Even though sales appear slightly off last year's pace in the first three weeks of the holiday selling season, music merchandisers say it still might outpace 2005.

In particular, they cite a favorable calendar-which as H.L. Distributors owner Hinsul Lazo puts it, this year generously provides five full weekends of shopping before Christmas Day. That's five Fridays, five Saturdays and five Sundays. This December is the only such month this year, and the next time it will occur is in August 2008.

For the first three weeks of the holiday selling season-Nov. 20-Dec. 10-U.S. album sales totaled 50.6 million, a 2.2% decline from the 51.8 million units scanned in the corresponding period in 2005, according to Nielsen SoundScan. Merchants are upbeat because the slight decline in sales leaves them within striking distance of reaching flat sales, which would be good news after last year's disastrous season.

Last year, sales were down 8.3% during the five-week period, and Thanksgiving week itself suffered a Nielsen SoundScan-era record decline of 12%. This year, when Thanksgiving week held steady at 17 million units, merchants considered that a good start.

Moreover, merchants point out that people are shopping for Christmas later and later every year. So far, "we are on plan, which means we are slightly down with a low-single digit comparable-store sales decline," Value Music president Rob Perkins says. He expects a big sales boom at the end: "With Christmas on Monday this year, that gives you a full shopping day on Saturday, so that should be a huge day for us."

However, some music manufacturers are a little less optimistic than merchants.

"The season so far seems to be new-release driven, event-driven and price-driven, but when you read stories about Wal-Mart being down, it's disturbing and troubling," one senior distribution executive says. Wal-Mart warned that it expects holiday sales to be disappointing.

But not everyone is down. Hastings Entertainment chairman/CEO John Marmaduke says the Amarillo, Texas-based chain's holiday selling season is off to a decent start. "It looks like some customers came back to music who had abandoned it in July and August when no major releases came out," he says.

Other merchants are more worried about profit margins than sales. Those worries began when Black Friday kicked off with Minneapolis-based Best Buy touting four hit albums that day at $5.99 and Richmond, Va.-based Circuit City pushing eight albums for $6.99. Since then, hit pricing has mostly slipped back to the $9.98 level ($9.72 for Wal-Mart), with the occasional $6.99 or $7.99 hit. But the bottom line, according to one merchant, is that among all the big-box advertising circulars there is a wide spread of hit titles for sale at loss-leader prices.

In fact, because of falling profit margins, Newbury Comics CEO Mike Dreese describes the holiday season so far as "disappointing. Unit volume is doing OK, but margins are really challenged. On a typical day, [comparable store] sales are down 4%, but margins are down 10%."

While traditional stores so far are slightly down since the holiday selling season began, the nontraditional sector-which includes digital downloads, Amazon, Starbucks and albums sold at concerts and through TV commercials with 800-numbers-initially put some big numbers up on the board before slacking off. During Thanksgiving week, sales were up 53% in that sector, which is ahead of the 47% year-to-date pace it has generated, as of the week ending Dec. 3. But in the following two weeks, sales were only up 41% and 33.6%, with both weeks under-performing for the sector for the year.

Looking at individual albums, merchants were pleased with the first-week sales of Jay-Z's "Kingdom Come," which came out Nov. 21. But its second-week sales drop of nearly 80% continues what some see as a worrying trend that seems to indicate that consumers are becoming more willing to burn CDs than buy them.

Meanwhile, Value Music's Perkins says Young Jeezy's "Thug Motivation: Inspiration" is moving briskly since its Dec. 12 release, with some slight outages in its first-week availability. At Gallery of Sound in Wilkes Barre, Pa., VP Joe Nardone Jr. says that "Eminem Presents: The Re-Up" is off to a good start, and the chain can't seem to get its hands on Vince Gill's four-CD boxed set, "These Days."

While merchants expect big things for the last week coming into Christmas, one notes that Dec. 19's release schedule this year is sub-par compared with last year's, when Mary J. Blige, Jamie Foxx and the Notorious B.I.G. debuted new titles.