Amazon (AMZN) to destroy Home Depot (HD) . Amazon to eviscerate Macy's (M) . Amazon to decapitate Kohl's (KSS) . Amazon to annihilate Nordstrom (JWN) . Amazon to filet Advance Auto Parts (AAP) . Amazon to crush Dick's (DKS) .
It never stops and it is the theme of the retail earnings season, and frankly I have never seen anything like it. I have never seen one company so disrupt every aspect of one of the largest markets in the U.S., the retail business, and almost no one is immune, even the companies that do well and put up incredible numbers. Companies like Home Depot, which reported a classic "beat the estimates and then raise the estimates." And these are not just small beats. Home Depot gave you the best quarter it has ever had with fabulous margins, a fantastic spring selling season and a much bigger raise of forecast than anyone expected.
So what happened?
Its stock got crushed.
The conference call, usually a primer on how to run a business, became a nightmare for the company almost from the first question, which was, to paraphrase, how long, really, can these good times last because it is so long in the tooth?
For a moment, I thought shareholders might be OK because executives from Home Depot dutifully link sales with household worth, which keeps going higher and shows no signs of cooling.
Then boom, the same questioner asked about e-commerce, with the implication that you could get tools cheaper online.
Well, the floodgates opened. Question after question about online competition. It was as if the company had a terrible quarter and they were all trying to figure out how much of their business was taken by "the dark star," the term the legendary Frank Blake, Home Depot's former CEO, used to describe Amazon in a Rotary Club talk in the company's Atlanta hometown.
"I really don't like Amazon," he was quoted as saying in the Atlanta Business Journal. He particularly pointed out the unfair nature of Amazon's Alexa, the listening device that he says shows a preference for Amazon's products, and the customer may not even know if it is getting the best deal. "Every retailer is going to have to figure out a strategy for dealing with Alexa."
I would say so, given that the analysts on the call did everything but say, "Isn't Alexa killing you?"
How outrageous was this call? At one point an analyst asked what really worried the company, and the answer? The customer's treatment by associates in the really high-volume stores. Yes, the issue is too much business.
It fell on deaf ears. I swear I thought the analysts wanted them to say, "Amazon, of course, we are being killed by them."
But they are not.
No matter, the analysts have spoken. It's only a matter of time.
So the stock gets pulverized and Home Depot just joins the list of companies zapped by the dark star even as, to me, it's not even being bruised by it.
Is this all ridiculous? Maybe it doesn't matter anymore. The fact is that the market is not going to pay as much for the stock of a company that competes with Amazon even if it competes as effectively as Home Depot obviously does.
The incredible thing is that even a gigantic beat-and-raise doesn't shield a company from the dark star. So what do you do with the stock of Home Depot?
I think you have to wait until it is so cheap that there's no immunity and the company can sit there and buy back all the stock it wants while giving you a huge dividend.
Otherwise, the stock of this phenomenal company may just be too hard to own because the analyst community has deemed it too vulnerable with their questions, even as their reports remain, for the most part, positive about the best do-it-yourself company in the world.