Chewy and Amazon ‘well-positioned’ for the changing macro environment

By Sam Boughedda

In a research note based on online sales, Wells Fargo analysts said the firm believes Amazon (NASDAQ:) and Chewy (NYSE:) are well-positioned for the holiday season and the changing macro environment.

The analysts described both companies as price leaders and said overall, the firm remains cautiously optimistic about the 2022 U.S. holiday e-commerce sales and they “expect healthy MSD growth, encouraged by better-than-expected Thanksgiving/Black Friday results.”

“However, uncertainty about the current state of the consumer remains elevated as reflected in the wide range of third-party holiday season online sales growth forecasts—from +3% to +14%. Coming on the back of strong online sales growth in 2020 (+34% avg) and 2021 (+10% avg), MSD growth would indicate sustained gains in e-commerce penetration,” added the analysts.

Initial data from Thanksgiving Day (TG) and Black Friday (BF) indicate stronger-than-expected online sales, likely at the expense of physical store sales, the analysts said.

“Looking at third-party forecasts for holiday season online retail sales growth, we see a range from +2.5 (Adobe (NASDAQ:)) to +12.8-14.3% (Deloitte), with an avg of +8.4% YY. Other forecasters that have published their estimates include Salesforce (NYSE:) at +3%, the National Retail Federation (NRF) at +10-12%, and eMarketer at +12%. This compares to +9.5% avg growth reported in 2021 and +34.4% in 2020. Adobe and Salesforce cite the uncertain economic environment/inflation and an earlier start of holiday shopping (pulling spend into Oct) as major drivers in their notably lower forecasts,” they continued.

Amazon shares have declined 2%, while Chewy is down 3% at the time of writing on Tuesday.