It certainly hasn't been a great day to own shares in many of Australia's leading retail companies.
A number of retail shares have taken a dive today after leading investment bank Credit Suisse warned that the much-speculated launch of Amazon in Australia could be far worse for retailers than the market is currently predicting.
According to the research note, courtesy of The Australian, Credit Suisse believes that the disruptive effect that Amazon will have on business models and pricing are likely to be seen within five years of the retail behemoth launching on Australian shores.
The following four shares have been named as retailers likely to be negatively impacted. Here's how their respective share prices reacted to the news:
- The Harvey Norman Holdings Limited (ASX: HVN) share price is down 9% to $4.33.
- The JB Hi-Fi Limited (ASX: JBH) share price is down 3.5% to $23.80.
- The Myer Holdings Ltd (ASX: MYR) share price is down 3% to $1.10.
- The Super Retail Group Ltd (ASX: SUL) share price is down 3.5% to $10.34.
Should investors be worried?
Whilst at this stage the launch of Amazon in Australia is purely speculation, if it does eventuate I would be concerned if these shares were in my portfolio.
Especially if I were a Myer shareholder. Although its turnaround has been quite impressive and taken me by surprise, it may not be much help if Amazon arrives on Australian soil.
Credit Suisse believes that Myer could lose up to 55% of its potential earnings before interest and tax by FY 2022 if the retail giant enters the market.
Whether or not a launch materialises, only time will tell. But in my opinion the prudent thing to do is to avoid the industry and focus on other areas of the market.
