Japan's Aeon posts Q3 net loss

TOKYO (Reuters) - Japan's second-largest retailer Aeon Co Ltd slashed its earnings outlook and said it may post its first annual net loss in seven years, hit by flagging sales, a writedown at U.S. unit Talbots and accounting changes.

Consumer reluctance to spend, which retailers say has only grown every month, has sent Aeon and its rivals scrambling to slash prices, close unprofitable stores and expand their selection of own-brand goods.

For the nine months to end November, Aeon's same-store sales fell 1.2 percent from a year earlier, with apparel sales down 4.4 percent, although food sales were relatively solid as consumers chose to spend more time at home.

The sharp decline in clothing sales has been especially damaging for retailers as clothing accounts for a large percentage of revenue and has bigger profit margins than grocery items.

The company said it now expects its net earnings to fall within a range of 2.5 billion yen in profit to a 2.5 billion yen loss for the year ending in February.

That is down from its previous estimate of a profit of 11 billion yen to 15 billion yen and compares with a mean forecast of 9 billion yen profit in a poll of 11 analysts by Reuters Estimates.

It posted a net loss of 13.4 billion yen for the September-November quarter after its U.S. apparel chain Talbots took an impairment charge stemming from its decision to sell its J. Jill brand.

The firm's bottom line was also hurt by accounting changes on deferred tax assets.

Shares of Aeon lost 42 percent in the year to Tuesday, underperforming a 36 percent decline in the benchmark Nikkei average.

Talbots shares jumped 24 percent on Tuesday, a day after the women's apparel retailer said it entered into agreements with three banks to secure a total $150 million in committed lines of credit.

Bigger rival Seven & I Holdings Co Ltd is scheduled to announce its results on Thursday.

(Reporting by Taiga Uranaka; Editing by Edwina Gibbs)