The rise of Amazon.com, Inc. (NASDAQ: AMZN) has changed the face of brick-and-mortar retail forever. Amazon may have single-handedly driven traditional mall retailers such as Aeropostale, Pacific Sunwear, American Apparel and Wet Seal into bankruptcy. Other companies, such as Sears Holdings Corp (NASDAQ: SHLD), seem to simply be delaying the inevitable.
However, just because some of the worst-performing mall retailers are going under and others are closing down thousands of stores doesn’t mean that betting against all retailers across the board is a good idea.
Some mall retailers are doing just fine in the Amazon era.
TJX Companies Inc (NYSE: TJX), Nordstrom, Inc (NYSE: JWN) and Bed Bath & Beyond Inc. (NASDAQ: BBBY) have grown their revenues by 37.4, 31.1 and 27.3 percent in the past five years.
Other companies have been gaining market share and/or increasing efficiency from all the store closings. Falling share prices have created appealing valuations in the space as well. J C Penney Company Inc (NYSE: JCP), Macy’s Inc (NYSE: M) and Kohl’s Corporation (NYSE: KSS) all currently trade at forward PE ratios of under 12.
Mall REITs are doing just fine as well. Shares of Simon Property Group Inc (NYSE: SPG), General Growth Properties Inc (NYSE: GGP) and Macerich Co (NYSE: MAC) are all up between 24 and 53 percent in the past five years.
Amazon is certainly turning up the heat on brick-and-mortar retailers, but the mall environment is far from deal. Traders would be wise to be selective in the space when making bearish bets rather than assuming all mall stocks are doomed.
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