Amazon.com Inc. (AMZN) may be adept at entering markets, disrupting them and completely owning them after a few months or years. Look at what Amazon has done to retailers and what it’s aiming to do to the healthcare and food delivery markets.
But Logan Capital Management fund manager Stephen Lee, who counts Amazon among the firm’s holdings, sees three companies that are resistant to the e-commerce giant’s might: Nike (NKE), Estee Lauder (EL) and Constellation Brands (STZ). He argued that those brands have an advantage compared to retailers because they are well known in an era in which people are more likely to to shop online. (See more: 8 Companies Amazon Is Killing.)
Take sneaker and fitness apparel company Nike. Not only does the company keep its product lines updated, it is also creating a “unique ability to reduce the time from innovation to market,” Lee told MarketWatch in an interview. He cited investments in automation, and the proximity new factories closer to its markets as reasons it is more nimble in introducing new products. What’s more, the fund manager said Nike’s focus on selling via the Internet positions it well. In 2017 MarketWatch noted sales via Nike Direct reached $2.61 billion, up 14% from a year earlier. That's 29 % of its total revenue. In 2016 direct sales represented 27 % of its revenue. (See more: Ackman Earned $100 Million By Cashing Out of Nike.)
Estee Lauder also has a powerful brand that makes it Amazon resistant, Lee told MarketWatch. The company is benefiting from an overall increase in demand for cosmetics. The Internet and images of makeup posted online are partly driving demand, according to Lee. The company “has leading brands and has done a really good job of controlling distribution and maintaining the pricing power,” Lee noted. What’s more, the makeup company isn’t underselling its retailer partners with its own online store. MarketWatch noted that net sales for the last quarter of 2017 were up 17% year-over-year to $3.7 billion.
As for Constellation Brands, which sells beer, wine, and spirits, Lee said its brand recognition, tough barriers to entry into its market and its customer demographic makes the company attractive and less susceptible to a threat from Amazon. Lee also credited the company with doing a good job in the craft beer market.