6 Consumer Stocks Not Getting Killed By the Amazon-Whole Foods Deal

Many consumer facing stocks are getting killed today because of Amazon’s acquisition of Whole Foods. But not all. Here are some that might surprise you.

A wide variety of stocks are getting killed today after Amazon.com (AMZN) agreed to buy Whole Foods Market (WFM). Grocers like Kroger (KR). Big-box stores like Target (TGT). Pharmacies like CVS Heath (CVS). But it’s also interesting to look at what’s not getting killed.

Restaurant stocks, for instance, as McDonald’s (MCD) has gained 0.9% to $152.48 at 12:59 p.m. today. Luxury retailer Tiffany (TIF) has climbed 1% to $91.45. Handbag maker Coach (COH) has advanced 0.6% to $46.33. And even some department stores.

Yes, department stores. Nordstrom (JWN) has risen 0.7% to $47.31, and even Macy’s (M) has dipped just 0.6% to $22.60, while JC Penney (JCP) is off 0.1% to $4.84. Maybe the market is betting that they’ve already seen the worst, and if nothing else the threat they face is already well known.

That doesn’t stop analysts from having bearish views on them, however. Credit Suisse analyst Christian Buss and team, for instance, release a note today on why the decline of Sears (SHLD) won’t save JC Penney:

Our analysis suggests that Sears revenue donation is providing a moderate near-term boost to sales and earnings ($54M in revenue, and $0.03 in EPS). However, we believe that any further Sears store closings may increase the likelihood that JC Penney will have to accelerate closure of lower-tier mall locations, adding meaningful medium-term revenue and EPS risk of about $150-200M and $0.09. Our analysis of a full Sears closure scenario suggests an $800-900M revenue boost, $130-140M in incremental EBITDA, and $0.40-0.45 in EPS for JC Penney. Unfortunately, even in this scenario, we estimate FY20 revenue and EPS of $12.5B and $0.83, well short of company targets for FY19 of $13.8-14.3B and $1.40-1.55 (a year earlier). As a result, our primary concerns remain: 1) continued weakness in the core apparel business; 2) persistent degradation of store traffic, and 3) diminishing contributions from asset sales.

Weakness, weakness, everywhere.

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