If last week was a tough ride for large retailers in North America's earnings season, this week is the turn of their smaller and specialist cousins - and May 20 could be particularly the date of which to be wary.
They share something in common with the larger retail names. Just like with the big names, investors are also shorting the niche retailers' stocks in anticipation of their earnings announcements - in the hope that a poor set of figures offers the investors an opportunity to buy back the stock at a profit.
This week a report by financial analysts Markit found that retailer Hibbett Sports Inc (NASDAQ:HIBB) is the most-shorted retailer stock. A total of 25.6% of its stock is currently out on loan. The company reports on May 20. In fact, the top three most-shorted stocks reporting this week were in the retail sector.
"Sports retailers have had a tough first quarter culminating in the recent chapter 11 bankruptcy filing of Sport Authority in early March. This looks to have emboldened Hibbett short sellers given that demand to borrow the retailers shares shot past the 25% of shares outstanding for the first time in over two years," Markit said.
In the clothing retailers Stage Store (NYSE:SSI) (reporting May 19) and Buckle (NYSE:BKE) (reporting May 20) which have both seen their shares trade at recent lows over the last few weeks round out the top three most shorted names announcing earnings next week.
Stage Store is 24.5% shorted and Buckle is the third-most at 19.5%.
Another retailer bracing itself is farm equipment maker Deere (NYSE:DE). It is heavily shorted with over 9.3% of its shares out on loan.
"Deere has seen its business suffer in the wake of the commodities downturn which has seen the firm’s most recent yearly revenue fall by over 20% from the previous year. This has made the firm a short target although demand to borrow the firm’s shares has fallen somewhat in recent months as the current short interest is 20% off the highs seen in early March," Markit said.
Other North American stocks heavily-shorted outside the retail sector and on Markit's radar include casinos and gaming operator Amaya Inc (TSE:AYA), communications equipment group Viasat Inc (NASDAQ:VSAT), Penn West Petroleum (TSE:PWT), pharma group Akorn Inc (NASDAQ:AKRX), and biotech Seres Therapeutics (NASDAQ:MCRB). All are more than 8% shorted.