Gamestop, which long been a favorite for short sellers, is the second-most-shorted stock on this week's list with almost 22 percent of shares outstanding on loan. The bear case is that its model of selling video game discs will eventually be supplanted by downloads or streaming, making it the next major retailer (like Blockbuster Video) to succumb to the Internet.
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Still, about 57 percent of analyst ratings assess the company as either a "buy" or "overweight" stock, according to FactSet. Gamestop's average price target is $50.28, and the stock currently sits at about $40 per share.
Aeropostale and American Eagle Outfitters also make the list of heavily shorted stocks announcing earnings this week. The retailers, which are direct competitors in the teen retail space, may both be suffering from a lack of new ideas.
"Without newness, the consumer has little need to update her wardrobe," Stifel Nicolaus analyst Richard Jaffe wrote in an Aug. 14 report on both companies and their competitors Urban Outfitters and Abercrombie & Fitch. "This will likely hold back sales in 3Q, in our opinion. Weak sales will likely drive increased promotions further pressuring results."
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American Eagle announced in May that it would shut down 150 stores over the next three years in light of weak sales.
Multiline retail stores also make an appearance on the weekly list with regional department store chain Bon-Ton ranking as the fourth-most-shorted stock announcing earnings this week. The embattled Sears Holdings will announce on Thursday, but its 10.1 percent of outstanding shares on loan pales in comparison to Bon-Ton's 21 percent.
Here is Markit's full list of the top 20 most shorted stocks announcing earnings this week: