Home Retailers Are Getting Crushed After Sears Partners With Amazon

Sears Holdings CorpSHLD

announcement on Thursday it will start selling its Kenmore appliances on Amazon.com, Inc. AMZN is having ripple effects across the entire home retailing sector.

For example, Home Depot Inc HD's stock was trading lower by more than 4 percent while Lowe's Companies, Inc. LOW was lower by more than 6 percent.

If anything, Sears' agreement with Amazon is the "reality of life," Josh Brown, CEO of Ritholtz Wealth Management said during Thursday's CNBC "Halftime Report" segment. Sears, like every other retailer on Amazon's platform, is just selling its products to consumers who want to buy online. At the end of the day, Sears could have built out its own online platform to avoid a middle-man like Amazon, but for whatever reason, it didn't or couldn't.

Jim Lebenthal of HPM Partners and also a contributor to "Halftime Report" added to the conversation that the rise of e-commerce over the years is indisputable, but at the same time, the in-store experience will "never go to zero." In the home retail space, Home Depot most certainly isn't going away after Sears' announcement and a more than 4 percent hit to the stock "isn't right."

Jim Cramer has previously touted the Amazon proof nature of companies like Home Depot and Lowe's as few consumers will buy pieces of lumbar and other heavy products online. But now it remains to be seen if his position will change following Sears' announcement.

In fact, Home Depot's online website happens to be "amazing" and can directly connect consumers with sales peoples, Cramer previously said.

Mario Gabelli's Take

Mario Gabelli, CEO of Gabelli Asset Management Company, was a guest on the "Halftime Report" segment and had two points to make regarding Sears' announcement.

Home Depot will do just fine, especially at a time management has pledged to spend billions upon billions of dollars buying back its own stock, Gabelli noted. This alone implies that even if Home Depot's earnings on a dollar amount remain flat, the math implies it will be more attractive on a per share basis.
Also important to note, there may be a point in the future where regulators will come down on Amazon for "being too disruptive and entering too many markets."

At time of publication, Sears was up 14.06 percent at $9.90.

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Mario Gabelli's Take

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