Women's apparel retailer Talbots was slammed with a downgrade today as covering Friedman Billings analyst Adrienne Tennant lowered her rating on the shares to underperform from market perform. Tennant expressed concern that weak traffic and increased promotions may impact the retailer's bottom line, setting the stage for potential sales and earnings disappointments.
The equity has dropped more than 6% today, breaching its 10-day and 20-day moving averages after spending the last few sessions north of this pair of trendlines. TLB has been in a slow downtrend for most of this decade, showing only brief spurts of technical strength in the last 6 years.
Short sellers have responded to Talbots' downward momentum by assuming short positions on the stock. Nearly 30% of the equity's available float has been sold short, amounting to a short-interest ratio of 8.8 days to cover. While a short-covering rally is always a possibility, there is no real indication that the bears would find any impetus to begin covering their positions at this juncture.
Same-store sales for September from TLB and other major retailers are due later this week, with the majority reporting on Thursday. Unseasonably warm temperatures and continued high gasoline prices are expected to weigh on the numbers.