Short sellers positioned against US Retailers ahead of earnings
US retail sales rose in April at the slowest pace in nine months and consumer sentiment is declining, reports Bloomberg. We highlight negative investor sentiment towards the retailers due to report earnings this week including; J C Penney Company Inc (NYSE:JCP), Saks Inc (NYSE:SKS), Wal-Mart Stores (NYSE:WMT), Urban Outfitters (NASDAQ:URBN), Abercrombie and Fitch (NYSE:ANF) and Deere and Co. (NYSE:DE).
Urban Outfitters saw its shares tumble 16% in March after the company reported a shortfall in fourth-quarter profit and sales. Although the share price has since seen some recovery, short interest has jumped from 2% to 5% of total shares outstanding on loan.
Competitor, Abercrombie and Fitch tells a different story. The share price has continued to rally reaching new annual highs. Positive sentiment has been observed from institutional owners buying in to the stock. Currently, large funds who lend own almost 30% of total shares. Despite this, short interest has doubled since February to 3% of total shares outstanding on loan.
J.C. Penney shares have been pushing new annual highs ahead of earnings due this week, buoyed by positive news flow from competitor Macy’s Inc., which reported a jump in first quarter earnings last week. Despite a rallying share price, short interest in J.C Penney has been gradually increasing since February, rising from 4% to 7% of total shares outstanding on loan. Holdings of large funds who lend are down 30% on the year.
Wal-Mart has announced a deal to acquire a minority stake in the Yihaodian, the holding company of a Chinese online retailer. Short interest in the retailing giant is very low, but it is interesting to note that it has reached an annual high of 0.7% of total shares outstanding on loan, despite the share price rallying.
The CEO of high-end retailer Saks was quoted in The Wall Street Journal saying that “the stock market is the single biggest determinant of luxury sales.” The share price has flat lined since the start of the year and the company remains a favorite with short sellers, with half the lendable supply out on loan. Short interest has declined from 22% to 18% of total shares outstanding on loan over this period.
Competitor Deer and Co. also reports earnings this week and bucks the trend of rising short interest. Investors are bullish towards this stock with share price having recently peaked at USD 100. Short interest is at a low of 0.3% of total shares outstanding on loan.
