Fresh off its acquisition of self-driving startup company Zoox, Amazon.com, Inc. (NASDAQ: AMZN) should follow up with buying retailer Macy's Inc (NYSE: M), according to Lincoln International Managing Director Dominic Rispoli.
What Happened: Amazon needs to accelerate its brick-and-mortar penetration and Macy's represents an "excellent opportunity" for Amazon to do so, Rispoli said on CNBC. The physical retail space is still a "massive category" and if there is one thing Amazon loves, it's exactly that.
Amazon can also gain new exposure to sell footwear and apparel brands that usually don't sell well on its platform, he said.
Perhaps most important, Macy's still operates a $5 billion e-commerce business and this would be a "very easy plug-and-play" for Amazon to showcase.
Rispoli is an M&A banker that covers the retail space and his thesis is not based on any market rumor or chatter.
Why It's Important: Global brands like Nike Inc (NYSE: NKE) are able to control how and where it sells to consumers but "most brands are not Nike" and depend on distribution channels from Macy's and Amazon, among others, Rispoli said.
If Amazon owned Macy's, it would gain "substantial incremental power" for brands that aren't positioned as well as Nike is.
What's Next: Amazon would transform Macy's stores to include the familiar shopping experience and a local distribution center in the back to create a better customer ecosystem and become closer to the customer.
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Latest Ratings for AMZN
|Jun 2020||Deutsche Bank||Maintains||Buy|
|Jun 2020||SunTrust Robinson Humphrey||Maintains||Buy|
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