The Black Friday weekend, the most important shopping weekend of the year, has come and gone and there's still little word whether or not consumers stepped up spending beyond a 5 percent year-on-year rate. Press reports and private economic data were very upbeat, centering on the vast crowds that lined up early Friday morning to nail down one-time promotional prices. But yesterday's chain-store reports from ICSC-UBS and Redbook were both steady and soft, at a 2.5 percent same store rate that is correlating to no better than a 5 percent total rate. Tuesday's reports confirmed that holiday traffic was busy but said the mood among shoppers was stingy. Chain stores themselves have so far been very quiet on the results. This report will track the two major chains that the markets react to for quick reads on the retail sector — leading discounter Wal-Mart with 3,900 stores and rival Target with 1,600 stores. Announcements in the coming days from either of these two chains are guaranteed to have an enormous influence on the outlook for the entire holiday shopping season.

The graph above tracks Wal-Mart same store sales excluding fuel against the Commerce Department's retail trade data excluding cars and gasoline, two volatile categories that are not at the center of holiday shopping lists. Wal-Mart's annual sales in 2006 of $265.9 billion represent about 9 percent of the roughly $3 trillion of retail sales in the ex-auto, ex-gas category. An overall look at the above graph shows a gradually descending arc for both series over the last three years. But a look at just the October to December periods helps narrow the focus to Wal-Mart's usefulness in gauging changes in holiday sales. The first period in October to December 2004 (the first of four magnified areas on the chart) unfortunately doesn't show much usefulness at all, as Wal-Mart sales slid steeply in November before rebounding in December, this against the actual results of a steady showing in November followed by a rise in December. But Wal-Mart's story for 2005 clearly matched the overall results with steady and firm readings in October and November followed by a sizable dip in December. Results for 2006 were mixed but do show a parallel rise for December. Wal-Mart's sales for this month have yet to be posted but the chain's October sales, like the Commerce Department's actual sales, were soft.

Now we turn to Target, a much smaller retailer as can be seen by the wide percentage movements in the graph above. Target's total sales in 2006 came to $56.6 billion, about one fifth of Wal-Mart's sales. But Target is still closely watched, if only because it regularly issues a mid-month report that makes it a welcome exception to other chain stores who release data no more than once a month, if that. But Target's usefulness as a gauge is uncertain with no directional matches over the last three holiday periods. Target posted slowing sales in November 2004 while actual sales were steady, the same with November 2005. In November 2006, Target posted rising sales in contrast to slowing sales overall. And December matches are no better, with the chain sharing the actual direction only in 2004. 

Finally let's take a quick look in the above graph at yesterday's consumer confidence report from the Conference Board. Consumer confidence readings certainly have a big impact on the financial markets, but is the impact justified? A look back to 2004 leaves the question open. The Conference Board's data match up very well in 2004 showing steady readings before showing a sizable jump in December. The next year is distorted by Hurricane Katrina which crushed expectations at a time when retail sales, at least in October and November, continued to rise. Confidence was very firm in 2006 though retail sales proved a disappointment. Confidence going into this year's holiday is clearly on the decline, the result of $99 oil and the downswing in the stock market.

Bottom line

Wal-Mart and Target have not scheduled any statements in advance of next Thursday's November sales reports. After that, markets will watch for a mid-month statement from Target and perhaps a special month-end statement from Wal-Mart. But comments from either of these companies can come at any time, especially if their results are proving way above or way below expectations -- a likelihood that will add drama and impact to their statements. The results of Black Friday shopping are still uncertain, and any conviction that the results are strong could disappear in a moment's time -- the result of just one negative comment from just one major retailer. Watch for comments from one such retailer on Friday -- Sears/Kmart which has about the same sales as Target but with double the stores.