New York — According to Dana Telsey, senior managing director of locally based Bear, Stearns & Co., savvy retailers should see a turnaround in their finances by the end of 2001, and 2002 could be their comeback year.

Telsey believes retailers can expect the soft retail environment to continue through the third quarter of this year because consumer spending and confidence continue to erode, energy and fuel prices are increasing, and unemployment levels are rising. However, the financial climate of the retail world should pick up by the end of the year, driven by tight expense controls, improved merchandise assortments, lean inventory levels and a pickup in demand.

Telsey also believes that differentiated retailers, such as H&M, Torrid, Sephora and Zara, will be the long-term winners in terms of market share and profitability.