Amazon.com, Inc. (AMZN) shocked the world back in June when it forked over $13.7 billion to buy Whole Foods. But just because Amazon has already made a blockbuster buyout this year doesn’t mean that it’s finished with its shopping spree. “When AMZN bought WFM in June 2017, it led many to believe that AMZN might have aspirations to establish more of a bricks and mortar presence in the US,” Citi analyst Paul Lejuez[WD] says. Lejuez recently sat down and compiled a list of the seven most likely buyout targets for Amazon should is continue its push into offline retail.
- Abercrombie & Fitch Co. (ANF)
Abercrombie has a modest market cap of only $1.1 billion, but it has a well-established mall retail presence and two valuable brands in Abercrombie & Fitch and Hollister. Lejuez says Abercrombie would give Amazon instant access to the infrastructure needed to design, source and sell clothing on a global scale. Amazon could take advantage of Abercrombie’s prime real estate to sell its own proprietary products, and Abercrombie’s young customer base would be prime targets for Amazon’s business. In the third quarter, Abercrombie reported 4 percent same-store sales growth, a beat that sent the stock higher by 35 percent.
- Sprouts Farmers Market Inc (SFM)
Amazon and Sprouts already have a deal in place for to deliver Sprouts produce through Amazon’s Prime Now service. Sprouts fits Whole Foods mold of a grocery chain with a focus on organic and natural foods and a relatively large footprint of more than 250 stores in 14 different states. Lejuez says Sprouts makes the most sense for a buyout if Amazon is not finished in the grocery space. With Sprouts stock down nearly 13 percent since the Whole Foods buyout, Amazon may have actually lowered its own price for a potential Sprouts takeover.
- Bed, Bath & Beyond Inc. (BBBY)
Lejuez says there are a number of reasons for Amazon to take a close look at Bed, Bath & Beyond. First, the company already has store space dedicated to online order pickup. In addition, the company could give Amazon access to the high-growth furniture business, which is difficult to access via online channels alone. Bed, Bath & Beyond has a sizable national presence, including 1,100 stores outside of shopping malls across the country. Plus, Amazon already has plenty of merchandise that would fit right into its domestic and home furnishings themes.
- RH (RH)
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