Amazon Will Be America’s Top Clothing Retailer in 2017, Says Cowen & Co.
SEATTLE, United States — It’s been a tough few weeks for retailers, and today is no different. But there is one exception: Amazon.com Inc. While XRT, the SPDR S&P Retail ETF is down more than 4%, as of 2:30 p.m., Amazon shares are up more than 4%.
One of the retail drivers is Macy’s Inc., whose earnings report sent shares tumbling this morning after the retailer slashed its profit forecast and missed analysts’ revenue estimates. That’s the opposite of what happened to Amazon last week when the web giant topped analysts’ estimates. Given this recent action in the retail sector, analysts at Cowen and Company reiterate their call for Amazon to replace Macy’s as the top apparel retailer in the United States by next year.
“[Our calculation] implies a 5% to 14% U.S. apparel and accessories market share gain,” the team, led by John Blackledge, wrote in its memo, adding, “We have seen continued retailer abandonment more traditional… In the first quarter of 2016, Amazon Apparel shoppers were up 19% year over year, while apparel shoppers fell 1% year over year. and 5% year-over-year at Wal-Mart and Target, respectively.
The team previously made the call in July 2015, saying it was confident Macy’s would lose its No. 1 spot within two years.
Looking at electronics and general merchandise revenue at Amazon, the trend is evident. Amazon has seen continued growth in its retail business with the expansion of its Prime offerings.
Macy’s, on the other hand, was a bit more sporadic. There was a sharp drop after the recession before sales rebounded, but a more recent drop raises concerns.
Their stock prices certainly reflected these trends. Amazon is up 65% over the past year, while Macy’s has fallen more than 50%.
Of course, Macy’s recognizes that more and more sales are happening online and that the department store model may need some changes.”[W]We are absolutely not backing away from our commitment to digital and omnichannel retail,” Macy’s CFO Karen Hoguet said during today’s earnings call. “Mobile remains a very high priority and we need to invest. You may have seen that a leading trade publication last month ranked Macy’s Inc. as the sixth largest online retailer in America, and as I said earlier, we continue to see increases double-digit year-over-year online sales. .”
By Julie Verhage; editors: Joe Weisenthal and Dashiell Bennett.