Macy's and Amazon could both benefit from unlikely tie-up - report
17 FEB 2017
At least one Wall Street analyst sees an Amazon [NASDAQ:AMZN] purchase of Macy's [NYSE:M] as beneficial to both companies, but acknowledges the pairing is unlikely, according to Women's Wear Daily. Several other observers also cast doubt on the likelihood of such a deal.
Cowen & Co. said Amazon could foster Macy's online and mobile operations, bring in younger customers and provide supply chain and data help, while Macy's could help connect Amazon to major fashion brands and maybe hasten deliveries, WWD reported.
The publication quoted Cowen retail analyst Oliver Chen as calling such a potential deal "tremendous," as Amazon could obtain better apparel brands and fashion credibility, reach Macy's department store customers, and use those physical stores to display a host of products and allow customers to try on clothes.
Other experts, however, said such a purchase wouldn't fit Amazon's character. KeyBanc Capital Markets analyst Edward Yruma, for example, noted that Amazon doesn't usually make big acquisitions and said that as the e-commerce giant starts to try bricks-and-mortar retail, it is reimagining the nature of stores. And he said it doesn't make sense for Amazon to buy a retailer that has too much physical space.
Mabel McLean of the L2 research firm told WWD that a Macy's acquisition would saddle Amazon with new responsibilities outside of its core capabilities, and that the e-tailer would acquire access to low to mid-market apparel brands that are already available to the company. Amazon might be able to gain access to higher-end brands by acquiring a luxury fashion e-tailer like Farfetch or Lyst, according to McLean.
Sucharita Mulpuru, Shoptalk chief retail strategist, said Macy's doesn't appear interested in being sold, and indicated that Amazon investors probably wouldn't be excited about buying the more than 700-store retailer.