Merchants, who get about a quarter of their annual sales in November and December, rely on early specials to encourage spending in the days after Thanksgiving. Luxury chains such as Neiman Marcus Group Inc. will likely do well as higher-income shoppers splurge, while discounters including Wal-Mart may draw customers paring budgets amid higher gasoline and food prices.

"We have a lot to buy this year on a budget," said Kathryn Bills, 36, who was shopping for her two Children at the Toys "R" Us flagship store in New York's Times Square. "We're spending less and sticking to a budget so we don't charge out the credit cards." After buying two Bratz dolls for $10 each and a Game Boy console, she said her next stop was Macy's.

The day after Thanksgiving was the busiest shopping day of the holiday season last year, according to the International Council of Shopping Centers. Sales at stores open at least a year are expected to rise about 3 percent to 4 percent this holiday season, said Michael Niemira, chief economist for the New York- based trade association.

Shoppers plan to spend about $730 on average this year, compared with expectations of $734 a year ago, according to a Gallup Poll. Holiday sales will be about $219.9 billion this year, the National Retail Federation has forecast.

Wal-Mart, the world's largest retailer, was selling Nintendo Game Boy Advance consoles for $39.93 and $27.87 DVD players. Sears, Roebuck & Co. gave out $10 gift cards to the first 200 shoppers at each store, and Kohl's Corp. sold 7-inch DVD players with a carrying case and two headphones for $159.99. Federated Department Stores Inc.'s Macy's sold $100 diamond rings for $29.99 with any purchase.

"We had people lining up around the block before we opened," Toys "R" Us President John Barbour said.

Shares of Bentonville, Ark.-based Wal-Mart fell 18 cents to $55.32 at 1:08 p.m. in New York Stock Exchange composite trading. Wayne, N.J.-based Toys "R" Us shares fell 6 cents to $19.55. Shares of Dallas-based Neiman Marcus gained 78 cents to $69.20.

"I'm saving $400," said Chris Larson, 28, who arrived at 2:30 a.m. at the Best Buy in Myrtle Beach, S.C., to buy an eMachines personal computer and 17-inch flat-screen monitor for $199.98. The retailer also offered Norcent DVD players for $17.99, after a mail-in rebate.

Merchants including Circuit City Stores Inc. and Best Buy listed the minimum number of some items that would be available at each store. Wal-Mart's circular noted that most specials were available on a one-time basis.

First come, first serve

Retailers traditionally offer some specials for only a few hours on the day after Thanksgiving, known as Black Friday because in the past it was the day when many retailers turned a profit after earlier losses in the year.

"They say first come, first serve," said Felix Fores, 55, a plumber with three children, who was the first person in a line of about 200 people at a Sears in Chicago. "If you are the last one, you don't get anything."

Fores, who had arrived at the store at 4:45 a.m., received a $10 gift card. He used the card to buy a coat that was marked down to $29 from $100. He plans to spend more than $250 this year and get all his shopping done this weekend.

The day after Thanksgiving has become less important as shoppers put off purchases until later in the season, Wal-Mart's Chief Financial Officer Tom Schoewe said earlier this month. Merchants including Federated and Nordstrom Inc. have kept inventory tight, aiming to reduce the need for discounts later in the season on slower-selling merchandise.

"This is not a big year for bargains," Federated Chief Executive Terry Lundgren said.

Wal-Mart said it will be "more balanced" in offering specials for the season. Last year's promotional items lost money and may not have been worth it to attract shoppers, said analyst Deborah Weinswig of Smith Barney. The change at Wal-Mart may relieve pressure on other retailers to cut prices, she said.

Wal-Mart's specials this year include some DVDs for $3.88 and a Kodak digital camera for $198.

Weekend momentum

Retailers including Sears and Target will offer specials today to keep up momentum throughout the weekend. Target, the No. 2 U.S. discount chain, is selling Westinghouse microwave ovens for $28. Sears, the largest U.S. department-store company, will offer 10 percent off most merchandise in the stores, with exceptions such as Lands' End items, from 7 a.m. to noon, spokesman Chris Brathwaite said.

Best Buy and Circuit City narrowed no-interest financing offers, and Circuit City sold compact discs for $11.99, up from $9.99 last year, Goldman Sachs analyst Matthew Fassler wrote in a report. More moderate discounts may help the companies' margins, he wrote.

"We've seen many retailers including Wal-Mart show far better profit growth than their top-line sales growth," said Larry Jones, who helps manage about $2.2 billion at NCM Capital Management in Durham, N.C., including Wal-Mart shares. "The market is more in tune to not depending on heavy sales to generate profit for the companies."

Gas prices were a factor when Bruce Haywood, a 34-year-old truck driver from Stone Mountain, Ga., drew up his holiday budget. The average price for a gallon of unleaded gasoline was $1.95 in the most recent weekly Department of Energy report, about a third higher than a year earlier.

"The economy is worse this year," said Haywood, who was sitting atop two television boxes in the Cool Whip section at the local Wal-Mart shortly after the 24-hour supercenter cut the yellow "caution" tape surrounding the specials at 6 a.m. "It seems like everything is getting higher and higher."

Ready to spend

Merchants selling pricier gifts, such as Neiman Marcus, will benefit after companies in the Standard & Poor's 500 Index boosted dividend payments 15 percent in the first nine months of this year.

Anita Carter, 40, stood outside Saks Inc.'s Saks Fifth Avenue store at Tysons Galleria in McLean, Virginia, with plans to buy Dana Buchman designer clothes. The real estate settlement agent said she expected to spend about $1,000 today, with her total holiday shopping budget reaching as much as $2,000.