THE TIMES 100 : The Best Performing Companies in California : View From the Street : Retail Firms Dominate List of Stock Laggards

Operation Desert Storm may have done great things for the American consciousness, but it didn’t do much for consumer spending. Unless you were a yellow-ribbon retailer, you probably didn’t get much business in the past year or so.

At least that’s the conclusion anyone with a calculator would come to after a peek at last year’s stock prices, a look at whose stock appreciated and whose fell to earth faster than a Scud missile.

Like Stormin’ Norman Schwarzkopf in the Kuwaiti desert, retail stocks dominated the Falling Behind list of California stocks as compiled by MZ Group of San Francisco. This KIA list is littered with the bodies of the formerly brave: Leo’s Industries, L.A. Gear, Quiksilver, Sharper Image, Barry’s Jewelers.

“Your list is by no means all-inclusive,” said Jacquelin M. Fernandez, director of the Southern California retail services group for Deloitte & Touche in Los Angeles. “There are a lot more retailers in the same situation. Their earnings are down; their stock prices have dropped. . . . Consumers were holding back because of the economy and the war.”

Consumer spending is closely watched as an indicator of the nation’s economic health because it amounts to two-thirds of U.S. economic activity. The slump in spending after the Iraqi invasion of Kuwait last Aug. 2 is largely credited with pushing the economy deeper into recession.

A drop in consumer spending plagued retailers, but that wasn’t the only trouble that stood in their way. Also forcing them off the Charging Ahead list and onto the Falling Behind list were strong performances by high-tech and biotech firms, whose spectacular increases raised the criteria for admission to the ranks of the rich.

Remarkable appreciation in stock price for firms like biotech’s Amgen and high tech’s Borland International pushed up the stakes. Amgen stock rose 334%, from $30.75 to $133.50, between April 12, 1990, and April 12, 1991. Borland’s rose 281%, from $16.13 to $61.50. A company whose stock appreciated 84% last year would have made the list, while it took a jump of 101% this year to make the cutoff.

But it came as no surprise to Phillip Vincent, vice president and economist with First Interstate Bank, that Sharper Image, the San Francisco-based yuppie-toy vendor, showed up on the Falling Behind list for the first time. He says a standard phenomenon of recession-era spending is a drop in luxury purchases.

To get on the list, a company’s stock price must have fallen dramatically, and Sharper Image’s did just that. Between April 12, 1990, and April 12, 1991, its shares dropped 63%, from $5.75 to $2.13.

The company, which touted such gear as $2,400 motorized surfboards, racked up its first annual loss. In the year ended Jan. 31, it lost $2.3 million on $180.7 million in sales, which were down 13.4% from the previous year.

But if Sharper Image exemplifies a classic drop in consumer spending, other retailers’ woes were not so clear. In fact, for some, a drop in consumer spending was only part of the problem.

This year, Leo’s Industries, for example, not only fell from its No. 1 spot on the 1990 Charging Ahead list, it actually showed up for the first time on the list of stocks with greatest per-share loss. L.A. Gear and Quiksilver Inc. switched from Charging Ahead to Falling Behind also.

Like Sharper Image, L.A. Gear posted its first loss ever in the fourth quarter of last year, $7.1 million. In the first quarter of the current year, it posted another loss, $12.5 million.

The Marina del Rey-based company, the nation’s No. 3 sneaker firm, has been hurt by the nationwide retailing slowdown, an apparent lack of new hit products, squabbles with its celebrity sneaker-pushers, suits by shareholders and an investigation by federal customs officials, among other things.

“They’d be hurting even without the recession,” one analyst said soon after its first losing quarter was announced.

Last year, L.A. Gear was No. 25 on the list of companies whose stock had risen dramatically in value, after the per-share price rose 84.3%. This year, it did a dramatic about-face, landing at No. 13 on the list of the laggards, because its stock price has fallen 65%.

Although the national recession is expected to end by summer, California companies may have some trouble rebounding, said David Hensley, acting director of the UCLA Business Forecasting Project.

“We’re worried about real estate, the budget deficit, the drought and defense,” Hensley said. “Putting those factors together and arguing that none of them will be resolved very quickly, we think that Los Angeles and California may lag the U.S. by some time. If the U.S. is in recovery by summer, we think there is considerable risk that California might not be.”

