2017-09-19 14:08:00
Tuesday, September 19, 2017 2:08 PM EDT
After a huge rally over the past five years, shares of auto parts retailer AutoZone (AZO) have taken a beating in recent months as investors fret over Amazon's ability to become a full service parts supplier.
(Click on image to enlarge)
What is interesting, however, is that auto parts industry observers are far less optimistic about Amazon's desire and ability to break into a business that often requires super fast delivery (far less than even two hours) and a huge selection of SKUs. Simply put, auto body shops suddenly dumping their relationship with AutoZone seems unlikely. In that case, AZO's share price slump from $800 to $500 lately is probably unjustified.
There is little doubt that non-time sensitive auto-related purchases have a place in the online world. If you want to stock up on car air fresheners or get a new license plate holder, Amazon is a good place to look. But for more specialized needs, where price is not always the most important factor (getting your car back as soon as possible is), the distribution networks powering the large national auto parts retailers should still provide certainty, comfort, and value.
To see exactly how much AutoZone's business has been impacted by Amazon, I looked back over the last 15 years to see the trend for the company's sales per retail square foot. After all, if auto part sales are moving online in a material way, the average AutoZone retail store should be seeing sales declines. This would show up in sales per square foot since a store's size is constant even if more stores are built.
Here is a graph of AutoZone's sales per square foot since 2003:
(Click on image to enlarge)
Can you see Amazon's impact in that graphic? When did they really accelerate their auto parts selection? Does it look like they are having the same chilling effect on AutoZone's business as they are on, say, JC Penney? I just don't see it.
For those expecting the impending doom of auto parts retailers like AZO, I think their death may be greatly exaggerated in Wall Street circles lately. In fact, it is notable to point out that over the last five years (when e-commerce growth has really started to disrupt traditional retailers), AutoZone's revenue has grown from $9 billion to $11 billion, leading to an increase in free cash flow from $27 to $34 per share.
Disclosure: Long shares of AZO and AMZN at the time of writing, but positions may change at any time
Disclaimer: Peridot Capital Management LLC is a registered investment advisor in the ...
moreHow did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.
分享自Wind资讯金融终端
在App Store或Google Play等移动软件商店搜索"Wind资讯"即可下载使用《Wind资讯金融终端移动版》使用前请先确保您已获得iWind帐号及密码，如果尚未注册或遗忘密码请联系您的客户经理
從我的 iPhone 傳送
沒有留言:
張貼留言