The US markets opens this week to October retail sales stats. Last month's report showed that the consumer sector was improving and in better shape than expected with an advance of 0.6% for September. ICSC-Goldman Sachs’ weekly report last week continues to project a similar outlook for the sector with retail sales up 1.3% on the week. With numerous US retailers updating the market about earnings we look at Lowe’s Companies (NYSE:LOW), The Home Depot (NYSE:HD), Dillard’s (NYSE:DDS), Saks (NYSE:SKS), Abercrombie and Fitch (NYSE:ANF), American Eagle Outfitters (NYSE:AEO), The Gap (NYSE:GPS), Dell (NASDAQ:DELL) and Wal-mart Stores (NYSE:WMT).
Furniture and home furnishings have posted increases in sales for three consecutive months. This bullish outlook is also visible in the securities lending data for related stocks. The Home Depot reports third-quarter 2010 earnings on Tuesday. Short interest is low and has been subject to short covering since mid-October reducing short interest from 1.4% to 0.8% of total shares outstanding. However, funds who lend have been gradually reducing their holdings over the past year. Institutional ownership is down from 370 million to 311 million shares over the past year. Lowe’s Companies will also report third-quarter 2010 earnings today but as a thinly traded stock short interest is insignificant.
Dillard’s which offers home furnishing as well as apparel s is due to report third-quarter earnings today. The company announced on Friday that comparable-stores sales dropped 1% in October. Short interest in the stock has been trending upwards since mid-May when 8% of total shares outstanding were observed to be out on loan. Short interest reached a 52-week high in October at 20% and currently resides at 19%.
In apparel retailers this week, Saks and Abercrombie and Fitch report third-quarter 2010 earnings on Tuesday. Saks’s share price hit a new 52-week high last week. Despite this, Short interest in the stock is considerably higher than the sector average. It dipped to a 52-week low in early October at 21.3% but short sellers have since increased their positions to 24%. Short interest in Abercrombie and Fitch has been generally flat since its last dividend in August at 8.5%. However, short covering over the past week sees short interest currently at 6.7%.
Other companies reporting third-quarter earnings this week include; Dell and Wal-Mart. Dell has been subject to recent short covering over the past month. Short interest has halved from 1.1% to 0.6% of total shares outstanding on loan. Short interest in Wal-Mart is low but has increased from 0.1% to 0.3% over the past month.
