through the 2009 Christmas holidays is the consumer is becoming a bit more confident. The [sales] numbers, largely, came in better than expected. We’re beginning to see positive retail sales performance from many of the largest retailers. The jobs recovery is certainly important, and that’s going to lead us out of this. But I think that we’ve stabilized and seen the worst of it. Based on the consumer confidence numbers, that’s how the consumer is feeling as well. There’s some anticipation that things are beginning to improve, and spending patterns are reflecting that.

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