Amazon to Wind Down Some of Its DEI Programs
Jan 12, 2025
Amazon Shifts Focus to Black Friday, Reaping Rewards of Strategic Change
Amazon.com Inc. (AMZN) has made a notable shift in its retail strategy by moving its focus from Cyber Monday back to Black Friday for the second consecutive year. This change is yielding positive results as highlighted by Gene Munster from Deepwater Asset Management.
This tactical adjustment reflects Amazon's long-standing practice of innovating its own sales events, akin to the previously successful Prime Day.
Overview: Munster points out that changes in tariffs, particularly regarding import duties on items valued at over $800, could pose challenges for Amazon in the future.
Despite potential tariff challenges, the overall retail landscape is thriving, with sales growth speeding up over the past eight quarters. Specifically, paid units have increased from 8% in December 2022 to 12% in September.
Additionally, retail profitability is on the rise. Although Amazon does not release specific data on retail operating margins, Munster estimates that margins have improved from a negative 3% two years prior to a positive 5% recently.
Munster predicts that further enhancements in profitability could reach 7% by 2025, which would substantially elevate earnings per share to $7.15 compared to the current expectations of $6.15.
Significance: This shift to Black Friday is particularly crucial in a competitive retail environment, where businesses across the U.S. and Europe are launching campaigns to attract early bargain-hunters. Retail stores even opened as early as 5 a.m. post-Thanksgiving, amid a shorter overall shopping period.
Additionally, the incoming administration's proposed tariffs could disrupt the economic landscape, potentially leading to a strengthened dollar which may affect buying patterns for consumers and businesses alike.
Despite these hurdles, the shopping period from Black Friday to Cyber Monday is predicted to set new sales records, with U.S. retail sales projected to hit $75 billion, reflecting a 5% year-over-year growth rate. This significant statistic underscores the importance of this shopping window for retailers, according to analyses by Bain & Company.
Stock Performance: On a recent trading day, Amazon's stock closed at $207.89, representing a 1.05% increase. Year-to-date, shares have surged nearly 39% as per available data.
The consensus rating for Amazon stocks is currently classified as a "Buy," with the highest price target set at $285 and the lowest at $197. The median price target of $238.16 suggests a potential upside of 14.6% for investors.
Overall, Amazon's shift in focus not only indicates a strategic redirection but also highlights their capability to adapt to market changes, enhancing their profitability and positioning in the competitive retail space.
Amazon, BlackFriday, Retail