As unbelievable as it sounds that one tech company could take down an entire sector of the U.S. economy, Amazon.com, Inc. (ticker: AMZN) may be single-handedly destroying U.S. retail. Retailers have seen the Amazon retail juggernaut coming for years, and yet the Amazon body count continues to rise.
This month, two more names could be added to the list. Shoe chain Payless just filed for bankruptcy, and teen retailer Rue 21 is reportedly planning to follow suit in coming weeks.
Amazon has been devastating traditional brick-and-mortar retailers for years. But while the retail industry struggles to adapt, things only seem to be getting worse.
[Read: How Investors Can Capitalize on the Growing Success of E-Commerce.]
Sears Holding Corp. ( SHLD) officials have acknowledged “substantial doubt” that its Sears and Kmart chains will continue.
U.S. retailers have already closed roughly 2,880 total stores so far in 2017 compared to only 1,153 store closings at this point last year. The total number of year-to-date closings puts the industry on a record pace in 2017.
Despite closing thousands of stores in recent years, popular mall retailers such as Macy’s ( M) and J.C. Penney Co. ( JCP) will likely need to continue to aggressively reduce store counts.
“Cowen’s proprietary top-down metropolitan statistical area analysis combined with a bottom-up point of view reveals closures of 20 percent or greater required at JCP & Macy’s,” Cowen & Co. analysts wrote in a new retail report.
Cowen predicts mall retailers such as Abercrombie & Fitch ( ANF), Gap ( GPS) and Ascena Retail Group will “likely need to significantly reduce their store counts.”
[Read: How 7 Big-Box Retail Stocks Are Faring.]
Cowen estimates off-mall retailers such as Kohl’s ( KSS) may not require as many store closures.
The firm says retail investors should expect at least another 1,800 store closures in the near future.
The retail store closings have certainly been reflected in the U.S. employment numbers. The Department of Labor just reported that U.S. unemployment dropped to 4.5 percent in March, its lowest level in a decade. However, the retail sector reported a loss of 61,000 jobs in the past two months, its worst two-month stretch since 2009.
At the same time, Amazon announced in January that it plans to create 100,000 full-time U.S. jobs by mid-2018.
[See: 10 of the Worst Performing Stocks of 2016.]
Despite the overall weakness in the retail sector, Cowen still sees growth opportunities for selective investors. Cowen expects “growth and share gains” from value retailers TJX Companies ( TJX), Ross Stores ( ROST), Burlington Stores ( BURL), Dick’s Sporting Goods ( DKS) and Ulta Beauty ( ULTA).
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Amazon.com, Inc. (AMZN) Has the U.S. Retail Sector Reeling originally appeared on usnews.com
