Analysts are not known for making bombastic comments, but this remark from Piper Jaffray Retail analyst Erinn E Murphy certainly has the ring of truth: "Q1 2017 Likely Marks A Historic Moment For North American Softlines."
A historic moment of truth? That's not too hyperbolic. Piper Jaffray believes Amazon "will have driven >100% of industry growth in Q1 by the time everything is tallied."
How is that even possible? Because Amazon is getting all of the incremental new business, and it's taking share away from everyone else. Even discounters may be showing cracks now.
It's not like the consumer isn't buying. I noted in my last post that retail sales grew better than 3 percent in 2016. But the shift in where they are buying is accelerating and has likely reached a tipping point.
April retail sales show that the trend toward online is very much intact, and the department stores continue to lose sales:
April Retail Sales
Dept. stores: down 3.7 percent
Online: up 11.9 percent
Restaurant/bars: up 3.9 percent
Furniture: up 3.8 percent
Notice that the trend toward going out to eat and drink is very much intact, as is furniture sales. No wonder Amazon is looking to expand into furniture.
J.C. Penney's CEO sounded the same note as Kohl's, saying: "We are pleased with our comp store sales for the combined March and April period, which improved significantly versus February."
He too reaffirmed full year earnings guidance for JCP at $0.40-$0.65. Never mind that's a pretty wide estimate: no one believes it anymore. Not with same store sales trends like these:
You combine rising inventories with traffic declines, and you have a big problem. Analysts have been cutting JCP yearly estimates for months, but it will likely be cut even more in the coming weeks:
January 1: $0.66