Short Interest Surges on Nordstrom, Inc. (JWN) and Tiffany & Co. (TIF)

Traders placed bearish bets on JWN and TIF after quarterly earnings and sales outlooks disappointed

Dec 11, 2015 at 12:08 PM
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The holiday shopping season is now in full swing, and retailers are trying all they can to keep customers coming through the doors, especially as record-high inventories threaten companies' bottom lines. Unseasonably warm temperatures have been weighing on apparel retailers in particular, while other retail giants brace for a month with historically poor returns. Meanwhile, upscale department store Nordstrom, Inc. (NYSE:JWN) and luxury jeweler Tiffany & Co. (NYSE:TIF) are feeling the pressure, as short sellers have been upping their bearish bets in recent weeks.

Nordstrom, Inc. is trading 1.9% lower today, last seen at $55.71, and has shed nearly a quarter of its value so far in 2015. After the company reported third-quarter earnings below expectations in November and cut its full-year sales forecast, the shares plummeted to an annual low of $50.43, and JWN received a handful of price-target cuts from analysts. 

At present, 12 out of 20 brokerages following Nordstrom, Inc. give it a rating of "hold" or "sell" -- and traders have also been increasingly bearish on JWN. Over the past two reporting periods, short interest on the security surged by 40.5%, and now accounts for 8% of the total available float.

Options traders have reached a pessimistic peak, as well. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), JWN's 10-day put/call volume ratio of 7.81 indicates that nearly eight puts have been bought to open for each call over the past two weeks. What's more, this reading is in the 100th percentile -- meaning traders haven't bought puts over calls at a faster rate in more than a year.

Tiffany & Co. has been having an even rougher year, dropping nearly 30% on the charts. The shares were last seen trading at $74.91, a loss of 2.1% for the day. TIF is still trading very near its early November two-year low of $73.09, after a surprising pre-Thanksgiving rally following its quarterly earnings report was quickly thwarted by resistance at the stock's descending 80-day moving average.

Over the last two reporting periods, short interest on the stock has ramped up by almost 70%, now accounting for 8% of TIF's total float. Elsewhere, analysts are split on the security, with half of the 18 brokerages maintaining "buy" ratings, while the other half dole out eight "holds" and one "sell." Options traders, meanwhile, have been making bearish bets, earning TIF a 10-day put/call volume ratio of 2.10 at the ISE, CBOE, and PHLX -- higher than 86% of all readings in the past 12 months.

If holiday sales fail to impress, and the stocks continue to struggle on the charts, Nordstrom, Inc. (NYSE:JWN) and Tiffany & Co. (NYSE:TIF) could be exploring new lows heading into the new year as short sellers continue to press their winning bets.

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