, Inc. Is Taking Key Strides into Premium Women’s Denim; KeyBanc Weighs In

KeyBanc's Edward Yruma shines light on "steady progress" from the e-commerce king in the apparel market.

KeyBanc analyst Edward Yruma is out with a cautiously optimistic research report on, Inc. (NASDAQ:AMZN) following the e-commerce king’s recent launch of two premium private-label denim brands; Hale and Denim Crush. Esteemed denim designer Adriano Goldschmid, the man behind big brand names like AG Jeans, Diesel, and Gap 1969, is notably Hale’s creator.

The key point here for Yruma: the new brands suggest a step into premium women’s denim for Amazon, from price points to details to construction. Gap and Nordstrom companies could be put under pressure, as Yruma sees this as a “modest negative” for these rivals.

A commonality amongst Hale, Madison, and Denim crush lines: the price points for these premium denim brands soar above Amazon’s other private-label apparel brands. Though performance features to washes to embellishments echo that of premium rivals including Paige, AG, and rag&bone, price points stand attractively at an around 30% fraction of these other players.

Yruma points out, “Sizing and fit are critical in the bottoms business; success here creates strong loyalty. We think a focus on this category is smart given that it is not as seasonal and that fashion can be expressed through changes in wash and embellishment. AMZN has also targeted the men’s pant business (Goodthreads) and the athleisure pant business (Core 10).”

Just two years ago, the analyst first underscored the e-commerce giant’s private-label apparel efforts. The opening original count? 7 brands. Now, the analyst can spot a minimum of 85 private-label brands, which includes 71 in apparel.

On the whole, “Amazon continues to make steady progress in apparel. The Company continues to add incremental private labels in an effort to diversify its product offerings and enhance margins […] Many of the private-label brands are designated as Prime exclusive. We view the continued push as detrimental to many of traditional apparel companies under our coverage, and see AMZN’s entrance to premium denim as most negative to GPS (denim focus, but lower price points), VFC (denim, but lower price points), and JWN (strong premium denim assortment).This focus on private-label and a recent change to the apparel seller fee (now 18%) reinforces AMZN’s commitment to apparel as a 1P business,” Yruma concludes.

For now, the analyst reiterates a Sector Weight rating on AMZN stock without listing a price target. (To watch Yruma’s track record, click here)

TipRanks highlights a strong bullish camp taking the e-commerce bet on Amazon stock. Out of 36 analysts polled in the last 3 months, 34 rate a Buy on Amazon stock while 2 maintain a Hold. Worthy of note, the 12-month average price target of $1,641.69 boasts upside potential nearing 17%.

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