Apparently J.C. Penney Company, Inc. (NYSE:JCP) is not the only one in the retail sector that is facing heat. It seems to be an all around difficult time for several names in the retail industry. Citi’s Deborah L Weinswig noted increasingly short interest in the retail sector in September, where borrowed interest in 12 out of 16 names in its retail basket called the Broadlines and Food & Drug retailers, experienced an increase in short positions.
Short interest rises in COST, CVS, JWN
The companies that experienced a more than 5 percent increase in short interest in the first two weeks of September were Costco Wholesale Corporation (NASDAQ:COST) +17 percent, CVS Caremark Corporation (NYSE:CVS) +16.8 percent, Nordstrom, Inc. (NYSE:JWN) +15 percent, Walgreen Company (NYSE:WAG) 13.8 percent, Macy’s, Inc. (NYSE:M) +9.2 percent, J.C. Penney Company, Inc. (NYSE:JCP) +7.2 percent and The Kroger Co. (NYSE:KR), who experienced a 6.5 percent increase in short interest.
Short interest in Dollar General Corp. (NYSE:DG) decreased by 16.8 percent.
However, despite the increasing short interest in individual companies, overall the net shorts in Citi’s Broadlines and Food & Drug group are still low when compared to historical highs, as shown in the chart below:
Citi raises Kroger’s price target
Short interest in The Kroger Co. (NYSE:KR) increased by 6.5 percent in September, and the company has been rated Buy by Citi’s Deborah Weinswig. The price target was raised yesterday and the analyst noted in her report, “Against the backdrop of a fragile and slow consumer environment, we believe KR’s steady approach to building loyalty will continue to bolster its competitive position.”
Recently Kroger’s CEO announced his year-end retirement.
J.C. Penney Company’s liquidity concerns
Meanhwhile, J.C. Penney Company, Inc. (NYSE:JCP) is getting no respite and has stayed in the news in a bad way for several months now. Despite being one of the stocks that all hedge funds have vowed to buy, the company’s stock tanks to new lows every other day. Short interest in J.C. Penney Company, Inc. (NYSE:JCP) increased by 7.2 percent in September so far. Big names like Richard Perry, Kyle Bass, George Soros, Larry Robbins have positions in JCP’s equity. Today, the company said that it was satisfied with its progress and is not anticipating any conditions that will require it to raise liquidity. Yesterday, an update from Goldman Sachs raised concerns about the company’s further cash requirements this year.
Citi thinks J.C. Penney Company, Inc. (NYSE:JCP) has ample liquidity for 2013, however, they maintain a sell rating on the stock as the turnaround has stretched beyond expectations.
Some of the highest short interests in the retail sector are, JCP at 33 percent, Saks Inc (NYSE:SKS) 20.8 percent, Safeway Inc. (NYSE:SWY) 19.8 percent and SUPERVALU INC. (NYSE:SVU) 16.7 percent.