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SAN FRANCISCO, CA (May 8, 1997) -- April same-store retail spending rose a slight 1.3 % over the same period last year, according to data compiled by TeleCheck Services Inc., the world's largest check acceptance company. "Same-store sales grew slower in April than March's 2.1% increase, in part because of an early Easter that shifted this year's Easter spending into March. Last year, the final week of Easter spending occurred in April. In addition, an unusually cool, wet April across much of the country may have dampened sales of spring clothing, seasonal and outdoor merchandise," said William Ford, TeleCheck's senior economic advisor.

TeleCheck's index is compiled on a calendar basis and is based on the total sales volume of check-writing consumers at a broad cross-section of retailers. Figures are not adjusted for inflation and obviously do not include credit card sales. Payment by checks account for 37% of retail spending.

MOTHERS DAY: NOT ANOTHER BATHROBE, PLEASE

WHAT MOMS WANT and what Moms get on Mother's Day aren't necessarily the same things. THE GOOD GUYS! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GGUY)") else Response.Write("(Nasdaq: GGUY)") end if %>, a leading consumer electronics retailer on the west coast, is promoting several electronic and television gift ideas to "take a little chaos out of Mom's busy day." With no offense to this San-Francisco based retailer, if my family appears Mother's Day with something that needs to be either plugged in, or I have to search for two AA's batteries to run it (we know they would forget to buy them) I will go on a major Mother strike. (No laundry, no making lunches, no car pooling, hey Dad-nothing).

So children and fathers alike read on: The National Retail Federation, a trade group in Washington, finds that 17% of mothers they talked to would like to get jewelry. So how did jewelry wearing become a staple in Mom's everyday life?

Marilyn Monroe sang "Diamonds are a Girls Best Friend," but not until the end of the 19th century were fine jewels accessible to the middle class. When 14-carat gold small objects set with seed pearls, little diamonds and colored gemstones were able to be mass-produced, entrepreneurs changed jewelry-making from an artisan trade that could be afforded by few into an industry; Men and women staffed the factories with skilled labor; traveling salesmen carried the goods as far as Alaska; they transformed jewelry-wearing in America from the privilege of an elite into a near-necessity of the growing middle class. Now millions of Americans buy "fine jewelry" in response to changing fashion and seductive advertising.

Last year saw the fifth consecutive year of increases in gold jewelry sales in the U.S., with total sales reaching $12.3 billion, up five percent from 1995 and up from $9.9 billion in 1992. Though dollar and unit sales were up in virtually every distribution channel, the U.S. gold jewelry market mirrored overall retail trends and displayed a share shift from small traditional jewelry retail outlets to mass retailers. The average price paid for a piece of gold jewelry in retail stores has remained virtually constant at eighty-six dollars over the past five years. Seventy percent of gold jewelry was purchased by women for themselves or as gifts for others. Gold sales among non-traditional retail channels (discount stores, department stores and non-store retailers such as QVC) now account for 53% of total gold jewelry sales. Smaller traditional retail stores are still growing.

Mothers should be receiving little velvet boxes from their children and spouses this Sunday. Therefore it's a splendid time to view some of the national jewelry retailers. The corporate name may not be as familiar so I have included those names used in the local shopping malls. One short note, the retail expression "fine jewelry" is a term of art, meaning not costume jewelry, yet not necessarily reflecting the quality or the expense.

FRIEDMAN'S INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRDM)") else Response.Write("(Nasdaq: FRDM)") end if %> is a rapidly expanding specialty retailer of fine jewelry based in Savannah, Georgia. The company offers diamond jewelry, bridal sets, dinner rings, pendants, earrings, watches, necklaces, and bracelets marketing to the18- to 45-year-old age consumers in the low- to middle-income spending group. The company offers lower prices than competitors by positioning itself as a value leader in the specialty retail fine jewelry business. They currently have 342 stores in 21 states. The company is the leading operator of fine jewelry stores located in power strip centers. A power center strip is usually one with high-volume anchors like Target or a Wal-Mart super store. Friedman's expects to open between 70 and 90 stores in fiscal 1997, mostly in existing markets."

