"People are a little more extended and careful and stores are more cautious," Foley said. While Wal-Mart's business will likely be better because it's a discount retailer, "the earnings cannot justify the multiple," he said.
Wal-Mart, the world's biggest merchant, said last week that it expects same-store sales to rise as little as 2 percent in November, compared with a previous prediction of up to 4 percent.
Louis Navellier, who manages US$4 billion at Navellier & Associates, has also been selling retail stocks.
"I am expecting a very weak holiday season," said Navellier, who has pared holdings of Target Corp and Costco Wholesale Corp.
"Everyone is going into the season very depressed because of the layoffs."
Others are counting on shoppers to help shore up growth.
"The consumer has carried the economy throughout the year, and I am not sure that it's all of a sudden going to stop," said Bruce Jon Raabe, who manages US$500 million as chief investment officer at Collins & Co in Larkspur, California.
Raabe predicts business spending will pick up in the next three to nine months and help offset any retreat by consumers. He said he has recently bought Kellogg Co, the maker Pop-Tarts, and Sara Lee Corp, whose products include Endust furniture cleaner.
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