Saks Global has announced it will discontinue its “Saks on Amazon” storefront as part of its ongoing Chapter 11 bankruptcy restructuring. This decision comes in the wake of a significant investment from Amazon earlier this year, amounting to $475 million, which had initially tied Saks to a commitment of $900 million over eight years. Following the news, Amazon’s stock experienced a slight decline of 1.0%, closing at $239.30 on Friday.
The timing of this decision is particularly noteworthy as it comes just days before Amazon is scheduled to report its quarterly earnings on February 5 and the U.S. jobs report on February 6. Investors are keen to gauge whether Amazon’s investments are yielding returns or contributing to rising costs. Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors, emphasized the pressure on companies with high expectations to deliver results.
Friday’s market was affected by a broader decline, with the S&P 500 falling 0.4% and the Nasdaq losing 0.9%. Concerns were exacerbated following Donald Trump’s announcement appointing Kevin Warsh as the head of the Federal Reserve, as well as unexpected wholesale inflation data revealing a 0.5% increase in the Producer Price Index for December. Terry Sandven from U.S. Bank Asset Management expressed that the leadership change has contributed to investor concerns about expenditures related to data centers and other capital investments.
Despite the setback associated with the Saks partnership, which is minor compared to Amazon’s extensive retail and cloud operations, it raises questions about how far a mass-market platform can successfully venture into the luxury sector without losing brand appeal.
Going forward, Amazon’s stock performance will largely depend on the demand figures released during its upcoming earnings call, where investors will be looking for signs of consumer spending trends, particularly in discretionary areas following the holiday season. Additionally, the management of shipping and fulfillment expenses, along with the pace of their warehouse expansions and AI resource investments, will be closely monitored for potential impacts on profit margins.
The discontinuation of the Saks deal could also lead to legal complexities if the issue extends into bankruptcy court proceedings. As trading resumes on Monday, attention will focus on whether the news surrounding Saks will influence market sentiment or be overshadowed by earnings discussions. The upcoming earnings report from Amazon and the U.S. jobs report are key events that will shape investor outlook in the coming days.