“Retail Is The Titanic”: This Is The Biggest Threat From The Coming Amazon Monopoly

In the latest in-depth overview of the troubles facing the US retail sector, which also serves as a recap of several previous articles posted on Zero Hedge, the FT’s Robin Wigglesworth asks “Will the death of US retail be the next big short”, something covered here back in March in “Why Some Think This Is The Next “Big Short” and subsequently in “The Retail Bubble Has Now Burst”: A Record 8,640 Stores Are Closing In 2017.”

That said, there are several notable incremental data points, including dramatic soundbites by what appear to be new shorts in the space such as Stephen Kethcum of Sound Point…

The reshaping of how Americans shop by the internet is accelerating. The US retail industry faces a growing headache, with 10 companies pushed into bankruptcy already in 2017, according to Standard & Poor’s. Even Sears, a once mighty department store chain founded in 1886, is now tottering.

“We think the magnitude of this short could be bigger than subprime,” says Stephen Ketchum, the head of Sound Point Capital, a hedge fund that manages more than $13bn in assets. “Go to the Amazon website and type in ‘batteries’. What you see is just the tip of the future iceberg. And retail is the Titanic.”

“Because it is such a slow bleed, it is important to get both the direction and the timing right,” Mr Ketchum says. “We are focused on shorting the companies that have reached a tipping point for one reason or another.”

… as well as some familiar faces:

Victor Khosla, founder and senior managing partner of Strategic Value Partners, a $6bn distressed debt hedge fund, says the list of troubled retailers his firm now monitors is “extraordinarily long”, but he is staying well away.

“Trying to figure out the bottom is hard. We have spent a lot of energy understanding these businesses, and have concluded that the vast majority of them are uninvestable,” he says. “Many of these were great businesses at some point in time, but the internet and changing consumer habits have destroyed them.”