Argos short sellers caught on the hop
SHORT sellers caught out by a better than expected performance of Argos, the chain owned by UK-based Home Retail Group, prompted a massive rally in the company's shares yesterday.
Shares in Home Retail were catapulted by more than 25pc at one stage after it issued an interim management statement which showed like-for-like sales at Argos dipped just 0.2pc in the 13 weeks to June 2.
That was a much better performance than had been expected. But like-for-like sales at its Homebase unit slumped 8pc in the same period as it was hampered by poor weather.
The stock was boosted by a 'short squeeze', where investors who had gambled on the stock price falling rushed to buy shares to limit their losses. About 22pc of Home Retail's stock is held by short sellers who have been betting that the continued difficult economic conditions in the UK will weigh on the company.
Speaking to analysts yesterday, Home Retail Group finance director Richard Ashton said sales at Argos during the quarter had been helped by demand for Apple's iPad and Amazon's Kindle. He said that sales of laptops had also been good.