If Amazon.com, Inc. (NASDAQ: AMZN)’s body language means anything, in-store sales are cool again. The e-commerce trend-setter has taken powerful, assertive steps into brick and mortar after effectively convincing competitors to upend their business models and shift focus online.
In doing so, it seems to be affirming the value of in-store shopping.
Now, as Macy’s Inc (NYSE: M), J C Penney Company Inc (NYSE: JCP) and Kohl’s Corporation (NYSE: KSS) prepare to report quarterly results and expound on future strategies, they and industry peers can defend their mixed models with justified poise. And they should.
“They have to report with more confidence how they're balancing the brick and mortar with the online,” TD Ameritrade Chief Strategist JJ Kinahan told Benzinga. “It's so interesting to me that Amazon ran towards brick and mortar while the rest of the world ran away from it.”
Their game plans around in-store and e-commerce experiences are critical in offsetting any past performance flaws.
“The revenue numbers are incredibly important,” Kinahan said. “If they miss on earnings because of expenses on real estate, that will be forgiven. What won’t be forgiven is missing on revenue and not looking like you have a plan in the short term.”
As investors await the industry’s Tuesday earnings reports, Kinahan warned against making generalizations.
“More than most industries, because the business models are so under question, it's really an individual stock story,” he said. “The individual story underneath that top-line revenue is really going to be what separates them. If one company beats wildly on revenue, it could hurt the others. It could lead the market to ask, ‘Is there a market share problem?’”
As far as individual performance goes, Kinahan sees promise in Macy’s, which is “front and center in the online-versus-brick-and-mortar fight.” Meanwhile, J C Penney has proven a “tough story.”
At the time of publication, SPDR S&P Retail (ETF) (NYSE: XRT) was trading around $41.44.
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