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The bears are circling retailers ahead of the holiday season.

Short sellers have revived their bets against bricks-and-mortar retailers in recent weeks, taking their most aggressive positions in months. Short positions against the SPDR S&P Retail fund, one of the biggest retail exchange-traded funds, last week hit 441% of the fund’s available shares, due to multiple borrowings by bearish speculators, according to financial-data firm S3 Partners.

That was twice the percentage of shares investors shorted at the same time last year and the highest level in roughly eight months.

Short sellers—who have wagered $7.7 billion against retailers including Macy’s Inc., M -1.03% Kohl’s Corp. KSS -2.71% and Nordstrom Inc. JWN -0.39% —borrow shares and sell them, expecting to repurchase them at lower prices and collect the difference as profit. Mall owners are also being targeted, with billionaire investor Carl Icahn among their biggest detractors in recent months.

Despite expectations for a solid holiday shopping season, several investors said their bearish bets are based on retailers’ struggles in a highly competitive landscape and consumers’ growing preference for digital shopping. And investors say they will closely watch the results from Dollar General Corp. , Big Lots Inc. and Lululemon Athletica Inc., which are due to report results this week.

The wagers against retailers stand in contrast to investors’ more bullish take on the stock market. Bets against the SPDR S&P 500 Trust, the biggest ETF tracking the broad index, stand at just 15% of available shares, near the lowest levels of the year, according to S3. The S&P 500 has surged 25% this year.

“Everyone talks about the holiday season and how retailers are doing better,” said Seth Golden, a 43-year-old consultant for the consumer-packaged goods industry in Ocala, Fla. “But retailers are fighting an uphill battle. It doesn’t matter what many of them do at this point. Their structure is a storefront, which is only decreasing year after year.”

Mr. Golden, who also runs a trading website that issues alerts on trades he completes to 3,000 members, said he has been shorting shares of Kohl’s for most of the year. The trade got a big boost last month after the department-store chain reported lower-than-expected sales and cut its profit forecast for the year, sending shares down nearly 20% on Nov. 19. That was the stock’s largest-ever single-day decline and helped extend its pullback for the year to 27%.

Mr. Golden isn’t finished with the trade. “I don’t see growth,” he added. “I see only further share-price deterioration.”

Kohl’s is the second-most profitable retail short this year. S3 estimates that short sellers have netted $556.5 million on the stock this year. Macy’s tops the list, giving investors who had bet against the stock a cumulative payday of $597.1 million.

The retail short trade has been popular in recent years as shares of department stores and specialty retailers have withered under the shadow of Amazon.com Inc. Macy’s shares have lost 76% of their value over the past five years. And some investors have bet shares will fall further after disappointing earnings reports over the past two quarters.

Short positions against the department-store operator have jumped to 31% of its total share count, significantly higher than the 13% of shares that were held short in early August, according to S3.

Macy’s representatives didn’t respond to a request for comment. A Kohl’s spokeswoman declined to address the company’s short sellers.

Despite the big paydays generated by a handful of stocks, retail hasn’t been a uniform trade for investors this year. Several short sellers described a tougher environment for picking shorts. Some shorts have gone the wrong way, saddling investors with massive losses, while others, such as Macy’s, appear so beaten down that some investors say there may be little upside left for bears.

Target Corp. , for example, has defied most expectations, rising 89% in 2019 after four consecutive years of single-digit gains and losses. Unlike many of its rivals, Target has continued to attract more shoppers, and the company reported last month its 10th consecutive quarter of rising sales.

Short sellers have hemorrhaged $1.3 billion on Target this year, forcing many out of the trade altogether. Discount retailers, such as Dollar General Corp. and TJX Co s., have also been resilient.

Even struggling retailers have had periods of strength, forcing short sellers to cover their positions. Shares of Nordstrom have struggled for most of the year. But some investors had to scramble to cover their positions on Nov. 22 after the stock rose nearly 11% on stronger-than-expected earnings.

Short bets have crept higher since then, with positions standing at 29% of Nordstrom’s share count.

“There was a tremendous amount of carnage in this area 18 months ago,” said Brad Lamensdorf, portfolio manager for AdvisorShares Ranger Equity Bear ETF. “Since then, it’s been bifurcated.”

Mr. Lamensdorf, who had shorted retailers including Macy’s in the past, said he has avoided traditional retailers in recent months. Instead, he has been shorting mall operator Macerich Co. , which has been hurting from the raft of bankruptcies of mall-based stores. The latest bankruptcy, Forever 21 Inc., is expected to dent Macerich’s annual earnings, the mall operator warned in late October.

Macerich shares are down 38% this year.

Carl Icahn has also been wagering against mall owners in recent months. The billionaire investor stands to gain $400 million or more if mall owners run into problems servicing their debt.

Besides that, retail shorts have been costly, contributing to why investors such as Mr. Lamensdorf have looked past the traditional trades. Crowded shorts tend to carry higher borrowing costs for short sellers. Also, several retailers pay rich dividends, forcing short sellers to pass that back to their share lender. Macy’s has a 9.8% dividend yield, while Kohl’s stands at 5.6%.

“Macy’s may go lower, but having to pay that dividend yield right now can be painful,” Mr. Lamensdorf said.

Other retail bears remain undeterred.

Michael Rooks, a 31-year-old director of digital media in Virginia Beach, Va., who invests on the side, has been shorting shares of Target, Lululemon Athletica Inc. and Ulta Beauty Inc. on a day-to-day basis, never holding a position past the market’s 4 p.m. close.

He says he has made money off his Lululemon and Ulta shorts but admits Target has been tougher.

“The bears have been squeezed to the damn bone,” Mr. Rooks said. “But I’ve been focusing on little windows.”