Amazon (AMZN - Free Report) received a jolt in its preparation for the holiday season in the form of a worker strike in Europe on Black Friday.
The company witnessed strong protests by workers in several countries namely the U.K., Italy, Germany and Spain. The workers alleged that poor and unfair working conditions in the company is the primary reason behind the strike.
Reportedly, the number of workers who have joined the strike in Germany and the U.K. were 620 and 500, respectively, while it is 90% of the workforce in Spain. This crisis has jeopardized the company’s prospects in this peak shopping season.
Disruption at Amazon
The workers’ walkout on Black Friday for an online retailer is a matter of huge concern. The fulfillment centers and logistic depots of Amazon went through a bad phase owing to the actions of workers against the company.
Fulfillment centers are giant warehouses that aid the company in storing and shipping products, and handling returns quickly. These are crucial for the company as they help in providing better shopping experience to its customers.
We note that Europe remains one of the key markets for Amazon’s e-commerce business and thus the latest move of the European workers is likely to disrupt the company’s capacity to cater to the rising customer demand during the holiday season.
Consequently, this might impact the performance of the company negatively this holiday season. Moreover, Amazon has provided a weaker holiday outlook for sales this time which is a key negative.
All these might turn the investors apprehensive about the stock.
However, the company has reportedly claimed that the workers are availing work conditions that are better that the industry’s average level. Further, wages are higher in comparison with the industry.
Notably, the stock has gained 28.4% on a year-to-date basis against the industry’s decline of 3.9%.
Additionally, Amazon’s strengthening initiatives for this holiday season are focused toward providing enhanced shopping experience with the help of its robust product offerings, deep discounts on various items, Prime program, expanding freight and delivery services.
These endeavors of the company are likely to drive its sales this season in many countries like, the United States, the U.K., Canada, Australia and many more in this season.
Per the latest data, Amazon seems to have surpassed the last year’s Black Friday sales figure in terms of items ordered. The company received more than 1 million toy orders and 700K fashion orders in the first nine hours. Further, the company witnessed robust demand for its Echo and Fire products.
The above mentioned facts are likely to continue aiding the company’s sales growth, holiday performance and market position.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are TripAdvisor (TRIP - Free Report) , Stamps.com (STMP - Free Report) and Etsy (ETSY - Free Report) . While TripAdvisor sports a Zacks Rank #1 (Strong Buy), Stamps.com and Etsy carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for TripAdvisor, Stamps.com and Etsy is pegged at 16.05%, 15% and 15%, respectively.
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