Why Traders Are Piling Into L Brands Inc (LB)

Shares of L Brands Inc (NYSE:LB) have popped more than 10% in morning trade after the company reported its March sales data. For the period, the company’s net sales came in at $951.4 million for the five weeks ended April 1, 2017, down 7% versus the net sales of $1.027 billion for the prior comparable period last year. Overall comparable sales for the time period dropped 10%, and were negatively affected by the later Easter in 2017 by approximately 2 to 3 points. In terms of specific brand data, Bath & Body Works comparable sales were flat, while Victoria’s Secret fell 13%. L Brands fell 10%. Although the numbers are not good on an absolute scale, the sales data may have been better than some trader expectations, hence the rally.

Given L Brands Inc (NYSE:LB)’s disappointing performance in 2017 (shares were down 33.86% year-to-date before today), it is reasonable to say that some short sellers may be taking profits as well, and that dynamic may have created somewhat of a short squeeze in the process.

What Does The Smart Money Sentiment Say?

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According to our data, the smart money was less optimistic in Q4 than in Q3. Of the 742 elite funds we monitor, 23 had a bullish position in L Brands Inc (NYSE:LB) at the end of December, down 9 funds from the previous quarter.

The Bottom Line

L Brands Inc (NYSE:LB) shares have surged higher due in part to the combination of a potential short squeeze and the company reporting March 2017 sales, which may have been better than what some market participants were expecting. For more reading, check out ‘Top 10 Apparel Brands in the World‘.