I've been to that store. All it sells is Christmas-related merchandise. Putting a couple of Santa Clauses out front would not be holiday decorations- it'd be plain old advertising - like putting a five foot puppy in front of a pet store.
And putting a Christmas cap on one of those big puppies would be illegal in this city.
This is clearly vulnerable to challenge on a constitutional basis. More than one, actually.
But, this guy is going to lose because he and his attorney want to fight it on a different battlefield. Oh well.
So, if they sell Christmas decorations I don't understand what the problem is with Santa. Exactly what wording in the code is he breaking?