NEW YORK (CNN/Money) - After a tepid start to the holidays, it was the late-season bargain hunters, strong gift card redemptions and deeper discounts after Christmas that apparently bailed out the nation's retailers.

Discounters Wal-Mart and Target both benefited from a surge in sales in the last week of December.

Wal-Mart (Research) said Thursday that sales at stores open at least a year, known as same-store sales, rose 3 percent -- in line with its recently raised forecast for the month.

The world's largest retailer credited the better-than-expected performance to post-holiday shoppers and a "significant" bump in gift card redemptions from a year earlier.

Total sales including new stores jumped 13.4 percent to $38.4 billion for the five weeks ended Dec. 31, Wal-Mart said. Sales at Wal-Mart (Research) discount stores grew 12.1 percent, outpacing the 7.8 percent growth at the company's Sam's Club wholesale club stores.

For January, Wal-Mart said it expects same-store sales up between 2 percent and 4 percent.

Sales at Target (Research), the No. 2 general merchandise retailer, rose 5.1 percent, topping analysts' estimates for a 4.2 percent increase.

"Our sales for the month of December were at the upper end of our expectations, driven in part by a higher mix of promotional sales," Target CEO Bob Ulrich said in a statement.

But efforts to boost sales during the critical holiday shopping period had its costs -- with Target also saying it expects fourth-quarter profits to fall below Wall Street forecasts.

Ken Perkins, research analyst with Retail Metrics, said that while December sales looked good overall, retailers' fourth-quarter profit guidance was either unchanged or lower, on average.

Of the universe of 70 retailers that he covers, Perkins said 35 beat comparable sales estimates last month while 14 missed.

"I thought the result would have been a little more even because of the dire news that we were getting after Thanksgiving about slowing sales. So this (sales showing) is a pleasant surprise," Perkins said.

But, he added, "the profit warnings mean that margins were compressed last month because of all the promotions."

Perkins said Wall Street's focus will now definitely shift to January, February and March when retailers are facing a big hurdle with tough comparisons with solid sales a year ago.

"On average, comparable sales grew 5.8 percent just in those three months compared to an average of 2.6 percent in the last six months of 2004," said Perkins. "The first-half of the year will be a big challenge."

Last month's winners were luxury merchants, chains catering to teens and warehouse clubs.

High-end department store chain Nordstrom (Research) posted same-stores sales up 9.3 percent; sales at Urban Outfitters (Research) jumped 15 percent in December, while Pacific Sunwear (Research) sales gained 5.3 percent. And Abercrombie & Fitch (Research) said December sales spiked 10 percent

Discount warehouse club Costco (Research) logged a 9 percent increase.

No. 1 electronics retailer Best Buy (Research) reported December sales up 2.5 percent -- below its earlier guidance of a 3 to 5 percent growth -- fueled by sales of MP3 players, digital TVs and digital cameras.

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Best Buy's rival Circuit City (Research) also struggled last month, logging a sales decline of 5.8 percent.

It also wasn't a jolly holiday season for Pier 1 Imports (Research). The home goods retailer extended its long streak of sales declines in December, posting an 8.8 percent decline.

Sales at department store chain Sears (Research) fell 3 percent, "Relatively strong sales at the end of the holiday shopping season were insufficient to offset a slow start to the month," Sears CEO Alan Lacy said in a statement.

Kmart posted a 2.6 percent decline in comparable sales in December. For November and December, the retailer said sales fell 4.6 percent.