December results were even worse than expected - if that's possible. Consider:

Neiman Marcus, down 31.2%
Abercrombie and Fitch, down 24%
American Eagle Outfitters, down 17%
Gap, down 14%
Limited Brands, down 10%
Pacific Sunwear, down 10%
J.C. Penney, down 8.1%
Sears, down 7.3%

Some of these retailers got whacked because several chains, including Mervyns and Linens ’n Things, were holding liquidation sales that took shoppers away. Even sales at Wal-Mart, which had been holding up reasonably well because of its low prices, rose only 1.7 percent, which was lower than expectations. The retailer also cut its earnings expectations for the current quarter. There were some exceptions to the gloom, including City of Industry-based Hot Topic, which capitalized on its vampire-style merchandise that seemed to tie in with the teen hit "Twilight." But that was certainly the exception. From the NYT:

Even retailers that did not suffer double digit declines in December could be in trouble. By selling merchandise at staggeringly low prices, many stores trimmed their inventories but likely eroded their profit margins. For instance, Retail Metrics said industry earnings in the fourth quarter of 2008 will likely fall at least 19.3 percent, or 27.5 percent, excluding Wal-Mart.

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ShopperTrak, a research group, does not report its final holiday figures until Jan. 14, but the group said Wednesday that for the entire season, customer traffic would probably decline 15 percent and sales 2.4 percent. In late September, the National Retail Federation estimated that overall holiday retail sales would rise 2.2 percent. And in a press release on Nov. 30, the group reiterated that it stood by its prediction. But the late holiday rush that many retailers had been dreaming of never came.