Amazon, destroyer of worlds.

As an exercise, Fitch Ratings likes to consider worst-case scenarios for different sectors should significant disruption occur. With Amazon.com  (AMZN) threatening to disrupt everything from the way you watch television to the way you shop for groceries, the analysts at Fitch decided to turn their attention to the apparel retail sector. 

In their scenario, Amazon increases its apparel market share to 25% from 7% over the next three years, effectively disrupting the sector. 

Malls will have a bleak future in this worst case scenario
Malls will have a bleak future in this worst case scenario

The scenario isn't that far-fetched as apparel retailers have experienced lower foot traffic and returns for the last decade. However, 70% of apparel retail sales still occur in-store. 

In Fitch's scenario, in-store sales would decline 50% over the next three years. Larger retailers would see a 20% revenue decline and an EBIDTA decline of 40%. 

The firm also warned of a "knock on" effect in which anchor stores in malls (stores that drive traffic to other stores in the mall) would leave the malls and create a domino effect that results in significantly lower traffic throughout the mall. 

That event would negatively impact net operating income for the affected retailers by between 7%-19%. For the malls themselves, net operating income would fall by 25% for B malls and 13% for A malls. 

This would then lead to a steep drop in mall property valuation, resulting in lower recoveries and higher loan losses. Loans secured by malls rated tier-1 would not default, according to Fitch, but malls in the second and third tiers would. 

The bottom line is Amazon must be stopped. Unless you're an Amazon investor.

Amazon shares were up 11.26% Friday morning following a strong third-quarter earnings release. 

More of What's Trending on TheStreet:

More from Stocks

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

Dow Gets Swept Into Nasty Reversal Even as Nasdaq Posts New Record

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

REPLAY: Jim Cramer on Fed Rate Hikes, Oil Prices and Starbucks Worries

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

What Will GM Do With Cruise -- and Is Its Stock Worth $55?

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

This Should Be Your Retirement Savings Plan When the Stock Market Crashes

This Should Be Your Retirement Savings Plan When the Stock Market Crashes