Market Insights

Amazon.com has declined along with the broader Nasdaq-100. But other consumer-facing companies have fared much better.

The chart below compares AMZN with competing retailers. It uses percentage-change charts with a six-month interval. Notice how the e-commerce giant is the only stock with a negative performance.

Etsy Outperforms

Etsy (ETSY) is the biggest standout on the list with a 58 percent gain. It is managing to retain most customers added during the pandemic, CEO Josh Silverman told CNBC yesterday. He added that by having producers sell directly to buyers, ETSY avoids the supply-chain challenges and costs hitting most retailers.

That’s consistent with the last quarterly report on November 10: Bottom-line profits missed estimates, but the bulls focused on top-line sales growth and projected increases in gross-merchandise volumes.

Another part of the story could be the space for growth in coming quarters because ETSY’s revenue in the last year totaled just $2.5 billion. That’s less than 0.5 percent of AMZN’s total.

Ross Stores, Gap

Here are some others retail stocks that have managed to gain in the last six months as AMZN declined:

• Ross Stores (ROST) is up 45 percent in the period. It surged after earnings, revenue and guidance shot past expectations on November 17. Some analysts also see the discounter benefiting from lower freight costs and customer gains.
• Gap (GPS) has risen 37 percent in the last six months. Unexpected growth in same-store sales and lower inventories helped drive a strong quarterly report on November 17.
• TJX (TJX) and Ralph Lauren (RL) also gained on strong results.

Takeaways?

So what are the key points?

First, AMZN is down at a time when rivals are up. That suggests not only customers are shifting to new retailers, but so are investors.

Second, the coronavirus pandemic clearly boosted AMZN’s e-commerce business. But it might have helped ETSY even more in the long run by jump-starting the smaller company’s market share.

Third, a “retail apocalypse” hammered traditional retailers before the pandemic. Tens of thousands of brick-and-mortar locations closed between 2015 and 2020, but now the industry is showing signs of a recovery. Companies have smaller footprints and less competition. They could also benefit from healthy consumer spending — especially if gasoline prices continue to fall.