Although the Christmas retail season this year was set up in the media to be a disappointing one, there is still some magic coming from consumers battered by the wacky economic environment in 2007.

As of Christmas Eve, a report from ShopperTrak indicated that sales from the last weekend before Christmas rose more than 18% from the year-ago period, although another report from MasterCard SpendingPulse indicated that a last-minute buying binge from desperate shoppers was not enough to make up for a weak holiday season.

Who ruled the roost -- and lost their shirt -- in retail this holiday season, then?

Target's (NYSE: TGT) didn't measure up, as the second-largest discount retailer in the U.S. said on Christmas Eve that December same-store sales were sitting below its recent guidance. December sales may have even went down 1% from a year earlier. Costco Wholesale's (NASDAQ: COST) CEO indicated that the second-largest wholesale club in the U.S. has "pretty good" holiday sales this year in what is a brilliantly cryptic quote.

When Wal-Mart (NYSE: WMT) sent shock waves into the retail sector three weeks before Thanksgiving with thousands of price cuts in every category, was the retail foreshadowing a week holiday shopping season? Although this week's discount plunge by retailers who needed to make up sales volume before the end of December is already in full swing. It's not entirely clear just how bad retail sales were this season. One hot item that increased over last year was the gift card -- from $18.5 billion in 2005 and $24.8 billion in 2006 to an estimated $26 billion this year. Even that increase, though, won't save retailers from the lowest consumer spending amount in five years.

Santas in Sydney might not be allowed to say "Ho, ho, ho" this holiday season, but Wal-Mart (NYSE: WMT) is making some progress on the sticking-it-to-political-correctness front: it's bringing back Santa.

Two years ago, Wal-Mart shocked the world when it ended its tradition of wishing shoppers a "Merry Christmas" in favor of the increasingly annoying "Happy Holidays." Now, Wal-Mart is shedding its agnosticism in favor of Santa. The chain is bringing Santa Claus back into its stores, and will be offering children free photos with the bearded one.

Bloomberg discusses some of Wal-Mart's other Christmas festivities. The move makes a lot of sense for Wal-Mart. Anyone who is likely to be offended by "Merry Christmas" at Wal-Mart could probably find better things in the stores to be offended by: low wages, poor benefits, lousy working conditions, a slew of discrimination lawsuits, and the strong chance of being attacked in the store's parking lot, just to name a few.

Wal-Mart may be able to pick up some sales from conservative Christians who are resentful of being sold "winter trees" at other stores. The decision to welcome back Santa with open arms is a good one for Wal-Mart and its shareholders.

If you asked the most ultra-left wing, anti-globalization zealot to provide the most egregious example he could imagine of globalization spreading western cultural customs eastward, he probably couldn't do any better than this:

The Home Depot, Inc. (NYSE: HD) is lighting up a giant Christmas tree in the parking lot of its new mall in Beijing.

Home Depot barreled into China in 2006 with its acquisition of Home Way, a Chinese-company modeled after Home Depot -- orange aprons and everything. From a USA Today piece covering this event:

"I have no idea what that tree is doing here. What's Christmas?" asked migrant laborer Yang Kunji.

I wonder what Thomas Friedman would have to say about this. For better for for worse, this a pretty good symbol of the flattening of the earth as globalization reigns supreme.

The poor earnings at companies like Sears Holdings (NASDAQ: SHLD) may be getting worse. A study released by America's Research Group indicates that shoppers will wait for another cut in retail goods toward the end of the month before making more purchases. "Half of America went shopping this weekend but they weren't very serious about it," Britt Beemer, founder and chairman of the group, told Reuters.

Details from the survey indicate that shoppers are simply sitting and waiting for deeper discounts, assuming that they will have to come.

The good news is that the consumer will be back to retail outlets, big and small. This means that Americans do not feel so pinched by current economic problems that they feel they cannot afford a nice holiday.

But the bad news is that they want retailers to bring down prices again to get them back into stores, and are willing to wait late in the season to see if deals improve.

There is an old saying that companies can lose money on each item and make it up on volume. That was not true when the saying was coined and it is no truer today. Margins at retailers are about to get pushed down again.

Douglas A. McIntyre is an editor at 247wallst.com.

In a move bound to arouse the ire of a few religious conservatives, The Home Depot (NYSE: HD) is selling what it calls "Miracle Trees" on its web site.

These "Miracle Trees" look suspiciously like what some folks call "Christmas trees." In fact, the company says that people who buy them will "enjoy less mess and more cheer." A representative for Atlanta-based Home Depot couldn't immediately be reached for comment, so it remains unclear what "miracle" these things are supposed to perform. I'll update the post if I hear from the company. The name of the product came from the manufacturer, according to a Home Depot spokeswoman, who added that the company continues to call Christmas trees by their given name.

