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Amazon.com, Inc. (AMZN), Barnes & Noble, Inc. (BKS): The Value of the Empty Chair Versus the Empty Suit

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Amazon.com Inc. (AMZN)Since its founding, Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos has insisted an empty chair always be present at meetings. Why? To represent the Customer. Can you think of another company that does this?

It is part and parcel of Bezos’ aim to be the world’s most consumer-centric company, not shareholder-centric, although shareholders certainly have nothing to complain about, not with a 25% gain this last year. Nor its astounding 400% plus return since it debuted to its all time high of $286.58 on July 2. Since 2009 alone, it’s been a five-bagger.

I love to read a story about a business that makes it seem human, not all charts and ratios, and gives you a fundamental reason to want to buy its  stock. With Amazon.com, Inc. (NASDAQ:AMZN), you certainly need a reason besides its valuation, giving the literary and dramatic term “willing suspension of disbelief” new meaning. Amazon.com, Inc. (NASDAQ:AMZN) has a forward P/E in the 80s and a price/book of 15.33. As the chart shows, the stock has soared despite negative EPS and revenue growth trends.

Nonetheless, its e-commerce division is strong with each holiday season boasting better numbers. The prices of devices, the Kindle e-readers and Fire tablets, have been slashed dramatically in light of increased production and despite a summer lull, they should pick up briskly as the holidays approach.

Amazon.com, Inc. (NASDAQ:AMZN) is also the pioneer of cloud storage, e-books, and now its Prime streaming membership is featuring original content, vying with Netflix, Inc. (NASDAQ:NFLX) and Yahoo! Inc. (NASDAQ:YHOO).



AMZN EPS Diluted Quarterly YoY Growth data by YCharts

The empty suits

I like to think Bezos’ empty chair business model is the antithesis of  empty suit CEOs and executives who ignore industry trends, not understanding why their earnings are lagging or their stock is cratering, which is what’s been happening at Amazon.com, Inc. (NASDAQ:AMZN)’s competitors Barnes & Noble, Inc. (NYSE:BKS) and Best Buy Co., Inc. (NYSE:BBY).

Best Buy Co., Inc. (NYSE:BBY) got a free pass when Circuit City closed its bricks and mortar stores. When “showrooming” first became a phenomenon, the company either ignored it or made customers feel uncomfortable about it.

In March, the company announced a major initiative to price match qualifying products at selected major retailers and e-tailers for a full 15 days after purchase. While this may seem like a big deal, the price matching policy was for a period of 30 days before the big reveal.

Showrooming has been an issue for years and this latest mandate will not, as the company claims, “Kill showrooming for good.” However, Best Buy’s online sales numbers have improved 16%. New CEO Hubert Joly has gained Wall Street’s confidence that he can turn things around from its last five quarters of dismal earnings and Q1’s decrease of 1.3% in comparable store sales. Joly still has a big job of regaining customer confidence in hopes of stemming the decelerating revenue growth plaguing the company before his tenure.

Customer satisfaction has long been a problem at Best Buy Co., Inc. (NYSE:BBY) with results in the low to mid 70’s on the American Customer Satisfaction Index, a monthly measure of what else… customer satisfaction. Amazon.com, Inc. (NASDAQ:AMZN), meanwhile, has achieved scores in the high 80’s, among the highest in the index along with Nordstrom, Inc. (NYSE:JWN), for years. To be fair, Amazon has lost a few points in the last two years while Best Buy has managed to improve, reaching its best score in years at 78. Barnes & Noble, Inc. (NYSE:BKS) achieved an 82.

Although the forward P/E is 12.48 and it offers a yield of 2.30% Best Buy is a company in transition. The consumer electronics e-tailer and retailer has cut off its European operations now only to do business in the US, Canada, and China.



BBY Revenue Quarterly YoY Growth data by YCharts

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