Photo: Orin Zebest via Flickr
By Eben Esterhuizen, CFARetailers recently announced lackluster sales for January, with retail sales rising 0.3%, worse than analyst estimates (as is usually the case, it was blamed on bad weather). It was the seventh consecutive month of gains, BUT it was the smallest increase since last summer.
Given the run-up that we’ve seen in retail stocks, is the industry’s valuation due for a correction? We crunched some numbers, and identified 5 retailers being targeted by short sellers.
Short trends described below occur between 10/29 and 1/31. We’ve sorted the list by the change in shares shorted over the last three months.
Short Seller Target #1: Regal Entertainment Group (RGC)
Regal is the largest movie theatre circuit in the United States, operating more than 6,300 screens in 39 states. Despite the company’s scale advantage, it has lagged the rest of the market over the last year, and short sellers think there’s more downside to this company.
Short float: 10.66% of shares outstanding have been shorted (equivalent to 7.22 days of average volume)
Shares Shorted Trend: Shares shorted increased from 6.19M to 13.81M (123.1% change).
Short Seller Target #2: Genesco Inc. (GCO)
Genesco is a mall-based retailer of branded footwear, headgear, and accessories, primarily targeting teenagers. The company recently boosted its EPS guidance, which raises the possibility of a short-covering rally. Analysts have also turned bullish on the stock over recent months.
Short Float: 12.72% of shares outstanding have been shorted (equivalent to 9.69 days of average volume).
Shares Shorted Trend: Shares shorted increased from 1.41M to 2.9M (105.67% change)
Short Seller Target #3: Jos. A Bank Clothiers Inc. (JOSB)
Jos A. Bank Clothiers is a retailer and cataloger of tailored and casual clothing targeting male career professionals. The company owns more than 320 company-operated stores and 10 franchise stores. The stock has performed extremely well over the last year, and short sellers think it’s due for a pullback.
Short Float: 20.54% of shares outstanding have been shorted (equivalent to 12.19 days of average volume).
Shares Shorted Trend: Shares shorted increased from 3.74M to 5.62M (50.27% change)
Short Seller Target #4: SUPERVALU Inc. (SVU)
Supermarkets got hit hard during the downturn, but SUPERVALU was hit harder than others, partly because it wasn’t well prepared to deal with the consumer-led recession (it used a lot of leverage in the months leading up to the slowdown). The company recently lowered its guidance for fiscal 2011.
Short Float: 20.85% of shares outstanding have been shorted (equivalent to 4.93 days of average volume).
Shares Shorted Trends: Shares shorted increased from 29.67M to 43.78M (47.56% change)
Short Seller Target #5: The Men’s Wearhouse, Inc. (MW)
Men’s Wearhouse is an off-price retailer of men’s tailored clothing, operating over 700 stores in the United States and Canada. The company recently announced that Douglas S. Ewert, the current COO, will be promoted to the CEO position in mid 2011. Analysts have recently turned more bullish on the stock’s outlook.
Short Float: 17.23% of shares outstanding have been shorted (equivalent to 7.59 days of average volume).
Shares Shorted Trend: Shares shorted increased from 4.89M to 6.76M (38.24% change)