Chain store sales expected to fall

U.S. retail chains may announce one of their worst monthly sales results this week as a global financial crisis leaves its effect on ordinary consumers, putting new doubt on holiday season sales.

Leading U.S. retailers like Wal-Mart Stores Inc, Costco Wholesale Corp and J.C. Penney Co Inc release October results on Wednesday and Thursday and Thomson Reuters is forecasting a decline of 0.1 percent.

"If the index actually comes in at -0.1 percent, this would be the weakest same store sales result ever registered since Thomson Reuters began collecting estimates in 2000," it said.

Expected to be affected the worst would be department stores and specialty retailers.

Consumers who are under pressure from high food and fuel prices and a crumbling housing market found themselves in an even worse situation in October.

The financial crisis that began in September has increased the prospect of a deep global recession and shaken consumer confidence in banks and the stock market.

"We're all one degree removed from somebody who has lost a job," said FBR Capital Markets analyst Adrienne Tennant. "It seems like it's so close to you ... and people put themselves in the what-if scenario, what if that happens to me? I think that's what is keeping people from spending."

Lowest holiday sales and gains in years

Retailers like Chico's FAS Inc and Talbots Inc might cut third-quarter earnings forecasts, she said. Tennant now expects low holiday sales, which include November and December. This has not happened since the National Retail Federation begins tracking such sales in 1992.

The NRF expects holiday sales to rise 2.2 percent, the lowest gain in six years. The trade group is waiting right after the U.S. Presidential election and updated data on consumer spending to decide whether to revise that forecast.

But the gloomiest forecasts expect the worst holiday shopping season in nearly two decades.

Banks have reduced lending, cut credit card lines or curbed new car financing, hurting the ability of shoppers to spend. Companies continue to shed jobs, with Circuit City Stores Inc on Monday becoming the latest employer to outline plans to slash positions.