It comes as no surprise to anybody that the holiday shopping season was horrible for many retailers. However, there were some surprises unwrapped in the December same-store sales data. For example, Wal-Mart (NYSE:WMT), which has been a major outlier for months now, didn't fare nearly as well as expected.

What's in the bag? Not much, apparently
Let's take a look at some of last month's sales figures, which show December's big ol' bag of ugliness.



Net Sales

Impact on Price (intraday)





American Eagle Outfitters (NYSE:AEO)












Limited (NYSE:LTD)




Pacific Sunwear (NASDAQ:PSUN)




J.C. Penney




Sales data from Business Wire's Retail Sales Figures report for December 2008; intraday stock data from Yahoo! Finance.

As you can see, it was an ugly, ugly month for many retailers. (Of course, many of us expected this was coming -- check out the Fool's special online report on Retail Holiday Hell from late November.) And of course, another thing we all expected -- that margins would be hit but good -- has also come to pass. Of course, it was no secret that retailers were slashing prices to lure customers into their stores and hopefully persuade them to open their wallets.

As much as the dismal data wasn't a surprise, Wal-Mart's weak showing was. An increase in December comps is impressive, but analysts expected a 2.8% increase. Meanwhile, it appears Wal-Mart wasn't able to push much more than necessities like food to shoppers in December, despite the fact that the holidays were on the calendar.

Some reason to be festive in the gloom
Oddly enough, there were some bright spots in the retail universe. Target did better than expected, for a change, with a 4.1% decrease in comps, as opposed to the 9.1% plunge analysts had expected.

A few retailers had a rockin' time during the holidays. Aeropostale's (NYSE:ARO) comps soared 12% with total sales up 25%. The Buckle (NYSE:BKE) reported comps for the five weeks ended Jan. 3 up 13.5%, with net sales up 20.8%.

Don't give up on retail stocks, but shop carefully
There are a lot of retail stocks I wouldn't touch with a 10-foot pole (Gap immediately springs to mind), but that doesn't mean investors should write off the entire sector. Although Wal-Mart's December comps weren't as good as expected, it still managed an increase in a difficult climate, and it's well known that its rock-bottom prices are resonating with consumers in these tough times. I continue to think Wal-Mart's a pretty safe haven, even if its stock is getting pummeled today.

Meanwhile, investors should also take it seriously when retailers like Buckle and Aeropostale buck the prevailing trends, and look to stocks like those as possible candidates for further research, particularly if they have a lot of cash and little debt on their balance sheets. After all, a retailer is really doing something right if it's consistently bucking the trends in a climate like the current one.

The ugliness is real, make no mistake. But such carnage can yield opportunities, too. Searching for high-quality retailers with little debt, which can manage to do well even in these harrowing times, seems like a logical move for investors.

Shop around for related Foolishness:

Wal-Mart Stores, Limited Brands, and Gap are Motley Fool Inside Value picks. Limited Brands is a Motley Fool Income Investor pick. Pacific Sunwear and Gap are Motley Fool Stock Advisor picks, and Pacific Sunwear is a Motley Fool Hidden Gems Pay Dirt selection. The Fool owns shares of American Eagle Outfitters. Try any of these Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.