Did someone cancel Christmas? It sure feels that way.

The panic is palpable: Stores festooned with holiday decorations since October; preseason Black Friday-level markdowns getting deeper every week; high-end retailers using lowbrow promotion tactics.

In normal times, the holiday season is make-or-break time -- with some retailers picking up 40% or more of their sales in the final weeks. This year, it's do or die. Literally.

Heading into Bleak Friday
Even before kids were halfway through their Halloween candy, the nation's second-largest electronics retailer, Circuit City, filed for Chapter 11. 

Circuit City's just a preview of what will likely become the most disastrous holiday season on the books -- one that we'll likely look back on as the beginning of the end for some of the retail sector's stalwart players. Unprecedented signs of desperation are on display everywhere:

  • High-end operators like Saks (NYSE:SKS) and Nordstrom are rolling out their preferred-customer "private sales" to the masses -- and extending these promotional events, or even repeating them weeks later.
  • Sears Holdings' (NASDAQ:SHLD) Sears stores have already announced a list of 450 doorbuster specials for their Black Friday extravaganza.
  • Taking doorbuster deals to a new level, eBay (NASDAQ:EBAY) is positing limited quantities of two items and one surprise luxury item daily from Nov. 24 till Dec. 8 for a fixed price of just $1 – and free shipping to boot.
  • The return of '80's-era layaway plans at places like Kmart and T.J. Companies' (NYSE:TJX) T.J. Maxx and Marshall's stores.
  • Hourly roadside sign-wavers trading in their bankruptcy liquidation placards for ones touting deals at Lord & Taylor.
  • And heretofore too-cool-to-stoop-to-the-holiday-hype brands like Apple (NASDAQ:AAPL) and Tiffany (NYSE:TIF) -- yes, Apple and Tiffany -- resorting to promotions to boost business.

As we head into Black Friday -- one of the biggest retail sales days of the year -- consumers have yet to take the bait. Suffice it to say, the outlook is far from festive.

Retail code red
To recap (in case you're still clinging to some of the holiday spirit), we've got an abysmal economy, surging unemployment, a market operating at Code Red status daily, and an ever-tightening tourniquet on consumer credit. Add to that a holiday season with five fewer shopping days between Thanksgiving and Christmas, and you get Holidaze '08.

We've taken an in-depth look at the state of retail going into the holiday season, identifying the companies that we think have a winning recession formula -- and the ones that may not survive through the holiday season of 2009. Read on for:

We've also scoured the mall, shopped online, and perused stand-alone stores to pick the standout stocks -- and the stinkers -- in key areas of retail: Inventory management, online prowess, customer service, serving a niche market and the ability to change with the times. Our coverage -- which includes plenty of timely investment ideas -- follows:

Every bargain hunter knows that the best deals are had are in the offseason. (Many a perfect winter coat has been bought during the dog days of summertime.) This is the mother of all offseasons, for sure. We'll be scouring the circulars, the shops, and the sales data this entire season and beyond to help investors bag bargain retail stocks for the long haul.