If the stock market is a game of brute force — and it often is — Amazon won the last decade.
The value of the web giant’s shares shot up 1,492 percent since the end of 2009, giving Amazon a market capitalization of $927 billion as it headed into the final, short week of 2019.
That’s an increase of almost $870 billion — a gigantic leap that speaks to, yes, the transformative force Amazon has been in the commercial world, where it accounts for about half of all online sales. But it’s also a measure of the company’s early leadership in the cloud computing sector (a cash cow for its operations), the lingering obsession with all things tech and a bull market that not only charged out of the Great Recession, but just kept going. (But Amazon itself has some catching up to do if it wants to match Apple, which added $1.1 trillion to its market cap over the last decade, expanding its stock market value to $1.29 trillion).
The Dow Jones Industrial Average is up 175 percent for the decade, going from strength to strength and setting a new all-time high last Friday.
Amazon is not only good at what it does — it was in the right place at the right time in the 2010s. And more so than perhaps any other company.
But there were other waves to catch coming out of the recession and one didn’t need to be a master of the tech universe like Jeff Bezos to take advantage of them:
• Activewear rose as the ath-leisure and wellness trends expanded.
• Beauty gained as the YouTube tutorial, Instagram and the mega influencer took root.
• Luxury perked up as brands tapped into the Chinese market and took control of their distribution, opening more stores and launching online while pulling back from department stores.
• And the offprice sector threaded the needle, serving up brands and discounts to no-nonsense shoppers shying away from the mall.
Benefiting from these trends was the eclectic group of Lululemon Athletica Inc., Ulta Beauty Inc., Estée Lauder Cos. Inc., Ross Stores Inc. and Hermès International — the top five market cap winners after Amazon, each of which drove stock increases of more than 600 percent for the decade.
The increases equal more than bragging rights or even shareholder gains. Power on Wall Street — where paper money rules — can also equate to real-world power.
Lauder, for instance, started off with a market cap of $9.5 billion, a tidy sum that ballooned over the last 10 years to $74.8 billion. That financial cushion helps as the company looks to its future and fills out its portfolio. In context, the firm’s $1.1 billion deal to move more aggressively into Asia and buy full control of Have & Be. Co., the parent to Dr. Jart+, looks small. To pay for the acquisition, and refinance $500 million in debt coming due, Lauder issued $1.8 billion in debt at interest rates of 3.1 percent and lower.
Likewise, Lululemon started off with a market cap of $2.1 billion and over the course of the decade added another $27.9 billion to it for a total of $30 billion — giving the company much more heft when it comes to attracting talent, raising money to fuel further growth and crowding out competitors.
While these companies with ultra-strong brands, deep connections with consumers and the wind at their backs have gained clout and financial might, the giants of old are limping into the 2020s.
The mall-based department and specialty stores have struggled to capture the hearts of investors as foot traffic waned, outdated leases lingered, debts piled up and many struggled to draw shoppers who are looking for new kinds of experiences.
Victoria’s Secret parent L Brands Inc., Nordstrom Inc., Macy’s Inc., Gap Inc., Abercrombie & Fitch Co. and J.C. Penney Co. Inc. were among those not only failing to keep up with the market during the 2010s, but losing ground. Even the off-mall alternative Kohl’s Corp. logged a decline.
Collectively, those seven companies gave up $29.2 billion in market cap — a decline of 46 percent for the decade. That’s not far off from the $27.9 billion Lululemon gained.
But if Lululemon, Lauder and the rest are going to keep up, they’re going to have to use their scale to master what is surely going to be another new kind of retail for another new kind of consumer in the 2020s.
And they’ll also have to make sure to be — once more — in the right place at the right time.
The Market Cap Race
The companies that led the market during the bull run of the 2010s generally played in strong sectors with strong brands.
|Market Cap (in billions) 12/31/2009||Market Cap (in billions) 12/27/2019||Change (in billions)||Percent Change|
|Lululemon Athletica Inc.||$2.1||$30.0||$27.9||1314%|
|Ulta Beauty Inc.||$1.1||$14.5||$13.4||1265%|
|Estée Lauder Cos. Inc.||$9.5||$74.8||$65.3||687%|
|Ross Stores Inc.||$5.3||$41.3||$36.0||680%|
|Hermès International||€ 9.74||€ 70.61||€ 60.87||625%|
|Kering||€ 10.56||€ 73.85||€ 63.29||599%|
|Under Armour Inc.||$1.4||$9.2||$7.8||570%|
|LVMH Moët Hennessy Louis Vuitton||€ 37.07||€ 210.21||€ 173.14||467%|
|Columbia Sportswear Co.||$1.3||$6.7||$5.4||410%|
|TJX Companies Inc.||$15.3||$73.2||$57.9||377%|
|G-III Apparel Group||$0.4||$1.6||$1.2||293%|
|Inditex||€ 27.04||€ 100.13||€ 73.09||270%|
|Tiffany & Co.||$5.4||$16.1||$10.7||200%|
|Dow Jones Industrial Average||10,428.05||28,645.26||18,217.21||175%|
|Compagnie Financière Richemont (Swiss Francs)||19.23 CHF||43.23 CHF||24.00 CHF||125%|
|Ralph Lauren Corp.||$8.0||$8.8||$0.7||9%|
|Hennes & Mauritz||328.86 SEK||320.26 SEK||-8.60 SEK||-3%|
|L Brands Inc.||$6.2||$5.0||-$1.2||-19%|
|Urban Outfitters Inc.||$5.9||$2.7||-$3.2||-54%|
|Abercrombie & Fitch Co.||$3.1||$1.1||-$2.0||-65%|
|Tailored Brands Inc.||$1.1||$0.2||-$0.9||-82%|
|Chico’s FAS, Inc.||$2.5||$0.5||-$2.0||-82%|
|J C Penney Company Inc.||$6.3||$0.4||-$5.9||-94%|
|Source: S&P Capital IQ|