Standing up to Amazon

Reuters Breakingviews talks about retailers that can withstand the Amazon juggernaut. Ross Stores gets a mention.

The Amazon vortex won’t suck in everyone. That’s the verdict of investors in the retail sector.

Among potential competitors to the e-commerce juggernaut founded by Jeff Bezos, some – including Ross Stores, Home Depot and AutoZone – may have the wherewithal to withstand Amazon. The market is conferring on them valuations commensurate with, or better than, the one accorded to Amazon.

Amazon is already wreaking damage on the shopping landscape. And that will intensify with the completion of its $13.4 billion purchase of Whole Foods this week. Amazon pledged to lower prices and put an end to its reputation as “Whole Paycheck,” crushing shares in competing grocers last week.

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Even in apparel, there are bright spots. At 1.4 times projected 2020 sales, Ross Stores, which sells reasonably priced clothing through more than 1,500 outlets, fetches an enterprise valuation close to Amazon’s. TJX Companies, operator of TJ Maxx and Marshalls, lingers at 1.1 times sales. That’s below Amazon but well above peers like Macy’s and Kohl’s. Bargain hunting may offer some respite from online price choppers.

Once he is done crushing the grocery business, Mr. Bezos may seriously set Amazon’s sights on car parts, cheap clothes and home-improvement accessories. For now, though, the market is betting on a few pockets of calm.

Posted by on August 28th, 2017 at 3:02 pm


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