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Stock Exchange: Reading Into Retail Moves

Our last Stock Exchange looked at consumer discretionary spending. If you missed it, a glance at your news will show that the key points remain relevant.

This Week – Amazon Apocalypse in Retail?

Amazon (AMZN) made waves again last week with its announcement that it would partner with Sears (SHLD) to sell Kenmore branded appliances. The announcement sent shares of competing appliance sellers like Best Buy, Home Depot, Lowe’s, and Whirlpool tumbling (BBY, HD, LOW, WHR) while bolstering Sears. Best Buy and Home Depot have acquired a reputation with some as being relatively ‘Amazon-Proof’, and for investors with such opinions these moves may represent a opportunity. It’s worth noting that Whirlpool is one of the main manufacturers of parts for a variety of Kenmore products, although it remains to be seen if it’s 30+ year partnership with Sears will survive.

Between its purchase of Whole Foods Market (WFM), filing a trademark for a prepared meals service (bludgeoning Blue Apron (APRN)), and freshly announced partnership with Sears, Amazon is attracting a lot of attention from the punditry and even some from regulators. Barron’s cites Reuters’ report that The FTC recently opened an investigation, as part of its review of the company’s purchase of Whole Foods, into claims by Consumer Watchdog that Amazon uses deceptive discounting practices. The word ‘antitrust’ continues to be whispered with increasing volume, and more and more with a bone to pick are finding this to be the moment to pile on with. The same day the FTC announced its investigation, David Kahan, CEO of Birkenstock Americas fired off a letter to the company’s retail partners accusing Amazon of “Modern Day Piracy” and attacking “All Brands”. The letter accuses Amazon of running Birkenstock’s blockade of sales to it by buying from resellers instead, and warns retail partners to steer clear or risk ending their relationship with the German shoe company.

Rupert Hargreaves’ piece published earlier this week on ValueWalk, does an excellent job examining some of the concurrent dynamics affecting brick and mortar retail. It isn’t pretty. He covers the precipitous drop in retail traffic over the summer, how consumer behavior with private-label credit cards and store closures exacerbate each other’s effects, and the major disadvantage brick and mortar stores face in having to deal with issues like shoplifting and robberies. For more, you’ll have to check out his article. While retail stores are closing and laying off workers, Amazon is hiring, listing 50,000 full time positions across its fulfillment network nationwide.

The Stock Exchange does not have all the answers, but it provides good ideas and a stimulus for your own trading.

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Expert Picks from the Models

We’re joined again by one of our favorite guest experts on the stock exchange: Blue Harbinger (also known as Mark Hines) who we were lucky enough to have for last week’s edition of The Stock Exchange as well. Blue Harbinger specializes in independent investment research, and we’re glad to have his...