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Almost every bit of news about the retail industry has been bad since the third quarter of last year. Some analysts believe that 72,000 stores could close in the US during the first half of 2009 and that several retail firms could go bankrupt.

Wal-Mart (WMT) has been the exception to that talk. Its same-store sales have been up most of the last six months. The company’s stock was only one of two components of the DJIA which moved higher in 2008.

Now analysts are trying to figure out whether the world’s largest retailer can repeat its performance in 2009.

Wall St. thinks that Wal-Mart may continue its march up with Target (TGT) being the target of its market share gains.

According to Bloomberg, "Wal-Mart will report sales growth for the next three quarters, while Target’s revenue will decline or remain little changed, according to analysts’ estimates."

While Wal-Mart has size, buying power, and marketing prowess on its side, it would be a mistake to think that Target and other competitors will simply roll over to be killed.

Over the last year, Target’s shares fell about 35%, very close to the performance of the Dow. Wal-Mart’s shares were up about 20%. But, over a five-year period, only a few percentage points separate the performance of the stocks, which means that Target shares were running higher than Wal-Mart’s for most of that period.

Analysts may also see Target’s shares as a bargain, especially if its business picks up. It has a P/E of less than 11 while Wal-Mart’s is over 16.

Don’t count the chickens before they are hatched.

Douglas A. McIntyre