Wal-Mart May Ring Up Rare Win

Wal-Mart has since returned to its promise of value, under the marketing banner of "Save Money. Live Better." That message may have resonated more with shoppers in December, when sentiment about the economy and the housing market was deteriorating. Analysts have also pointed out that Wal-Mart is doing a better job of controlling its inventory and managing its margins.

Niemira adds that Wal-Mart has gone through issues that are specific to the company, and it may finally be overcoming those troubles.

At the same time, Target may simply be having an off season, at least for December. In November, the company recorded a 10.8% climb in same-store sales, far ahead of Wal-Mart, which posted a rise of 1.5%.

Target's shares have also already taken more of a short-term hit. They fell nearly 12% in 2007, while Wal-Mart, coming off a tough 2006, saw its stock rise 4.9%.

Analyst Ed Weller of ThinkEquity Partners calls Target's holiday dreadful, but remains upbeat about its future, noting that its rationally structured merchandise assortments, better-quality products and well-edited fashion "combine nicely with a growing replenishment business, we think, to constitute a desirable discount store alternative that will soon, we think, recover its market share momentum."