Rumors about retailers can be very bad news for their health

Davidowitz, 67, welcomed a reporter to a recent interview in his unpretentious Manhattan offices by displaying the five news clips quoting him that morning, including Time and Newsday. The 45-year veteran of retail consulting says he does about 20 interviews a week, a claim that a search of news services and a scroll through CNBC's archives supports.

A portly and polite (at least to the press) man who is given to outbursts of expletives, Davidowitz is the man retailers love to hate but are hesitant to take on in print.

Though he says he has consulted for some of the best-known names in retail — Van Cleef & Arpels, Target and Limited are among the past and present clients listed on his website — he seldom works for the big names anymore, acknowledging having just four retail clients, none of them household names.

He and his team of four professionals spend most of their time buying and selling retail stocks.

No retail officials would agree to specifically discuss him directly or his allegations on the record, although he says some have called him personally. When a major retailer's public relations representative called a few years ago to complain about some of his comments, Davidowitz says he cursed at the person and said, "I can say whatever I want."

Davidowitz's website notes that he was retail practice leader for the consulting firm now known as Ernst & Young until 1981, when he said in an interview he was "booted out" for reasons he didn't "want to go into."

According to a February 1983 judgment, Davidowitz pleaded guilty and was convicted of securities and mail fraud that year, sentenced to serve every weekend in prison for nine months and pay a $10,000 fine. Court documents show the conviction was for making stock trades based on confidential inside information of a planned 1981 takeover of Drug Fair by Gray Drug Stores while he was representing Gray for Ernst.

Davidowitz says all of his clients and the journalists who quote him know about the case, but he asked that the 26-year-old conviction not be mentioned in this story because it "has no relevance to anything I'm doing." "I have a logic to what I say. It's pretty fact-based, pretty analytical (and) based on 45 years of experience of doing this stuff," says Davidowitz.

To suggestions that he only spreads bad news, Davidowitz says he "always" mentions winners — Wal-Mart and the dollar stores of late in TV appearances — even when he's declaring the end is near for others. His print appearances, however, tend to be one or two quotes, typically on the downward spiral of retailers.

But he can be withering in his criticism of those he declares losers.

The retailers may not agree with him, but Davidowitz says his frequent media exposure has helped him land major investment banking clients. When someone about to interview him mentions they saw him on CNBC or quoted in The Wall Street Journal, Davidowitz says he knows things are leaning in his favor.

While his negative comments may not have brought in any big-name retail consulting clients of late, Davidowitz says, "Truthfully, it's helped me with hedge funds and people who give us money to invest."

Saks CEO Steve Sadove hopes consumers will see through much of the talk from various sources.

"All of these comments in the press feed the negative environment relative to the consumer and shopping," says Sadove. "It puts a pall over all retail, as well as luxury retail."

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