A roundabout of U.S. Retail earnings

This earnings season for second-quarter earnings has been overshadowed by market turmoil unfolding in the global financial markets and disappointing economic performance measures. As the season draws to a close, there are still companies due to report to the market on their performance. We highlight U.S. stocks reporting next week that show interesting investor sentiment including; Barnes and Noble Inc (NYSE:BKS), Campbell Soup Co (NYSE:CPB), Fresh Market Inc (NASDAQ:TFM) and Zale Corp (NYSE:ZLC).

Barnes and Noble Inc. has been in the public eye after investors showed interest in the retailer as a potential takeover this summer, almost a year after it announced that it was considering acquisition bids. Liberty Media were known to be courting the company but recent revelations observe that although the companies are still in active discussions, Liberty Media may now invest in the company but not purchase it (http://www.businessweek.com/ap/financialnews/D9P75RJ80.htm). Short sellers rushed to cover their positions earlier this year - presumably, to cut losses following short interest reaching highs of 24%of total shares outstanding, while the share price surged to new highs following the retailer being approached by other interested investors. However, the surge in share price was short lived as the negotiations broke down and there has been a slight increase of short interest from 5% to 6% of total shares. Institutional investors have showed bearish sentiment towards this stock and have reduced their holdings since May by 20% of total shares. If Barnes and Noble miss earnings estimates again, it will be the fourth consecutive quarter for the company.

Campbell Soup Company reports its fourth-quarter earnings next Friday. As the share price has been in gradual decline over the past year, we have observed an upward trend in borrowing of this stock. Short interest reached an annual high of 7% of total shares outstanding in July but a rush to cover short positions over the past month has reduced this to almost half the amount, at 4% of total shares. This bearish sentiment coincides with institutional investors also reducing their holdings in the stock by 10% on the last month, in line with the mass sell-offs seen in the global markets.

Fresh Market Inc. has been highlighted by our screen as a heavily shorted stock over the past few months. The stock’s share price has remained relatively steady over 2011, trading between USD 30 and USD 40. Institutional investors have showed bullish sentiment towards the stock having doubled their holdings to almost six million since May, although this is still a low amount and only represents a tenth of the company. The influx in short interest saw total stock on loan jump from 2% to 10% of total shares. This represents most of the supply available to be borrowed indicating scarcity in its availability and a possibly expensive stock to borrow.

Following Signet Jewellers Ltd. reporting a higher than expected quarterly profit last week, the pressure will be on for fine jewellery competitor Zale Corp., which updates the market this week. The share price of Zale has seen some recovery, despite the recent market volatility, after it reached new lows last June. Investors had been supporting the recovery of the stock, reducing short positions over the year. However, bearish sentiment returned in June resulting in an increase in short interest from 5% to a new annual high of 14% of total shares outstanding. Institutional investors have been less opinionated towards this stock as total investment by funds who lend remains steady at 14% of the market cap’.