THE TIFFANY BLUES

Short-sellers betting jeweller’s shares will drop as it prepares to deliver holiday sales results,

Et Tu, Tiffany & Co.?

That’s the question that appears to be on investors’ minds as the upscale retailer gets ready to update Wall Street on its holiday sales. Short sellers have been increasing their bets that shares will decline. In the options market, the total num- ber of put contracts exceeds calls by a ratio of 1.4-to-1, and investors are positioned for an outsize move in the wake of the report.

Tiffany, known for its fine jewelry, is set to unveil its sales results for the November-December holiday period on Jan. 18. The report comes as U.S. retail stocks have already fallen under pressure after results from Macy’s, Kohl’s, Barnes & Noble and others showed the season wasn’t as strong as some had expected.

As of Dec. 31, 8.4 million shares in Tiffany, or 7.3 per cent of the total available for trading, were sold short. That has since risen to around 10 million shares, or 8.3 per cent of the float, according to data compiled by IHS Markit.

The increase in bearish sentiment has “likely coincided with a decline in hedge-fund long positioning,” Markit analyst Samuel Pierson said by email.

Tiffany’s shares are trading around 40 per cent below their record high reached six months ago. The decline was driven in part by concern that luxury retailers are going to be particularly hard hit by China’s eco- nomic slowdown. Tiffany gets about 40 per cent of revenue from the Asia Pacific region, including China and Japan.