Back to top

Image: Bigstock

German Union to Call Workers' Strike: Will It Hurt Amazon (AMZN)?

Read MoreHide Full Article

Amazon (AMZN - Free Report) is likely to get a jolt in its preparation for the holiday season in the form of a workers’ strike in Germany starting this Thanksgiving through Black Friday.

Reportedly, the German labor union named Verdi, is advising Amazon workers to go for a strike during this busy shopping period. Workers at AMZN’s three shipping centers located at Rheinberg, Koblenz and Graben are gearing up for a walkout on Thursday night.

The union might take further action in the form of strikes at other locations of Amazon.

The primary reason behind these work stoppages is the exploitation of workers, and their poor and unfair working conditions.

Disruption at Amazon

The workers’ walkout at the time of Thanksgiving and Black Friday for an online retailer is a matter of grave concern.

Moreover, such an industrial action in Germany, which emerged as the second-largest market for Amazon, is expected to jeopardize the e-commerce giant’s prospects in this peak shopping season.

We note that the shipment and fulfillment centers aid AMZN in storing and shipping products, and handling returns quickly. These are crucial for Amazon for providing a better shopping experience to its customers.

Consequently, the strike might impact Amazon’s performance negatively this holiday season. Moreover, AMZN provided a weaker holiday outlook for sales this time, which is a key negative.

As the strike under discussion will predictably affect the holiday performance of Amazon, investors may turn apprehensive about the stock.

Amazon’s Stance

However, AMZN reportedly claimed that the workers are availing of safe, secured and favorable working conditions along with good career opportunities, robust benefits and an excellent pay.

Additionally, Amazon’s strong strategies are focused on providing an enhanced shopping experience with the help of its robust product offerings, deep discounts on various items, Prime program, expanding freight and fast delivery services.

These strategic endeavors are likely to continue driving its sales this season in many countries like the United States, the U.K., Canada and Australia, to name a few.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #5 (Sell).

AutoNation (AN - Free Report) , Penske Automotive Group (PAG - Free Report) and Target (TGT - Free Report) are some better-ranked stocks in the broader Retail-Wholesale sector. While AutoNation and Penske Automotive Group sport a Zacks Rank #1 (Strong Buy) at present, Target carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoNation has gained 82% on a year-to-date basis. The long-term earnings growth rate for the stock is currently projected at 24.44%.

Penske Automotive has jumped 73.1% on a year-to-date basis. The long-term earnings growth rate is currently projected at 20.04%.

Target has rallied 40.9% on a year-to-date basis. The long-term earnings growth rate is currently projected at 14.4%.