Watch out, children, or the Christmas cat will get you! That's the Jólakötturinn or Jólaköttur, and Wikipedia describes it as
a huge and vicious cat said to lurk about the snowy countryside during Christmastime and eat people who have not received any new clothes to wear before Christmas Eve.
Why does it do this?
The threat of being eaten by the Yule Cat was used by farmers as an incentive for their workers to finish processing the autumn wool before Christmas. The ones who took part in the work would be rewarded with new clothes, but otherwise get nothing and thus be preyed upon by the monstrous cat. The cat has alternatively been interpreted as merely eating away the food of ones without new clothes during Christmas feasts.