If investors were bummed by today's overall retail sales data for July, Wal-Mart's (NYSE:WMT) lackluster quarterly earnings won't improve their mood.

Wal-Mart's second-quarter net income fell 0.2% from last year to $3.44 billion, or $0.88 per share -- a slight uptick on a per-share basis. Earnings also suffered a $0.04-per-share hit from currency exchange rates.

Wal-Mart's revenue wasn't so impressive, either; net sales dipped 1.4% to $100.08 billion. Same-store sales fell 1.2% without accounting for fuel sales, and fell 1.9% with it. That's a far cry from this time last year, when same-store sales rose by more than 4%. I guess consumers' love for Wal-Mart just isn't enough these days.

Wal-Mart admitted that the sales environment was more difficult than it had previously expected. While it was able to raise its guidance for the year, expect Wal-Mart to start pursuing the same sort of cost cuts keeping many companies afloat. The megaretailer said it expects same-store sales to be anywhere from flat to up a mere 2% in the current quarter.

This earnings season, many companies have exceeded analysts' profit expectations, even with uninspiring sales. Starbucks (NASDAQ:SBUX) is a particularly high-profile member of that camp. And while it's tempting to ask when retail will finally turn, there are plenty of good reasons to believe that things will remain tough for retailers for quite some time, even if some economists say the recession is technically over.

Last quarter, even Costco (NASDAQ:COST) proved slightly disappointing, reporting less-than-stellar results back in May. (I'm eager to hear how the warehouse chain fared in its latest quarter.)

As investors' exuberance reaches arguably irrational levels, some retail stocks -- J. Crew (NYSE:JCG), for example -- have gotten incredibly overpriced. Even long-struggling retailers like Talbots (NYSE:TLB) have enjoyed nonsensical rallies. Now more than ever, investors are playing a dangerous game with some of these stocks.

Instead, Fools should carefully seek out quality retail investments. Venerable discount names such as Wal-Mart, Costco, and cheap eats expert McDonald's (NYSE:MCD) seem like good defensive ideas, although even these giants may start suffering at some point. As foreclosures continue and joblessness lingers, consumers will likely feel gun shy about spending for quite some time. Still, these high-quality discounters do appeal to consumers' need to scrimp and save, and right now, that's an excellent advantage.

Wal-Mart Stores, Costco Wholesale, and Starbucks are Motley Fool Inside Valueselections. Costco and Starbucks are Motley Fool Stock Advisor selections. The Fool owns shares of Costco and Starbucks. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.