Insider Caution Grows in Retail Sector

First Call/Thomson Financial Insiders' Chronicle, July 26, 1999

Are consumers putting away their check books? As we monitor insider activity, we're starting to get that impression. Insiders at a growing number of companies with fortunes tied to retail are selling shares at increasingly higher paces. This trend is especially interesting considering that the long-bullish alignment of our industry sector screens has shifted to a more cautionary stance. As recently as early June, insiders were looking bearish in only eight of our sixty-nine industry groups. The look had been consistent since immediately following the September '98 market break. Quickly, however, things have begun to shift. We now see net insider distribution in twenty-one groups. Particularly prevalent, among the industries showing net insider selling, are retail and retail-related companies. Apparel & Apparel Stores, Restaurants, Computer Software & Computer Stores and General Retail companies are all among them. Here are some of the companies we are monitoring:

COMPUTER & RELATED

* Circuit City -- CC(*)

* Best Buy -- BBY

* CompUSA -- CPU(*)

RESTAURANTS

* Wendy's -- WEN(*)

* CRBL -- CRBL(*)

* Outback Steakhouse -- OSSI(*)

* Applebee's Intl. -- APPB

* Consolidated Products Inc. -- COP

APPAREL & RELATED

* Children's Place -- PLCE

* Deb Shops Inc. -- DEBS

* Urban Outfitters -- URBN

* Tommy Hilfiger Corp. -- TOM

* American Eagle Outfitters Inc. -- AEOS(*)

* Wilsons Leather Experts Inc. -- WLSN

GENERAL RETAIL

* Dollar General Corp. -- DG

* Kmart Corp. -- KM(*)

* May Dept. Stores -- MAY

The selling in a number of these companies has not yet reached "Alert" status. We are monitoring them, however, for any additional clues that may add to the picture. Granted, insiders in a number of these companies are taking profits, given the fides they've gotten from their shares in recent months. Not all companies on the list, however, are trading at their highs. The overall message is that we are receiving stronger signals that consumers may provide the answer to how overheated this economy will become. If this insider trend continues, that answer may come as an unexpected surprise to inflation-minded investors.

(*) Selling at "Alert" levels