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Wilsons: Set To Go Hell For Leather

BusinessWeek Investor -- Inside Wall Street

Wilsons: Set to Go Hell for Leather

With Christmas just around the corner, are retail stocks set for a lift? Maybe not, considering the slowing economy and the sharp sell-off in stocks. But Daniel Schwarzwalder of Buckingham Capital Management--whose fund, mainly in retail and apparel, is up 35% this year--bets big on one specialty retailer. He thinks Wilsons the Leather Experts (WLSN) will score. Why? He calls leather the "sweet spot" in fashion today, and he's impressed with Wilsons' "very focused" management. Schwarzwalder says it has created "a good brand, whose sales have been growing at 20% a year." Wilsons operates 529 retail stores in 44 states, Canada, and Britain. "The stock, down from 21 in August, to 14 1/4, is cheap," he says. He sees it doubling in 12 months.

John Rouleau of Gruntal says shares of Wilsons have yet to reflect its acquisition of El Portal, a retailer of luggage and travel accessories. Its 38 stores--in five states and Guam, selling such brands as Coach, Bally, Hartmann, and Kenneth Cole--could swell to 300 stores under Wilsons, he says. El Portal, adds Rouleau, will make Wilsons profitable all-year round, because its business is less seasonal. Most retailers make their money in the fourth quarter. In 2002, Rouleau figures El Portal will add $75 million in sales and will up earnings by share by 20 cents. He sees Wilsons earning $2.33 in the year ending Jan. 31, 2001, and $2.83 in 2002.By Gene G. MarcialReturn to top

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