Traditional Retail Beats Amazon on the Stock Exchange

Since the beginning of the year, stock price of Macy's department stores, one of the largest American retailers founded in 1858 has increased by 56%, and 58% accounting for dividends. This year, other “old school” retailers such as Kohl's shares are also sharply up on the year – 42 %. Kohl's is an American department store founded in 1927.

                “The consensus wisdom about Macy’s — and much of the rest of brick-and-mortar retail — was that it was an idea past its time, and one inevitably heading to the dustbin of history.”concludes the author.

                Last year, these companies were significantly influenced by this point of view: Macy’s saw its stock price shed about a third of its value, and Amazon stock went up by 56%.  "

                However, analysts and investors are looking more carefully at the segment and have been more focused on firms where their efforts at a turnaround have some appealing features. Macy’s — along with Target, Kohl’s and Walmart — makes that list.

Quantitative hedge funds, such as Renaissance Technologies and Two Sigma have increased their Macy’s portfolios. A sharp jump in the company's shares is also a consequence of a significant reduction in "bearish rates" (games for a fall).

“When growth is abundant in a sector, investors tend to buy the cheaper stocks,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors.

“Given the relative cheapness of brick-and-mortar names versus eCommerce, it thus makes sense that they’d begin to outperform when consumer sentiment and spending accelerates.”

Gokhman further noted that, though he thinks brick-and-mortar does, in fact, have a lot more gas left in its tank than it is given credit for, he does not believe the current rapid momentum will end up being sustainable growth.