From Asos to Kingfisher: Six retail stocks being targeted by short sellers

During the pandemic, ecommerce almost single-handedly kept the retail sector afloat, but concerns over how the sector is coping as the retail landscape continues to shift have seen retail stocks become a breeding ground for stock shorters.

This pandemic-fuelled shift in how the retail sector functioned meant that retailers changed how they operated; strengthening supply chains and increasing warehouse space to handle rises in ecommerce deliveries.

However, now the high street has opened up again and many retailers are left with too many staff, excess warehouse space or remain hampered by debts incurred during lockdowns.

These sector-wide concerns have shaken investor confidence; what was a safe bet in mid-2020 may not be quite so safe in the new retail landscape.

Stock shorters

As a result, retail stocks have become a breeding ground for stock shorters. Short selling is a trading strategy which sees investors speculate on the decline of a stock price, which sees them profit if the value falls.

According to data from the London Stock Exchange (LSE), Asos, Boohoo, Kingfisher, Royal Mail, AO World and Naked Wines are all being targeted by short sellers and should be wary of further shifts over the coming months.

Aggressive or excessive stock shorting is widely recognised as a way to undermine investor confidence, depress a company’s market value and make it more difficult for it to expand or raise capital.

“The narrative was that there was a ‘new normal’, that consumer buying behaviours wouldn’t return to how they were pre-Covid and that ecommerce businesses would continue to grow in the future,” Hitsuzendo CEO and marketing consultant Andy Duggan told Charged.

“These businesses now find themselves in the perfect storm. Consumer behaviours are showing signs of returning to how they were pre-Covid, inflation is raising, global shipping costs have rocketed, energy prices continue to increase, single digital profit margins are being predicted, and for some of these brands their order returns percentages have increased, which drains resources and eats into profit margins.

“These brands now need to look beyond their next earnings report and start to communicate their longer-term visions. They need to remind investors why they are in business.”


“Asos stock is down circa 82% in one year. Their stock is still being shorted and there’s a likelihood that will drop further yet,” Duggan said.

The fast fashion retailer is currently being shorted by eight funds, with the percentage of stock being held short at 7.2%.

Wavering investor confidence can be attributed to the fashion retailer’s £15.8m pre-tax loss in the six months to the end of February, especially when compared with £106.4m profit seen a year earlier, when the company was benefiting from the lockdown ecommerce boom.

During the pandemic, Asos recorded £48.5 million of profit from what it called the “net Covid tailwind,” which saw the number of active customers rise by 1.5 million to nearly 25 million.

The short can be attributed to the company’s high returns and margins that are being squeezed heavily, according to Duggan.

“[Asos has] got to shift a lot of value to maintain their business. There are more independent websites in the market than two years ago,” he explained.


Asos’ rival Boohoo is also being targeted, with 6.2% of stocks being held short. This could be because the retailer has recently posted its first ever UK sales drop as it struggles with supply chain disruption and shifting consumer trends.

In its most recent trading update, the Manchester-based business posted a 1% fall in UK revenue while overall sales plunged 8% in the three months to 31 May 2022. The retailer also stuck to its previously lowered guidance for the full year of “low single digit” revenue growth, the smallest increase since its IPO in 2014.

It has also predicted that profitability will be much lower than its historical average, a potential sticking point for investors who may be better off backing Boohoo’s rivals.

“Asos is feeling the pinch from sitting in the tech category and the fashion categories,” Duggan explained, adding that a “decent strategy” would enable Asos to switch gears, but Boohoo “needs to completely pivot”.

“Fashion and lifestyle can do well during a recession but if the business is chasing turnover growth and not profit growth then that’s where they’ll continue to be shorted,” Duggan explained.


B&Q and Screwfix owner Kingfisher has 6% of its shares held short by six funds on the LSE. The company’s sales have dropped, although it remains confident it can manage inflationary and supply chain pressures.

Sales were down 4.2% in constant currency in the three months to 30 April, declining 5.4% on a like-for-like basis over the same period.

Investors will likely keep a keen on eye on whether Kingfisher can back up the bold claims it can withstand the headwinds facing the retail sector within the next few months.

Royal Mail

Royal Mail has also been targeted by stock shorters, with 4.9% being held short by five funds.

The share price has plummeted over the last year and is currently down 54% year-on-year, with inflation, energy costs, and lower parcel volumes all contributed to deteriorating results.

The company struggled to handle consumer demand during the festive period, with the company grappling with huge volumes of parcels passing through its 1,200 delivery offices as a large proportion of its workforce were struck down by the dominant Covid variant of the time.

“Royal Mail market cap grew significantly because of Covid. Their share price needs to settle back down because they’re not doing anything new,” Duggan said.

He puts the shorts down to a lack of Sunday delivery service and increasing fuel costs.

AO World

Electrical retailer AO World is also suffering at the hands of the stock market, with 5% of stock being held short at the time of writing.

The white goods etailer had to close its business in Germany last month, after launching a strategic view of the business in January.

“This decision was based on the continuing deterioration in the outlook for the German business, as well as the board’s responsibilities to shareholders and other stakeholders,” AO said.

Naked Wines

Naked Wines’ full year sales rose 5% and 77% on a two-year basis as repeat custom boosted its performance. But despite this, five funds are shorting 5% of its stock.

The online wine retailer said sales retention was 80% which was stronger than expectations, with sales from repeat customers increasing 13% year on year.

CEO Nick Devlin said: “Our unique model offers a win for both winemakers and consumers and is backed by attractive and well-proven unit economics.

“I am especially pleased to see the improvements to our customer experience and product range reflected in sustained retention rates above our expectations.”

Duggan also warned of potential struggles ahead for Matt Moulding’s THG and JD Sports, despite the latter doubling its profits against pre-pandemic levels in a record year.

JD is currently seeking a new CEO after Barry Bown stepped down from his role, while THG has famously struggled since its disastrous IPO in September last year.

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