Many chains expected to post softer Dec. sales

By Karen Jacobs

ATLANTA (Reuters) - Many U.S. retailers are expected to report disappointing December sales later this week, hurt by everything from the challenging economy to unfavorable weather to the calendar, which shifted more holiday sales to November.

Though media reports say apparel sales picked up after Christmas, analysts said some retailers' quarterly earnings estimates are at risk as higher gasoline prices and recession fears in the face of a still-weakening housing market weigh on consumer spending.

"We do believe that traffic was lighter compared to last year and also promotionally driven," Credit Suisse softlines retail analyst Paul Lejuez said on Tuesday during a conference call previewing December sales.

"We really do question what is likely to drive the consumer through the mall to shop for apparel this spring," he added.

Expectations for December sales at stores open at least a year were further dampened by weak sales trends from Target Corp and Talbots Inc, controlled by Japan's Aeon Co Ltd. Talbots said last week it plans to close 78 stores focused on kids' and men's apparel.

On Monday, Circuit City Stores Inc offered more bad news when it said December same-store sales fell 11.4 percent despite strong demand for fancy TVs and video games.

The market was rattled again on Tuesday when the CEO of AT&T Inc cited softness in consumer phones and Internet services, stunning investors who figured telecoms would be shielded from a U.S. economic slowdown.

Electronics sector leader Best Buy Co is due to report same-store sales on Friday.

But Credit Suisse analyst Gary Balter said Circuit City's sales woes were mainly of its own making, since the chain let go its most experienced staffers last year.

"Don't take (the Circuit City report) and say this is bad for Best Buy," he said.

Many hope the electronics sector was a key destination for gift buyers over the holiday season.

"We saw some very good numbers from electronics and e-commerce over the holiday season," said Kamalesh Rao, director of economic research at MasterCard Advisors.

But Rao said same-store sales is a retail measure that is more heavily focused on department stores and apparel chains, two subsets that were weaker holiday performers.

Retail leader Wal-Mart Stores Inc is expected to post low-single-digit-percentage same-store sales growth for December, likely outperforming rival discounter Target, which cut its monthly same-store sales view last month.

Retail chains expected to post the strongest December sales include Pacific Sunwear of California Inc, Aeropostale Inc, Costco Wholesale Corp and TJX Companies Inc, Lazard Capital Markets said in a research note.