Net income increased 52.6% to a record $2.6 million in the second fiscal quarter of 1997, from net income of $1.7 million in the same period in 1996. Earnings per share for the second fiscal quarter increased 28.6% to $0.18 per share, on a significantly larger average share base, compared to earnings per share of $0.14 for the comparable period in fiscal 1996.

For the second fiscal quarter ended March 31, 1997, net merchandise sales increased 29.4%, to $36.2 million from $28.0 million in the previous year. Comparable store sales increased 3.0% during the second fiscal quarter. Total revenues increased 28.2%, to $43.2 million in 1997, versus $33.7 million for the same period in 1996.

Commenting on the results, Bradley J. Stinn, Chairman and Chief Executive Officer, said, "The Friedman's team posted solid results for the March quarter. Sales were good with a stable gross margin. Expense control was excellent with the ratio of selling, general and adminstrative expense to revenue declining to 36.9% from 37.8% in the prior year." The company attributed significant progress in credit operations during the quarter. Friedmans closed today at $17 3/8 unchanged.

Anyone receiving the Blue Box with the white satin ribbon knows immediately it is a gift from legendary TIFFANY & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TIF)") else Response.Write("(NYSE:TIF)") end if %>. The fifth Avenue retailer of fine jewelry, timepieces, sterling, silverware, china, crystal, stationery, writing instruments, fragrance, leather goods, scarves, and ties has the image of glamor and has always catered to very exclusive clientele. Tiffany management was very smart in the mid-eighties and started to use the "status" of the Tiffany's name by broadening the company's appeal and attracting less affluent customers and successfully boosting its profits. The sterling silverware and china once only available through the Tiffany store is now available at Macy's. Tiffany & Co. merchandise is available in more than 80 stores and boutiques around the world, in jewelry and department stores, and through their highly lucrative direct-mail catalogs.

This upscale retailer saw diamonds in their eyes, as the January 1997 year-end figures showed increased sales to $922.1 million, which is a 14.8 % increase over the 1996 figures of $803.3 million.The fourth quarter numbers are equally impressive as sales rose from 327.6 million over the same quarter in 1996 of 280.7 million. The earnings per share rose from $0.78 to $1.00 when comparing those same quarters. Tiffany's ended the trading day at $40 1/2 up $3/8.

A leading fine jewelry retailer MARKS BROS JEWELERS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MBJI)") else Response.Write("(Nasdaq: MBJI)") end if %> went public back in May of 1996. The stores are located in shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers, and Marks Bros. Jewelers. Whitehall is the company's primary trademark, with over 120 stores. Whitehall is the more upscale than most competing mall-based jewelry retailers. Interestingly, the company operates two or three stores in the same mall, each under a different name. All stores carry diamonds, gold, and precious and semiprecious stone jewelry. The fiscal year ended January 1997 saw sales of $155.5 million, an increase of 18.6% from the previous year of $131.1 million. In the middle of April, Marks Bros. announced it would open 30 stores in 1997. The company hopes to accelerating the new store expansion plan to take advantage of strong new store economics and favorable demographics in the retail jewelry marketplace.

This Monday, Lazard Freres & Co. started coverage of Marks Bros. Jewelers with a "buy" rating, commenting it was a "diamond in the rough." In addition the investment house said "an accelerated store-opening program makes the firm's projection of 20% annual earnings growth achievable assuming only "modest" 3.5% same-store sales growth." The analyst estimated the retailer will earn $1.07 a share in fiscal 1998 ending Jan. 31, and $1.30 a share in fiscal 1999, compared with pro forma net income of $0.89 a share for the year ended Jan. 31. Shares of this jeweler closed at $11 5/8, down $3/8.

