Brian Sozzi Talks About Specialty Retailers

Brian Sozzi of Wall Street Strategies is out with a research report on specialty retailers.

In his note, Sozzi says that prices are higher in specialty stores than at department stores like Macy's (NYSE: M) or J.C. Penney (NYSE: JCP). The department stores have done better better of moving inventory, and customer service has improved. He makes a note on Abercrombie & Fitch (NYSE: ANF) and says, "When has a half clothed male teen at Abercrombie & Fitch (ANF) guided you through the store to find a size?"

He also goes on to discuss the fact that specialty retailers do not offer the one-stop shopping experience consumers want right now. Sozzi notes, "instance, Ann Taylor (NYSE: ANN) displays a limited number of shoes in its stores. The customer therefore is left to buy a dress in that store and trek to a department store in the hopes of finding a pair of pumps that match the Ann Taylor "look." Major headache. Why not consolidate trips with gas above $3.50 per gallon by visiting a department store initially, which once again are no longer stodgy places to shop and where a complete outfit could be purchased."

Sozzi concludes his note by saying, "The allure of specialty retailers was always to buy a piece of the lifestyle, but in the process a higher price would have to be paid. Now, department stores have become larger specialty retailers, creating boutiques inside that showcase outfits that can be had for cheaper than a trip to Banana Republic. If you doubt me on this, check out the winners from second quarter earnings season; Nordstrom (NYSE: JWN), Macy's (NYSE: M), Kohl's (NYSE: KSS), and Saks (NYSE: SKS). The losers in my opinion were relegated to the specialty retail sector. Share shift is underway."