Amazon.com has now made it official: the company has raised the price of its Amazon Prime membership service from $79 a year to $99 a year. Amazon had initially suggested that such a possible price increase could be anywhere from $20-$40, but on Thursday's Investor Beat, host Chris Hill and Motley Fool analyst David Hanson discuss why it wasn't the fact that the increase came in at the low end of this range that caused the stock to rise a bit on the news.
David points more to the idea that this just simply means more cash flowing into the business. While some have compared this to the Netflix debacle, where it raised rates and consumers fled, Amazon's incredibly robust moat means it has more-than-enough brand strength to raise rates without losing Prime members. However, while David notes that this will be an incremental boost to the company's bottom line, he won't be buying just on this news alone.
Then, in a rare bit of truly good news for a brick-and-mortar retailer, fourth-quarter profits for Williams-Sonoma came in higher than expected, with the company also increasing its dividend by 6%, sending shares upward. But with so many other retailers facing a serious threat from Amazon.com, what is Williams-Sonoma's secret to staying strong in today's difficult retail environment? Chris and David discuss Williams-Sonoma's proactive efforts at becoming successful selling directly to consumers online, while other retailers sit back and let Amazon eat their lunch, and they also touch on the other channels the company is tapping to remain a strong retailer today.
Also, fourth-quarter profits for Krispy Kreme more than tripled year over year, with the company now having approximately 800 locations worldwide. Just how much bigger can this doughnut maker get? The guys discuss Krispy Kreme's growth plans. Despite the company's ambitious goals, David sees a lot of potential headwinds that the company may be facing. With healthy eating trends gaining more and more traction in the U.S., and the company's efforts to grow in so many very different markets, he doesn't get particularly excited about this business, despite enjoying its product.
And finally, David discusses why Discover should stand in its own right as a strong performing investment, rather than continuing to hold the stigma among investors as "the poor man's American Express." David also talks about why this company should stand apart in investors' minds from the two big players in credit cards, Visa and MasterCard, and why Discover should almost be viewed more as a bank than a credit card company.
Chris Hill owns shares of Amazon.com. David Hanson owns shares of American Express. The Motley Fool recommends Amazon.com, American Express, MasterCard, Visa, and Williams-Sonoma. The Motley Fool owns shares of Amazon.com, MasterCard, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.