ZALE CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:ZLC)") else Response.Write("(NYSE:ZLC)") end if %> is the nation's largest specialty retailer of fine jewelry, operating 1,072 retail jewelry stores and 185 leased departments located throughout the United States, Guam, and Puerto Rico. It offers diamond jewelry, bridal sets, dinner rings, pendants, earrings, watches -- average, mid-priced jewelry to men and women in the 25 to 49 age bracket; Gordon's combines "fun" with lower priced, contemporary merchandise to attract younger consumers; Bailey Banks & Biddle, offers high-end merchandise from Rolex watches to large diamond rings, and Diamond Park leases jewelry departments in the department stores.

Today the Dallas-based company announced that sales for the third quarter ended April 30, 1997 increased 9.9% to $244.4 million compared to sales of $222.3 million for the quarter ended April 30, 1996. Comparable store sales increased 6.1% for the quarter. "We are pleased to report another quarter of solid sales growth, as we continue to increase our market share and solidify our leadership position within the retail jewelry industry," commented Robert J. DiNicola, Chairman and Chief Executive Officer. In early April, Merrill Lynch initiated coverage of Zale Corp. with a buy rating. Today it closed at $19, down $1/8.

REFUNDS, EXCHANGES AND RETURNS

For those of you who are new, this occasional section revisits some of the stocks mentioned in recent retail updates.

K-MART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:KM)") else Response.Write("(NYSE:KM)") end if %> expects to turn around and post a profit for the first quarter which last year posted a loss. In a statement released by the company, Kmart said sales were weak because of a slowdown in business late last month and the shift in Easter sales to March from April this year. KMart's same-store sales for the first quarter were up 5.5% because business was strong during the first two months of the period, the retailer said. The company will report earnings for the first quarter, which ended April 30, on May 15. Last year, KMart's loss from continuing operations was $36 million, or $0.08 a share, during the first quarter. Its net loss was $99 million, or $0.21 a share. On a retailing note, in what may turn out to be a great management decision, the KMart alliance with kitchen and home guru Martha Stewart continues, as the two companies announced a new coordinated paint line, available soon, in the KMart Stores. KMart closed $13 1/4, down $1/4.

Last Friday two of my favorite drug stores announced that their April same stores sales were up. RITE AID CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAD)") else Response.Write("(NYSE: RAD)") end if %> had same-store sales up 6.2%. This figure was based on an increase in sales to $799.4 million from a year ago of $436.3 million. WALGREEN CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WAG)") else Response.Write("(NYSE: WAG)") end if %> April same-store sales up 5.1% The sales were $1.804 million, up from $983 million. The year-to date numbers were reported as $4.431 million over the 1996 figures of $3.897 million. Gee, is that a lot of aspirin. Rite Aid closed at $47 3/8, up $3/4 and WAG closed at $45 3/4, down $1/2.

NOODLE KIDOODLE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NKID)") else Response.Write("(Nasdaq: NKID)") end if %> today announced that total sales in its stores for the first quarter of fiscal 1998 increased 89% to $15.5 million from $8.2 million for the same period last year. Same store sales for the first quarter increased 18%. Eighteen stores were included in the company's comparable store base for the first quarter. As noted in a recent retail update, Noodle Kidoodle is one of the few publicly traded retailers to sell that hot plush toy Beanie Babies.

SUNGLASS HUT INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %> reported today that sales for the four weeks ended May 3, 1997 were $44.4 million, an increase of 10.1% compared to the $40.4 million reported for the same period last year. Comparable store sales for the four-week period decreased 3.4%. Sales for the 13-week first quarter ended May 3, 1997, increased 12.6% to $138.3 million, compared to $122.8 million for the comparable period in 1996. Comparable store sales for the three-month period decreased 3.3%. The company blamed "weaker mall traffic and less than favorable weather conditions [which] contributed to a lower than anticipated comparable store sales performance in April."

