Overall, same-stores sales gains in January were the second weakest since Thomson Reuters began collecting data in 2000.
Despite the poor results, many retailers outpaced the analysts estimates, which anticipated the worst.
Also helping to buoy up retail stocks was the fact that many retailer actually raised their earnings forecasts, and few lowered them.
Still, the climate remains tough. One of sign of this is Wal-Mart's decision to stop providing monthly sales forecasts because of the difficulty in predicting swings in consumer spending in the current volatile environment.
Instead, Wal-Mart said it will provide sales forecasts on a 13-week basis, four times a year. The retailer was one of only a few in the industry that was still providing monthly sales targets.
According to many retailers, sales slowed after the holiday season. One factor was that gift card spending was lower, but consumers have been gripped by fear as the number of layoffs continues to grow.
Those looking to stretch their dollars have been turning to discounters, which has been helping Wal-Mart. In January, the retailer said same-store sales rose 2.1 percent, excluding the impact of fuel.
Analysts, on average, were expecting Wal-Mart's same-store sales to rise 1.1 percent, according to Reuters Estimates, while the company had estimated sales to be flat to up 2 percent.
Looking ahead, Wal-Mart predicts same-store sales gains of between 1 percent to 3 percent, without fuel in the period between Jan. 31 and May 1.
"Because our value proposition is so relevant to our customers and members, we believe our underlying business around the world will remain very healthy," Wal-Mart Chief Financial Officer Tom Schoewe said, in a press release.
The Big Consumer Trade Down
One thing shoppers have been doing is trading down, said Charles Grom, a retail analyst at JP Morgan. According to Grom, this is occurring throughout the retail landscape at all price points.
"The Saks and Nordstrom shopper is beginning to trade down to a Macy's, if you look at the numbers. " Grom said, in an interview on CNBC. "We are seeing pockets of trade down, across retail, not even just at Wal-Mart."
Saks said same-store sales fell 23.7 percent, far outpacing the 17.7 percent decline predicted by analysts surveyed by Thomson Reuters. At Nordstrom same-store sales fell 12.5 percent.
By comparison, Macy's same-store sales fell 4.5 percent during the same period. That was a narrower loss than analysts estimated. According to Thomson, analysts expected Macy's to post a 6.3 percent decline in sales.
More on the Retail Landscape:
At department store operator Kohl's said same-store sales fell 13.4 percent due to a lower level of clearance items, beating Wall Street expectations. Analysts surveyed by Thomson Reuters projected a decline of 15.4 percent.
Chico's FAS also posted a narrower-than-expected decline. Same-store sales at the woman's apparel retailer fell 10.9 percent, compared with the 12. 1 percent decline analysts expected, according to Thomson Reuters.
Among those falling short of analyst estimates was Children's Place Retail Stores . In addition to reporting a bigger-than-expected sales decline, the retailer said it is accelerating a search for a permanent chief executive.
The children's clothing retailer also said it had completed a strategic review of its business, and it plans cost cuts on everything from shipping to marketing that will result in approximately $20 million annualized pretax savings.
Talbots also announced new rounds of cost cutting as retailers try to survive the tough climate. Talbots received a $200 million loans and will cut 370 jobs, close 20 stores, and shave staff hours in an effort to reduce its costs by $150 million.
Teen Retailers Shine
But teen apparel retailers provided a bright spot.
Aeropostale posted a much bigger-than-expected 11 percent jump, and raised its earnings estimate.
The Buckle and Hot Topic both reported healthy sales increases that topped expectations. The Buckle said same-store sales rose 14.7 percent, outpacing the 9.3 percent estimate, while Hot Topic posted a monthly sales increase of 6 percent, compared with a 3.2 percent estimate.
Target same-stores sales fell 3.3 percent, within the company's planned range. But the retailer said its fiscal fourth-quarter results will be lower than the 86 cents a share projected by Thomson First Call.
Urban Outfitters' sales rose by 9 percent in the fourth quarter to $508 million, but were still below expectations of analysts surveyed by Reuters, who had predicted the figure at $522.55 million.
Comparable retail segment sales, which includes direct-to-consumer channels, increased 3 percent for the quarter, Urban Outfitters said.
Big Lots sales fell 3.4 percent to $1.35 billion, with sales in discretionary seasonal, home and furniture categories and toys department decreasing. The worst region for sales was the south east, Big Lots said in a statement, adding that comparable sales for stores open at least two years were down 1 percent in fourth quarter.
Stage Stores sales fell 3.7 percent to $455.8 million in the fourth quarter, in line with analysts' expectations.