NEW YORK – Wal-Mart Stores Inc.’s move to use the word “Christmas” in its stores and advertising, instead of the more neutral “holiday” this season, should benefit the retailer, analysts said Thursday.

The world’s largest retailer was hit with rash of negative publicity and boycotts last year when it omitted the word “Christmas” in its store decor and instructed employees to wish shoppers “happy holidays,” instead of “merry Christmas.”

“It will generate incremental goodwill and that’s a good thing. Considering how big the company is, even if it contributed one basis point (to same-store sales), that would be something,” Morningstar analyst Joe Beaulieu said. “In general, I think this is policy that makes sense for them. The net positives, as small as they are, will offset any slight negatives.”

The holiday shopping period is a crucial one for retailers, many who ring up as much as half of their profits during that time. Wal-Mart has been struggling recently, and last week reported lackluster October sales. The company is scheduled to report quarterly results next week.

In addition to bringing back the word “Christmas,” the company recently fired the first shot in the holiday price war and started slashing prices on traditionally hot holiday items including toys and electronics.

In stores, Wal-Mart’s specific references to Christmas will include “The Christmas Shop” previously known as “The Holiday Shop,” signs counting down the days until Christmas, seasonal merchandise selections labeled with “Christmas,” as well as Christmas carols being piped into stores.

Branding expert Rob Frankel said the change will help to drive more customers into Wal-Mart stores.

“For once you see Wal-Mart doing something proactive where the brands really live, and that’s in the hearts and minds of consumers,” he said.

Wal-Mart unveiled its plan to using the word Christmas to nearly 7,000 of its associates at the company’s holiday merchandise conference last month.

“The move was met with rapturous applause and we know many of our customers will feel the same,” John Fleming, executive vice president of marketing said in a statement.

The company is also instructing its employees to wish greet customers with Merry Christmas, Happy Holidays, Happy Kwanzaa, Happy Hanukkah and Feliz Navidad.

Wal-Mart produced a Christmas-specific television advertisement scheduled to air next week.

Seasonal merchandise selections will be changed from “holiday” to “Christmas,” up 60 percent from last year.

Not everyone thinks the damage from last year’s decision can be undone.

“Omitting the word “Christmas’ (last year) probably was damaging to Wal-Mart,” said Kurt Barnard, president of Retail Forecasting Group. “I don’t think that the reinstatement of the word is going to do very much good. But omitting last year it may have offended some people.”

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AP-NY-11-09-06 1842EST