How do I tell an interviewee that I won't hire them?

He is qualified ... it's a stock clerk position and I will have to train the new hire.
I only have one reservation and it sounds a little silly ... he came to the interview in a Hooter's shirt. Well, that and a certain gut feeling that he's not a good match for the company. I'm a newly minted manager, and I have no HR experience. I don't want to do the wrong thing.

Many companies do not bother to tell applicant's why they were not hired.

Just send him a letter stating that the company has hired another more qualified applicant.

Or don't do anything at all and if he calls just tell him that you have gone with a better suited applicant.

Part of being a good manager is learning how to deal with the crappy parts of the job. Giving out bad news is the crappy part.

just because he IS qualified doesnt make him MOST qualified so tell him there was a more qualified applicant (if he evens asks) and if he wants to know ways to improve then you might mention dressing more appropriately for the interview or some skills he may need to gain....good luck, its a tough job
Well it seems like your in a tight situation and i am sure there will be many more down the road. You could simply tell him that you have someone that is more qualified for the position and matches the image of your company better.
Tell him that
I believe that you not the the person that we are looking for.
Good luck in you future.
You aren't obligated to hiring any certain person. If they don't fit, they don't fit. Your judgement is really the only thing you've got to go on. Use it.

If you need words: "I'm sorry, but the job has been filled."
If you have other qualified candidates, then all you need to do is tell "Mr. Hooters" that you found someone that meets the skill set you are looking for. Tell them that their application will stay on file and if something comes up, you'll let them know. Remember to thank them for interviewing.