**THE FOOLISH SHOPPING MAVEN's OPINION**

DONNA KARAN INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DK)") else Response.Write("(NYSE: DK)") end if %> is a mess. This week the chief administrative officer left the company, marking another setback for the fashion house. In announcing the departure of this Morgan Stanley executive it becomes clear that the creative soul of Ms. Karan, and the economic strategies of Dewey K. Shay were like mixing oil and water. According to news sources, Donna Karan brought in Shay from Morgan Stanley to " fulfill a promise to find an executive to bolster its business planning and cost-control efforts".

In recent months, it was reported that Shay had taken an increasingly active and high-profile role in the company, from talking to analysts and bankers to serving as a company spokesman on financial matters. He focused on cost-cutting at the design house, promising last month that the company would study expenses "line by line to see what we can do without and what can be curtailed." Analysts and investors continually questioned whether such a philosophy would interweave and work with Ms. Karan's operating style. Indeed the designer herself last year noted: "We creative types like to spend." ( Donna, get a grip.)

Obviously her creative spending has not helped earnings or the stock. Since the glamor- filled public offering last June at $24, the company has struggled with high expenses, slipping sales of its most expensive products and a failed jeans licensing deal with DESIGNER HOLDING LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DSH)") else Response.Write("(NYSE: DSH)") end if %>.

Donna Karan posted an 87% decline in pro-forma earnings Thursday amid high expenses and sluggish sales, falling well below Wall Street estimates. The upscale apparel company said its first-quarter net income was $806,000, or 4 cents a share, down from pro-forma earnings of $6.2 million, or $0.29 a share, in the year-ago period. The First Call estimate for the latest quarter was $0.23 a share. Meanwhile, Donna Karan's revenue for the quarter totaled $158.8 million, down a bit from $159.6 million a year ago. The company's gross profit margin fell to 28.4% from year-earlier pro forma gross profit margin of 30.5%. The company stated reduction was due to increased design and production costs and increased sales dilution.

From the vantage point of this retail shopper, Donna Karan should re-evaluate her business, first from a fashion eye, and then from an investor's perspective. Women are tired of wearing the same basic bodysuits, black, beige and grey suits and are weary of paying the big bucks for an unlined jacket. Her basic classic styles have become somewhat flat, as this 7th Avenue designer competes with the vibrant colored Gucci and trendsetting but stylish Armani. When the company began selling its DKNY line in discounters like Ross and Marshalls it didn't sit well with me. From an investor's viewpoint, she owes it to her shareholders to work with someone from the business side to hold down costs and not be such a creative prima donna. Bandages made from the most expensive raw silk won't help. Investors interested in holding in their portfolio, an upscale retail stock may dump The Donna for The Ralph as the IPO saunters down the "cat walk" in the next few weeks. POLO RALPH LAUREN will trade on the NYSE under the symbol RL. Donna Karan's stock finished at $10, up $0.25.

ALTERATIONS

Here is where investment houses announcements are reported. Over time, they seem to be as unpredictable and ever changing as the length of skirts.

Alex. Brown initiated a group of retailer stocks last Friday. Two retailers, FEDERATED DEPARTMENT STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:FD)") else Response.Write("(NYSE:FD)") end if %> and DAYTON HUDSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DH)") else Response.Write("(NYSE:DH)") end if %> were started as "strong buy". The following were initiated as "market perform": WALMART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:WMT)") else Response.Write("(NYSE:WMT)") end if %>; SEARS ROEBUCK AND CO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %>; K MART CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %>; J.C. PENNEY'S INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JCP)") else Response.Write("(NYSE: JCP)") end if %> ; NORDSTROM, INC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOBE)") else Response.Write("(Nasdaq: NOBE)") end if %>; KOHL'S CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSS)") else Response.Write("(NYSE: KSS)") end if %>; DILLARD DEPARTMENT STORES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DDS)") else Response.Write("(NYSE: DDS)") end if %>; MAY DEPARTMENT STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAY)") else Response.Write("(NYSE: MAY)") end if %>.

Remember your plastic -- "We never leave Fooldom without it."