A number of reports state that U.S. retailers enjoyed an increase in holiday sales in ’09, but that many of the sales were at lower profit margins. Considering the complex chore of digging through company balance sheets and retail statistics to find the truth, perhaps a better judge as to whether 2009 holiday sales were a success is Wall Street.

Below is a chart that shows the S&P Retail Index (^RLX). I’ve highlighted the various stages of the holiday period from Black Friday pre-sales & hype to after Christmas sales.

2009 Holiday Sales as Measured by S&P Retail Stock Index

Retailers clearly saw their stock prices increase as they progress through the holiday shopping periods and as they begin sharing their sales data. Obviously there are many other factors to stock performance, but this chart displays Wall Street’s reaction to a 1.1% holiday sales rise, rather then the original projection of a 1% decline (2008 was a 3.4% decline).

How Did Individual Retailers Do?

Focusing in on the major retailers who most participated the heaviest in Black Friday and holiday shopping discounts, we can so who may have fared the best (or at least beat expectations):

Closer look at: Walmart, Best Buy, Target, Costco, Sears, & Amazon
Across the board, these major retailers showed positive growth early in the holiday sales period. Target was one of the rare retailers to have their stock slump during the Black Friday to Christmas period. Outside of Amazon.com which had an early jump in October after releasing great numbers, Best Buy was on pace to be the clear champion of holiday sales success until December 14th when investors began to question how deeply Best Buy discounted their products to win the Black Friday battle. Sears holding corporation (includes both Sears and Kmart) is the big surprise post Christmas thanks to a positive 2010 outlook, despite some store closings.

The big stories affecting stock prices thus far in 2010 are:

• consumers clearly willing to do much of their shopping online
• consumers growing more comfortable with online shopping
• consumers still shopping despite economic pressures
• retail industry managing well despite high unemployment
• retail industry in good position to capitalize on future improvements to unemployment rates
• some retailers, like Target and Sears, have been buying back their stock – an insider sign that they see current stock prices as a bargain.