Insider Selling Heads To The Skys And Malls

First Call/Thomson Financial Insiders' Chronicle, July 30, 2001

With so many eyes on technology and the enduring malaise of corporate America, the so-called "earnings recession" may be troubling insiders in at least one sector customarily associated with the consumer. For the better part of the quarter, insiders have been increasingly prolific sellers of airline stocks.

The dramatic decline in high-margin, discretionary corporate travel is an obvious concern. Should we see no pickup in corporate spending, excess capacity could quickly challenge fuel costs as the air carriers' Achilles heel. Whatever the reason, as corporate spending hangs in the balance and the traditionally weak Fall/Winter travel season approaches, airline insiders have turned noticeably cautious.

So too have those at a number of apparel retailers, though here the onus falls squarely on the consumer. And while the insider selling may not be quite as pervasive as in the air carriers, there are troubling aspects nonetheless. For one thing, the group has drifted to the top of our screens for insider distribution at a time when many are sizing up a thus-far resilient consumer. And why sell now, just as tax rebates are hitting the mailbox and kids are gearing up to head back to school?

Thus far, with the exception of certain top-tier names where a level of insider selling is par for the course, the contagion has been confined to apparel retail. Should it spread in the coming months, this would clearly be a concern.

And unlike in technology, insiders in retail have been known to head to the open market in search of bargains; should retail valuations get particularly compelling, we'd expect to see some accumulation from insiders in the group. To this point we haven't.

Q1 SALES AT SELECTED AIRLINES
Company                              Insiders     Shares  Avg. Price
Atlantic Coast Airlines Hlds (ACAI)     10       839,558    $24.26
Continental Airlines, Inc. (CAL)        9        187,198    $48.60
Southwest Airlines Co. (LUV)            6        241,490    $18.57
AMR Corp. (AMR)                         5        132,151    $37.35
SkyWest, Inc. (SKYW)                    8        231,500    $22.50
Northwest Airlines Corp. (NWAC)         3      1,859,348    $27.60
Q1 SALES AT SELECTED APPAREL RETAILERS
Company                             Insiders     Shares  Avg. Price
Amer. Eagle Outfitters Inc. (AEOS)     8      3,015,087    $37.58
Abercrombie & Fitch Co. (ANF)          5        302,889    $44.73
BEBE Stores Inc. (BEBE)                6        116,000    $28.84
Cato Corp. (CACOA)                     11       415,920    $18.79
Gap Inc. (GPS)                         8      2,297,060    $29.43
J. Jill Group Inc. (JILL)              5        107,500    $20.05
Ross Stores Inc. (ROST)                8        266,528    $22.21