Shuttered Retail Is Amazon's Gain

Amazon.com, Inc. AMZN hit a new-all time high Wednesday and Cantor Fitzgerald's Youssef Squali has a simple reason why the stock will continue moving higher.

Speaking as a guest on CNBC, Squali pointed out that over the past six to nine months around 1,000 physical retail locations closed their doors. This doesn't necessarily mean shoppers are spending less money or will cut back on their spending, but it does mean they will look elsewhere to spend money.

It's no coincidence that while retail stores are closing, Amazon has been launching new house-brands or private label products in areas like apparel and electronics. This best positions Amazon to capture at least 20 percent of the up to $5 billion in lost sales from closing stores. The analyst added that Amazon's share of the lost sales will then rise to 40 percent in 2018 and gain even more in the coming years.

Sales of Amazon's private label brands accounts for just 5 percent of its total global GMV (gross merchandise volume). This is a figure that falls well short of other companies, including Costco Wholesale Corporation COST at around 25 percent and Kohl's Corporation KSS at 48 percent.

As such, driving at the very least a mid-single-digit growth rate in its private label brand is "pretty achievable."

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