2 Retail Stocks Getting Walloped After Earnings

BKE and HIBB are both heavily shorted stocks

Nov 27, 2018 at 10:02 AM
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While Amazon (AMZN) unveiled record Cyber Monday sales, Buckle Inc (NYSE:BKE) reported third-quarter earnings of 42 cents per share on $215.1 million in revenue -- lower than analysts were expecting. What's more, the retailer confirmed same-store sales for the three-month period plunged 1.4%. BKE stock has dropped 8.2% to trade at $19.17, putting a key technical level to the test.

Specifically, the $19.50 level has served as a floor for BKE shares since late October. Above here are the $20.80 and $22.50 price points -- a 23.6% and 38.2% Fibonacci retracement, respectively, of the stock's retreat from its late-August two-year peak at $29.65 to its Oct. 19 low near $18 -- which have contained Buckle stock this month. Year-to-date, the equity is down 11%.

Short sellers are likely cheering today's sell-off. Short interest on BKE stock climbed 3.9% in the two most recent reporting periods to 11.4 million shares. This represents nearly two-fifths of the retailer's available float, or 17.5 times the average daily pace of trading.

The shares of Hibbett Sports, Inc. (NASDAQ:HIBB) are also lower after earnings. The sporting goods retailer reported an adjusted third-quarter profit miss of 14 cents per share, while revenue of $216.9 million fell short of estimates. Comparable sales for the quarter edged up 0.1%, and HIBB said its full-year profit will come in below previous estimates.

In reaction, HIBB stock is trading down 4.7% at $17.11, and has now shed 42.2% since its 16-month high of $29.60 from August. However, the $16.50-$17.00 region has served as a floor recently, which coincides with a November 2017 post-earnings bull gap.

Not surprisingly, sentiment is resoundingly bearish toward the security. All nine analysts in coverage maintain a "buy" or worse recommendation, while 37.5% of the stock's available float is dedicated to short interest.


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