E-commerce leader Amazon.com (AMZN) is on pace to become the No. 1 U.S. apparel retailer next year, investment bank Cowen said Wednesday.
Cowen analyst John Blackledge said recent earnings reports by Amazon and Macy’s (M) painted a clear picture.
“In light of Amazon and Macy’s recent results, we feel more confident that Amazon will displace Macy’s as the No. 1 U.S. apparel retailer by 2017,” Blackledge said in a research report. “Amazon’s Apparel & Accessories business is one of the key drivers of Amazon’s EGM (electronics and general merchandise) segment.”
Blackledge first made his prediction about Amazon overtaking Macy’s in apparel sales in a report last July.
Amazon’s success in the apparel category is being driven by a dramatically larger selection, ramping brand relationships, superior fulfillment and technology innovations.
Amazon is growing in the clothing business, while traditional retailers such as Wal-Mart (WMT) and Target (TGT) are in decline, Blackledge said.
In the first quarter, the number of Amazon apparel purchasers increased 19% year over year, while apparel buyers at Wal-Mart and Target fell 1% and 5%, respectively, he said.
“The longer-term trend also reflects a share shift in apparel purchasers, with Amazon apparel purchaser growth of 28% each quarter (on average) since 2014, while apparel purchasers fell 4% and 3% at Wal-Mart and Target,” he said. “In Q1, Amazon had 15% more apparel purchasers than Wal-Mart (vs. 24% fewer in Q1 2014) and 37% more apparel purchasers than Target (vs. 4% more in Q1 2014).”
Macy’s on Tuesday reported soft Q1 sales and slashed its full-year forecast, sending its stock diving to a four-year low Wednesday.
The Cincinnati-based company said its first-quarter sales fell 7.4% year over year to $5.77 billion. Analysts on average were looking for $5.93 billion in sales.
For 2016, Macy’s now expects same-store sales to fall 3% to 4%, compared with its prior guidance for a 1% decline.
Macy’s stock fell 15.2% to 31.38 on the stock market today. Amazon stock rose 1.5% to 713.23.
On April 28, Amazon reported its highest sales growth in nearly four years. Its Q1 revenue jumped 28% to $29.1 billion, ahead of the $28 billion view.