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Short sellers shopped for Macy's stock ahead of Black Friday

The sign of a Macy's department store is pictured in Pasadena, California May 12, 2015. REUTERS/Mario Anzuoni

By Noel Randewich

SAN FRANCISCO (Reuters) - Short sellers shopping for overpriced stocks snapped up shares of beleaguered department store Macys (M.N) heading into Black Friday.

The volume of Macy's shares borrowed by short sellers grew 11 percent in the three days leading up to Thursday's Thanksgiving holiday, according to lending data from SunGard's Astec Analytics, even as optimism among other investors about the upcoming holiday shopping season fueled a 6 percent rise in the stock.

Short-sellers borrow shares and sell them, hoping to buy them back later at a lower price and then return them to the lender. They have been increasingly targeting Macy's since September.

With reports on weekend sales suggesting a slow start to holiday shopping at brick and mortar establishments, Macy's stock has lost about 2.7 percent over the past three sessions, delivering a potential payoff to short sellers who got in last week. On Wednesday, the New York-based department store chain fell 1.04 percent.

Online sales surged over the weekend and on Monday, helping Amazon.com (AMZN.O) and some traditional retailers.

Macy's and many other retailers have been pummeled this year, reflecting a consumer shift away from discretionary items such as designer-label clothes and cosmetics and toward online spending and merchandise including smartphones, televisions and home goods.

Underscoring concerns on Wall Street, 3.4 percent of Macy's outstanding shares had been shorted in mid-November, up from 2.7 percent a month earlier, according to the most recent data available from Nasdaq.

Shareholders in Macy's and other major retailers have hoped that families spending less at the gas pump thanks to low oil prices would increase purchases at stores, but such a windfall has yet to be reflected at cash registers.

Macy's, which warned last month that holiday-quarter sales would be lower than previously expected, has seen its shares fall 40 percent in 2015.

Other retailers have also seen an increase in interest from short sellers. Almost a quarter of American Eagle Outfitters (AEO.N) shares were sold short in mid-November.

Short selling in Nordstrom (JWN.N) ticked slightly higher to 4.6 percent of its shares in mid-November from 4.4 percent a month before, and Tiffany & Co (TIF.N) has seen its short interest rise to 5.3 percent from 4.5 percent.

(Reporting by Noel Randewich; Editing by Alan Crosby)