Posted by on May 31, 2017 2:23 am
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Categories: Ames Business Department store Economy Marketing Retail Retailing Sears Holdings Shopping Shopping mall trade Walmart

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Everyone knew Amazon was crushing retail, dating back at least a decade. But for some reason, very few went through with the easiest pair trade of all time — long AMZN, short shopping mall operators. What a simple, yet brilliant, trade. Is it not?

Here’s an old market cap chart of when Amazon topped Walmart. Now it’s worth two Walmarts.

Here’s another old chart that captures the spirit of Amazon’s sales explosion. The current annual run rate is in excess of $140b.

So how does Amazon’s $143b in annual revenues stack up against other retailers?

According to Exodus, there are 31 companies in the Apparel Stores industry, the names you’re all familiar with when shopping at the old dead mall, whose sales equal $107b combined, with net income of $13.6b. Their composite market caps are $81.69b, the inversion of the price/sales ratio is indicative of an industry in duress.

Amazon’s $143b in annual sales and net income of just $9b is rewarded with a market capitalization of $469b.

Think about that for a moment. The entire shopping mall, sporting +1.1% quarterly revenue growth, does more net income than Amazon, on 40% less in revenues, and yet Amazon is valued at 5x what the entire mall is being sold for on the market today.

The Department Stores are an even worse comparison. TJX, M, KSS, SHLD, DDS, JCP, SRSC, SHOS and BONT combined do revenues of $129b, netting $10.17b in income, yet the composite market caps are just $68b on -4.5% quarterly revenue growth.

I get Amazon is the future and they’re growing at 22% per annum. But is it worth more than all the department stores and apparel stores combined 3x over?

And now for the most egregious juxtaposition: Amazon vs the Discount/Variety Store industry.

The Discount Variety stores include WMT, TGT, COST, DG, DLTR, BURL, PSMT, BIG, FRED and TUES. An impressive set of retailers, no doubt. Together, they sport sales of $729b with net income of $51b, enjoying median quarterly revenues growth of nearly 5%.

Their market caps combined equal $389b. If you threw in another COST, you might get to match Amazon’s market cap.

Does any of this shit make sense to you?

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