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The General Motors strike and the Asian economic crisis were factors in the slowing US economic growth in the 2nd qtr of 1998 although the economy is continuing to move ahead. Specialty retailer gains during the second six months of 1998 are expected to be moderate given this economy, and merchants who provide effective values and prices will do best. Investors need to be selective and make commitments to only the most timely retail stocks.

Low inflation, high employment, and disposable income is forecast to aid consumer confidence in 1998, and the US gross domestic product is expected to grow at an average of 2.5% for the remainder of the year. Specialty store chains with unique merchandising strategies will have opportunities to grow and prosper as a result, although some sectors are mixed and competition is tough. Several of these stocks are timely for investors in 1998.

Specialty retailers, which comprise a diversity of firms, had a generally good Christmas selling season in 1997, even though prospects and results were mixed for several companies. However, high employment, low inflation and interest rates, and other signals for the US economy are positive for the industry as a whole. Investors need to be selective when choosing these stocks, both for the short term and the next three to five years.

The outlook for the 1997 holiday shopping season is good compared to 1996 with higher consumer confidence due to a higher minimum wage, continued personal income growth and low unemployment. The selling environment for books, video games, toys, consumer electronics and soft lines is also good in 1997 and this should continue through 1998. Investors must select stocks in this industry that are timely for both the near- and long-term.

Several of the specialty retailers are expected to post good same-store results and higher profits in 1997 in spite of the intense competition in the industry, especially in the 2nd half of the year. The most prosperous retailers will be those with good pricing strategies, aggressive expansion programs, and good merchandising skills and franchises. Many of these stocks are good investment selections for 1997 and future years.

Financial results for special lines retail stores are as mixed as the numerous types of stores that make up the industry and although sales were good in February and March, 1997, they slowed considerable in April. Many sectors, even those doing well, are not likely to show much improvement and will have slow growth rates. Investors should seek companies with high growth potential or those that cater to price-conscious consumers.

The special lines sector of the retail industry performed well in 1996, with a less competitive environment and increased consumer spending. However, the 1996 Christmas sales season was disappointing and many stock valuations are overextended. There are no unusual positive or negative prospects for the segment, but US income polarization has become an industry factor. With a few, select exceptions, stocks in this industry contain weaknesses.

The forecast for the 1996 Christmas shopping season is good with high consumer confidence levels, along with the factors of supply and demand. However, specific retailers may have problems in 1997 since a slowdown in the US economy is expected, and consumer confidence and spending are not likely to be maintained. Investors in 1997 must carefully select those retail stocks with well-defined opportunities and proven records of success.

Same-store sales in the special lines retail industry slowed in Jun and Jul of 1996, due to lower consumer spending, calendar shifts, and the weather. Television broadcasting of the Olympics in late July also affected sales, as well. Companies in this industry are expected to refocus efforts after the 1996 holiday season, and several retailers are forecast to expand. Investors should seek stocks with turnaround, value, or growth potential.

The specialty retail industry performed poorly during the 1990s, with high inventory levels and low consumer spending. Industry prospects are good for 1996 compared to 1995, however, with 2.8% gross domestic product growth in the 1st qtr and 2.5% to 3% growth forecast for the remainder of 1996. The high-end retail segment with affluent customers is expected to outperform th market. Investors must evaluate individual stocks before investing.

Consumer debt and job security concerns led to a steep decline in consumer confidence from Dec 1995 to Jan 1996, resulting in weak retail sales and low margins. This is especially true in furniture and clothing. Several specialty chains have strengths, however, as do several chains with high income customers. These stocks are more volatile than in other industries and investors should seek the most timely issues.

Earnings prospects for the specialty retail industry in 1996 are weak, due largely to competition and mixed consumer spending. Same-store sales for Oct 1995 deteriorated and the 1995 holiday shopping season is expected to be weak. Sluggish wage growth and an aging population are two trends that will affect consumer spending in coming years. While this industry is not timely in 1995 and 1996, several stocks may be good investments.

Slow wage gains over the past twelve months and erratic consumer confidence are having an unfavorable effect on specialty retail earnings. Competition from department stores, factory outlets, and discounters, along with low demand, are also having an impact. Earnings for the 1st half of 1995 are sluggish as a result. These stocks are expected to underperform the market and investors must show caution in making selections.

The specialty retail stores sector, which comprises several categories, has been affected by increased competition and the consumer slowdown in 1995. Stock prices for specialty stores are lower as a result. Higher installment debt, increased saving, and competition will have a negative result on earnings. Investors should avoid stocks in this industry, with the exception of proven companies, such as CompUSA and Circuit City.