Wal-Mart May Ring Up Rare Win

Amid the tough economic times, discount chains are expected to be the best-performing group. Analysts estimate a December same-store sales climb of 1.8% for the group.

"In the broad sense, the discounters will tend to do better as long as the retailer is focused on price and value," says Mike Niemira, chief economist for the International Council of Shopping Centers, which predicts an overall 1% gain in December same-store sales.

Analysts expect Wal-Mart's same-store sales to be in line with the discount chain sector. They predict Target, however, will show a 2.5% same-store sales drop.

Both retailers have notoriously competed on price, but Goldman Sachs analyst Adrianne Shapira said Wal-Mart pursued the discounts much harder in December.

"Wal-Mart got more aggressive on key toy and consumer electronics categories as [the] holiday [season] progressed," she wrote in a research note after Target lowered its guidance for December.

Shapira added that consumers seem to have shifted their spending from home and apparel -- categories in which Target had been dominant -- into consumer electronics, which is not what Target is known for.

Wal-Mart is not necessarily blowing out its numbers for December. It comes against relatively easy comparisons from December 2006, when same-store sales inched up 1.6%, while Target is up against a 4.1% rise.

Wal-Mart is, however, showing a marked improvement over the prior year, when sales were viewed as particularly bad compared with other retailers because of the discount chain's botched attempt to recast itself as a hip retailer, offering trendy apparel that failed to impress customers.