(CNSNews.com) - While the city of Chicago is distancing itself from a movie on the nativity for fear of offending non-Christians, stores across the country are embracing the "Merry Christmas" greeting and Christian groups are claiming minor victories in what some have called the "war on Christmas."

Chicago officials this week acknowledged they had asked the organizers of an annual Christmas festival - the German Christkindlmarket - to reject sponsorship money from New Line Cinema, which was using the festival to promote its upcoming release, "The Nativity Story." The film depicts the biblical account of the birth of Jesus Christ.

After Christian groups strongly criticized Chicago officials Tuesday, the city released a statement saying its decision was based on New Line's "aggressively marketing the movie" and not on the movie's theme.

The statement said that "prominently placed advertisement may be insensitive to the many people of difference (sic) faiths who come to enjoy the market," adding that the city's guidelines "are to refuse to reduce any blatant commercial message."

"The City of Chicago has acknowledged the celebration of the birth of Christ with a nativity display on Daley Plaza for many years," the statement said. "Similarly, there has been an Islamic Crescent and a Menorah to celebrate the Jewish Chanukah."

But while Christian groups continue to argue with Chicago over the film, they are seeing some victories in the "war on Christmas" as some companies that had once rejected Christmas terminology are beginning to embrace the holiday.

Among the most prominent stores now wishing shoppers a "Merry Christmas" rather than the generic "Happy Holidays" are Wal-Mart and Macy's.

Others like Target, Dillard's and J.C. Penny also make Christian advocacy groups' "nice list" as they are this year allowing employees to say "Merry Christmas" and are advertising Christmas sales and selling Christmas products.

While Christian activists are seeing victories in some areas, there are still numerous U.S. retailers that shun Christian terminology and symbols. Liberty Counsel's list of "naughty" and "nice" stores include 12 that are using "Christmas" and 14 that prefer to use more generic terms.

Spokesmen for Best Buy, Eddie Bauer and Barnes and Noble, all of which are on Liberty Counsel's "naughty list" of stores that avoid Christmas, did not respond to requests for comment Monday.

The American Family Association, which in 2005 led a campaign against Wal-Mart's use of "holidays" instead of "Christmas," is now targeting Best Buy.

In an "action alert" encouraging members to voice their displeasure with the electronics superstore, AFA criticized the company for not mentioning Christmas while still "want[ing] the shopping dollars from those who remember the Reason for the season."

Jenn Giroux, founder of the Catholic group Operation Just Say Merry Christmas, said her group has tapped into frustration she described as "unbelievable."

The group sells bracelets that display the slogan "Just Say Merry Christmas." Giroux said the bracelets' popularity suggests that Christians are looking for stores that acknowledge their beliefs. Stores that don't recognize them risk losing their business.

"In the effort to offend nobody, they're just offending Christians," she said.

Some of the companies on Liberty Counsel's "naughty list" maintain that they do celebrate and recognize Christmas.

Chris Ahearn, a spokesman for Lowe's home improvement warehouse, said Tuesday that the stores "absolutely say 'Merry Christmas' and we have not directed our employees one way or another as to how they greet customers."

Liberty Counsel President Anita Staver told Cybercast News Service the group's lists change as the group gets more information on how retailers are approaching the season.

"Stores get taken off as we find more information," Staver said, adding that the group gets calls from shoppers and companies daily to update their information. "We're just reporting what people have told us," she said.

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