Drugstore chains suffer Amazon pain

Get out of the way, Amazon is coming. That’s the normal initial reaction on Wall Street when the online retail giant announces it is elbowing its way into a new industry. Traders’ knee-jerk move is to dump any stock they think will suffer a hit when Amazon sparks a new turf war.

It happened first to retailers. It happened to grocery store chains last year when Amazon bought Whole Foods. And it happened again Thursday to drugstore chains after Amazon announced that it is acquiring online pharmacy startup PillPack.

Walgreens Boots Alliance shares plunged nearly 10 percent after the Amazon news, despite bullish news that it topped quarterly profit estimates. Shares of Rite-Aid plunged nearly 11 percent; CVS Health dipped 6.1 percent.

Bespoke Investment Group has created a basket of retailing stocks it deems vulnerable to e-commerce competition. That index of stocks from its February 2012 inception until June 18 of this year posted cumulative returns of just 41.4 percent versus a gain of 106.9 percent for the S&P 1500 index.

“Amazon has such a large installed customer base and is so successful in its logistics that it makes people worried,” Bespoke co-founder Paul Hickey says.

There is a silver lining, however. Grocery stocks have bounced back, Hickey says. One example is Sprouts Farmers Markets, which fell 6.3 percent the day Amazon bought Whole Foods and another 7.5 percent when the company said it was cutting prices on some Whole Foods products. Sprouts Farmers has rallied back to where it was before Amazon bought the organic grocery seller.