CHARGING AHEAD

Ranks companies by percent gain in stock price.

% change 4/12/91 4/12/90 stock stock stock Rank Company price price price 1 Amgen Inc. 334.1 133.50 30.75 2 Micropolis Corp. 317.6 17.75 4.25 3 Borland International 281.4 61.50 16.13 4 Circon Corp. 239.5 18.25 5.38 5 AST Research Inc. 216.5 32.25 10.19 6 Synoptics Communications 164.2 45.25 17.13 7 Sunrise Medical Inc. 163.9 23.75 9.00 8 Novellus Systems Inc. 162.1 23.75 9.06 9 Symantec Corp. 157.0 50.75 19.75 10 Syncor International Corp. 156.6 17.00 6.63 11 Cisco Systems Inc. 156.2 28.50 11.13 12 Intl. Rectifier Corp. 149.3 22.75 9.13 13 Good Guys Inc. 148.9 40.75 16.38 14 Office Club Inc. 137.7 33.88 14.25 15 Countrywide Credit Ind. Inc. 136.4 16.25 6.88 16 Mercury General Corp. 134.8 33.75 14.38 17 SPI Pharmaceuticals Inc. 127.1 16.00 7.05 18 Exar Corp. 123.3 16.75 7.50 19 House of Fabrics Inc. 122.2 43.88 19.75 20 Chiron Corp. 115.8 61.50 28.50 21 Emulex Corp. 112.5 10.63 5.00 22 Vivra Inc. 104.9 35.00 17.08 23 Dreyer’s Grand Ice Cream 103.2 32.00 15.75 24 Linear Technology Corp. 102.7 18.75 9.25 25 Fredericks of Hollywood 101.6 21.00 10.42

FALLING BEHIND

Ranks companies by percent decline in stock price.

% change 4/12/91 4/12/90 stock stock stock Rank Company price price price 1 First Executive Corp. -88.2 0.28 2.38 2 Homefed Corp. -84.4 4.38 28.00 3 Software Toolworks Inc. -83.7 2.50 15.38 4 Landmark Land Co. -82.1 3.13 17.50 5 Barry’s Jewelers Inc. -80.0 1.75 8.75 6 Great Amer. Bank San Diego -80.0 0.75 3.75 7 Riverbend International Corp. -78.4 1.00 4.63 8 Businessland Inc. -76.8 2.00 8.63 9 MAI Systems Corp. -75.0 0.75 3.00 10 Leo’s Industries Inc. -73.6 4.63 17.50 11 Unionfed Financial Corp. -71.3 3.13 10.88 12 Carter Hawley Hale Stores -69.6 2.13 7.00 13 L.A. Gear Inc. -65.3 12.75 36.75 14 CF Income Partners -64.4 2.00 5.63 15 Intermark Inc. -63.6 3.00 8.25 16 J.M. Peters Co. -63.1 3.00 8.13 17 Sharper Image Corp. -63.0 2.13 5.75 18 Westwood One Inc. -62.5 1.88 5.00 19 Western Digital Corp. -61.4 4.88 12.63 20 Qume Corp. -61.2 2.38 6.13 21 Advanced Marketing Services -60.9 2.25 5.75 22 Maxtor Corp. -60.4 5.50 13.88 23 Quiksilver Inc. -58.2 11.50 27.50 24 Network Equipment Tech Inc. -58.0 7.50 17.88 25 Calfed Inc. -56.8 7.50 17.38

DIVVYING IT UP

Ranks companies by dividend as a percent of stock price.

Dividend as a % of 4/12/91 Rank Company stock price stock price 1 PLM International Inc. 10.32 3.88 2 General Parametrics Corp. 10.11 2.38 3 Pacific Enterprises 9.47 36.75 4 First Interstate Bancorp 9.09 33.00 5 Southern California Water Co. 7.04 31.25 6 SCEcorp 6.83 38.63 7 California Water Service Co. 6.37 28.25 8 SJW Corp. 6.36 30.19 9 Security Pacific Corp. 6.30 24.13 10 SPI Pharmaceuticals Inc. 6.25 16.00 11 WD-40 Co. 6.14 28.00 12 Pacific Gas & Electric 6.10 26.88 13 San Diego Gas & Electric 6.08 44.38 14 Sumitomo 6.04 26.50 15 Zenith National Insurance 5.71 17.50