The right-wing American Family Association, which earlier this month criticized Lowe's Companies (NYSE: LOW) for calling Christmas trees "holiday trees," was aware of the the Home Depot "Miracle Trees" but had no other immediate comment. Word of the "Miracle Trees" also has spread to talk radio.

With the holiday season about a month away, AFA already is on a heightened state of alert to ferret out Christmas slights. The Gap (NYSE: GPS) is in the group's penalty box for "censoring Christmas" for the second year in a row.

"At Gap, Old Navy and Banana Republic, Christmas hardly exists. For these three companies, all owned by Gap, the only items listed as having anything to do with Christmas were a pair of boxer shorts and a child's sleepwear set," the group says. A spokesperson for San Francisco-based Gap couldn't immediately be reached for comment. Update: Gap spokesman Greg Rossiter denies the retailer is anti-Christmas. The company encourages its 150,000 workers to greet customers "warmly" during the holiday season. "They are not required to use that greeting (Merry Christmas) nor are they required not to," he said in an interview.

Who would have thought that Christmas wasn't commercialized enough?

Gallery: 'Tis the season to boycott: Would Christmas by any other name be so controversial?

As the holiday season approaches, we thought you might appreciate some gift suggestions with a twist, appropriate for those on your list who aren't satisfied with the same old, same old.

Today's suggestion: The Flat-packed Hammer from Vert Design. The hammer comes in a flat sheet cut into pieces, resembling the snap-apart sections of an old-style model car or plane. The person you give this gift to snaps the component pieces apart and, by carefully assembling them, ends up with a handsome wooden mallet. The tool is perfect for bopping home a loose peg in a bookcase, a cat lunging for the cheese log, or a younger brother unaware of the power of armaments.

Vert Design is an Australian company. The hammer will set you back $45, Australian, or about US $40.

(thanks to Boing Boing)

Looks like the so-called "war on Christmas" has begun. Lowe's Cos. (NYSE: LOW) and PetSmart Inc. (NASDAQ: PETS) have angered the American Family Association, a prominent religious conservative group.

The home improvement retailer earned AFA's ire by calling Christmas trees "family trees" in a catalog. A Lowe's spokeswoman, speaking to the Charlotte Observer, called using the term an error that came during the "creative process." Lowe's has profusely apologized and the AFA has apparently forgiven the company. "We appreciate Lowe's for listening to its customers and responding appropriately to our concerns," AFA said on its website.

It's super Thursday, when same-store sales from many of the nation's retailers hit the Street, and the outlook for the holiday-shopping season is looking less than cheerful.

Weakness in the housing sector, high prices at the pumps, and unseasonably warm weather kept consumers' wallets on a tight leash in October. Early estimates from the International Council of Shopping Centers/UBS indicate that overall U.S. same-store sales in October rose about 2%, missing analysts' previous growth target of 2.5%. Data from Thomson Financial indicates that 18 retailers have missed expectations, while 10 have exceeded.

Ken Perkins, president of research company RetailMetrics, told The New York Times that "Overall, the sales trend continues to slow . . . I think the consumer is certainly feeling the [economic] pressure heading into the holidays."

The head of Walmart.com says that Halloween sales were particularly strong. And, he thinks the upcoming holiday season will do just as well. "Customers are still spending for the holidays. Halloween was very good for us, so I suspect that Christmas is going to be great," said Raul Vazquez in a talk with Reuters.

The website may be benefiting from the fact that parent Wal-Mart (NYSE: WMT) cut holiday prices early this year, about a month ahead of the normal Thanksgiving weekend time frame.

But there could be other explanations. Wal-Mart has been especially good at tying its website to its stores. Customers can order items on the internet and pick them up at the local retail outlet, saving shipping charges. This combination of convenience and low price may be increasing use of the website.

The other reason the site may be doing well is the rotation away from buying goods in stores and toward buying online. While same-store sales at many big retailers are relatively flat, e-commerce revenue is expected to rise over 20% in the last two months of the year.

Or, there is one other explanation. Wal-Mart may be doing better than most investors think.

Douglas A. McIntyre is an editor at 247wallst.com.

Santa will have a lot of "made in China" gifts on his sled this year. Reports out of China say that orders for toys to be sold for the holiday season are up sharply. "Li Changjiang, the head of General Administration of Quality Supervision, Inspection and Quarantine, said factory owners in the southern province of Guangdong, China's manufacturing heartland, told him business was booming," according to Reuters. His children will probably get US-made toys.

Recalls of China-made toys have hit about 21 million this year. It is not clear that any of the root problems that allowed the toys to make it into the US have been solved. In other words, the danger of more dangerous toys hitting the market still exists.

But, business before safety. Wal-Mart (NYSE: WMT) and other big retailers have made it clear that they cannot survive as low-priced outlets without sourcing goods out of China. That is almost certainly true, and means that these companies do not have the leverage to get the Chinese manufacturing industry to improve product safety.

