Have you ever heard of the saying ‘opposites attract’? Well, if it’s true, maybe dominating online retailer Amazon (NASDAQ:$AMZN) should enter into partnership with struggling conventional retailer Macy’s (NYSE:$M). At least that’s what a handful of analysts are saying.
“I think it absolutely could happen,” Christian Magoon, the CEO of Amplify ETFs, told TheStreet. Magoon pointed out that even though Amazon has acquired a number of physical locations in the United States over the course of the past month, it will still need additional spaces to further improve its delivery speeds. To compare, Whole Foods has 466 locations in North America and the UK, while Macy’s has 700 department stores and 125 specialty stores.
Amazon could implement big changes in Macy’s
According to Magoon, Amazon could take Macy’s in a new direction. While Macy’s tends to use its stores mainly as a showroom and secondarily as a place to store inventory, Amazon could use the locations for numerous reasons, such as drop-off locations for drone deliveries.
That said, Amazon and Macy’s coming together might be a tad on the awkward side of things. Why? Because Amazon is the primary reason Macy’s stores are dying off. “That’d be an interesting situation,” said Jim Cramer. “Amazon knocks down a stock with its own power and then gobbles up the stock underneath when it suits them.”
The suggestion of the merger first came onto the scene in 2017 after Macy’s disclosed in January that it would be closing 68 stores by early spring and letting 3,900 employees go as it moves into a more-digital friendly store. The following month Oliver Chen of Cowen & Co said that the merger would be a smart move because Amazon could use Macy’s locations for its distribution network to improve delivery speeds.
Even though Macy’s investors would feel some sense of relief if Amazon purchased the store, Cramer warned investors to never buy a company’s shares because it might get acquired. Keep in mind that this is even more important when a company has weak fundamentals, such as Macy’s.
On Thursday’s close, Amazon’s shares dropped 0.7% to $999.54. Macy’s increased 4.2% to $22.12.
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