NEW YORK -- Retailers reported dismal sales figures for December on Thursday as even Wal-Mart Stores Inc., one of the bright spots in the industry, finally buckled under the pressures of the deteriorating economy.

As the figures confirmed fears that the holiday season was the weakest in four decades, the malaise cut through practically all areas from kitchen gadget stores to jewelry purveyors and teen apparel retailers.

The deep discounts that began well before the official start of the holiday season spurred a number of merchants to cut their earnings outlooks, fueling more concerns about the health of the industry.

Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., and Gap Inc. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted a smaller sales gain than what Wall Street expected and cut its fourth-quarter earnings outlook.

"I think it says the economy is in more dire straits than we thought," said Ken Perkins, president of research company RetailMetrics LLC.

Wal-Mart, blaming the weak economy and severe winter conditions, said that same-store sales, or sales at stores opened at least a year, rose 1.2 percent. Excluding the affect of declining gasoline prices at the pump, the gain was 1.7 percent.

Wal-Mart noted that health and wellness items were the categories that primarily fueled sales. Electronics sales were solid, while the apparel and jewelry business was weak.

Discount rival Target Corp., which has been stumbling because its merchandise focuses more on nonessentials such as trendy clothes, announced a 4.1 percent decline in same-store sales.

Meanwhile, Costco Wholesale Corp. reported a 4 percent decline in same-store sales, but excluding the affects of lower gas prices and currency fluctuations, it actually posted a 4 percent gain. Lower gas prices are good for consumers, but reduce the sales volume for retailers such as Costco.

Among department stores, Sears Holdings said its December same-store sales dropped 7.3 percent, weighed down by a 12.8 percent drop at domestic Sears stores. The company, whose brands include Kenmore and Craftsman, said Kmart same-store sales fell 1.1 percent.

Macy's Inc. reported that same-store sales fell 4 percent in December. For the combined November-December period, same-store sales were down 7.5 percent. The department store chain announced plans to close 11 underperforming stores, including a store in Los Angeles.