Ms. Ryan: A hardline retailer would be a company that doesn't have a lot of exposure to apparel, whereas a softline retailer would be basically a clothing retailer such as Gap (GPS) or Limited (LTD). The hardline retailers that fall under my category include Amazon.com (AMZN), Barnes & Noble (BKS), Bed, Bath & Beyond (BBBY), BJs (BJ), Books-A-Million (BAMM), Borders (BGP), Costco (COST; Costco is not necessarily hardline, it has both lines and can be classified as department, discount or whatever), Linens 'n Things (LIN), MSC Industrial Direct (MSM), Office Depot (ODP), OfficeMax (OMX), Staples (SPLS), Tiffany (TIF) and ToysUs (TOY).
TWST: How did the hardline specialty retail stocks in general and how
did the stocks in your universe do over the last six to 12 months?
Ms. Ryan: 1998 was a mixed bag. Amazon exploded 934% relative to the market. You had other great performers including Bed, Bath & Beyond, up about 45% relative to the market and 77% on an absolute basis. Linens 'n Things did extremely well. It beat the market by 50%. Others that did well include Office Depot, up about 23%, and then Staples beat the market by about 100 percentage points. Thus far into this year the best performers have included Amazon.com, even though it has come off its peak of 199, but it's still up 13% relative to the overall market. Another good performer has been Staples. There have been price disappointments: Borders, for example, is down 40% relative to the market; ToysUs is down about 16% relative to market, and OfficeMax is down about 27%.
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