January 5, 2017 / 9:23 PM / a year ago

Amazon may hold Trump card in retail mess

NEW YORK (Reuters Breakingviews) - Jeff Bezos may be holding a Trump card in the U.S. retail-store slump. Amazon.com, the e-commerce giant he runs, is considering a bid for the bankrupt American Apparel, according to a Reuters exclusive, just as Macy’s and other department stores are losing sales and cutting staff. A deal could be a handy way to show a president-elect suspicious of Silicon Valley that he’s saving thousands of working-class U.S. jobs.

An Amazon logo is seen on a worker's jacket at an Amazon Fulfilment Center in Wroclaw, Poland, in this file photograph dated December 3, 2015. Online retailer Amazon is set to enter the British fresh food market after striking a supply deal with supermarket Morrisons, potentially ramping up competition in the already cut-throat sector. REUTERS/Kacper Pempel/files - RTS8J0Q

It wouldn’t be the main reason for Amazon to pounce on American Apparel, whose brand proudly refers to how it manufactures all its clothing in a Los Angeles factory employing some 4,500 people. The business would be a natural fit with Amazon’s in-house fashion offerings that it launched last year and with earlier acquisitions like Shopbop and Zappos.

It might, though, have the added benefit of assuaging Donald Trump. The president-elect and the tech industry disagree on everything from encryption to free trade to immigration. Trump singled out Amazon during his campaign for having huge antitrust issues and said the company would have “such problems” were he to win the White House. Bezos also personally owns the Washington Post, which has been a vocal critic of the incoming U.S. commander-in-chief.

Now Trump is using Twitter to threaten companies he deems are doing wrong – whether it’s Boeing overcharging for Air Force One or the likes of General Motors and Toyota for potentially moving U.S. jobs abroad to save money.

Buying American Apparel could help make Bezos a savior of a dying industry. Macy’s and Kohl’s on Wednesday reported November and December sales that were worse than expected, wiping 14 percent and 19 percent off their valuations on Thursday. Macy’s plans to slash more than 10,000 jobs, or 7 percent of its workforce.

Meanwhile, U.S. digital retail sales are expected to reach more than $500 billion by 2020, a third higher than 2016 estimates according to Forrester Research. Amazon already owns 60 percent of the pie. A deal wouldn’t cost much, either: American Apparel currently has an offer from Gildan Activewear for just $66 million. And Amazon’s avowed and proven disinterest in short-term profit means it should have no problem keeping the retailer’s jobs stateside.

Brandishing some “Made in the USA” cred would be a smart bet by Bezos.


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