So, kids, opens those Christmas packages with care.

Douglas A. McIntyre can be reached at 24/7 Wall St.

As some of you have probably already noticed, this year's holiday shopping season has started a little earlier than usual. For those of you who have not noticed the early arrival of the season, don't worry, you aren't blind, you are just proof that retailers have been successful in their attempt to start the holiday shopping without anyone noticing.

Typically, we can at least expect retailers to wait until we get past Halloween to start the hard hitting marketing campaigns, but this year is a bit different. Retailers usually expect strong sales leading up to the holidays, but this year there are economic jitters weighing on the minds of consumers, along with fear related to the massive Chinese toy recalls that we have witnessed this year, and are likely to continue to hear about.

This weekend's edition of the Wall Street Journal explored an interesting question: is Christmas good for the economy? The answer, according to most economists is a resounding no. They argue that the frenzy of gift-giving creates a huge amount of unwanted gifts and that if people simply bought stuff for themselves, we would all be a lot happier. According to a survey, more than two thirds of economists believe that if Christmas were abolished as a holiday, consumers would spend more on themselves. Wharton professor Joel Waldfogel suggests that "We'd be able to eke out more satisfaction from the amount of spending" if people bought stuff for themselves instead of relatives.

But what these academics may be forgetting is that much of the benefit of holiday giving is sentimental rather than material: receiving a box of chocolate that your doctor won't let you eat from your grandchildren is a lot more satisfying than purchasing the candy of your choice. Economists John List and Jason Shogren set up an auction where they offered students cash for their Christmas gifts. They asked students to place a value on the gift in two parts: first the material value and then the sentimental value. The study found that, on average, sentimental value accounted for around half of the total.

So what lessons can we take from these studies? If gift-giving is generally a poor way to allocate resources but we derive benefit from the sentimental value, maybe it really is "the thought that counts." And that's what I told my mother after she opened the bottle of knock-off Elizabeth Taylor perfume that I got her at the dollar store.

With so many post-holiday deals cropping up now that Christmas 2006 is over (see the "Top5ive Best Post Holiday Deals,"), does it make good financial sense to start shopping now? Unless you are very organized, I'd say no.

I tried advance Christmas shopping two years ago. I bought Santa-themed gifts for 50% off in the weeks after the holidays. Then I put them aside and promptly forgot all about them.

This year I finally managed to give away much of that loot. But the deals I had so excitedly snatched up had long since lost their allure. When I gave them to friends and family, I could hardly remember why or where I made the purchases. What good is giving someone a fancy hand-made Christmas tree ornament if their is no story behind it?

It was what thousands of parents of whiny kids were waiting for. Out of the blue, the Tickle-Me-Elmo floodgates are open and (among others) Wal-Mart Stores, Inc. (NYSE:WMT) makes oodles of TMX Elmo dolls available on the company's web site. From an, umm, "hidden cache." According to Heather, a TMX Elmo searcher in my office, she finally discovered an Elmo available "suddenly" from Fisher Price. Another warehouse abruptly appear out of the fog in El Segundo? (Do they have fog in El Segundo?)


All at once, eBay, Inc. (NASDAQ:EBAY) listings are everywhere, 22,446 results for my search for "TMX Elmo" and not just lots of results but falling prices. When I first checked around 10:45 a.m. there were dozens of listings closing around $5 or $10 over the suggested retail price of $39.99. 20 minutes later, when I was finishing up this piece? It was more like $5 or $10 under the suggested retail price. The Spanish version was going for a ridiculously cheap $26.55. Market floodage has commenced.

When Black Friday was approaching and customers were gearing up for their long wait in line to be one of the few, the proud, the early purchasers of TMX Elmo dolls, a few less festive souls whispered of "artificial shortages" and wondered if Mattel was purposely creating a frenzy over the toys. Most parents and eBay sellers accused them of a distinct lack of holiday spirit, and oh yeah, not enough capitalism.

I remember how innocent I was, long before I was a parent. Do you remember that time? When you were young, perhaps it was the 80s, or the early 90s. You imagined bringing a baby into your home one day, certainly, it was far off in the future but the image was clear, if a bit soft-focused around the edges: all was fuzzy, wuzzy, warm, soft, and gentle. If you imagined your home with a kitchen, in fact, the knives were all tucked safely away in a hand-oiled maple block somewhere, way, way back on the counter.

[Big sound of brakes squeaking, wheels skidding, cars smashing into walls, screams...]

And then, I became a parent in the new millennium. And my world was filled with the most fearsome, warlike cutting implements. Industrial-strength scissors that came apart at the hinge so you could sharpen them daily. Hunting knives with a whetting stone, glistening next to the sink (where I keep my gentle organic hand soap). A typical day in my first child's infancy might find my knuckles raw, my fingers calloused, battle wounds all over my fingers.

I'd been faced with my children's toy packaging.