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For Retailers, Fashion Makes Cents

Consumers headed back to the mall in February, with many taking advantage of end-of-season promotions and more cash in their pockets from lower gas prices.

The result? The best results from retailers in five months. But it wasn’t a uniform picture and, analysts caution, not the start of a turnaround. For many, sales were still lower than the same period a year ago.

Discounters like Wal-Mart Stores continued to stand out in the crowd, which makes sense given consumers are reticent to spend. But another trend emerged as you pick through the sales reports that may be counterintuitive: there was a hunger for fashion.

“Consumers have continued to spend on fashion and trend-right product,” says Christine Chen, an analyst at Needham, in a research note. “Therefore, we believe that retailers with unique, differentiated merchandise will fair better than those retailers not taking as much fashion risks.”

Chen expects consumers to continue to be choosey when deciding to shop and spend money this spring.

  • To listen to CNBC's interview with Beder, click here.

One company that fared well in February is teen retailer Aeropostale . Aeropostale is “really taking off in terms of teen apparel,” says Eric Beder of Brean Murray Carret & Co.

Beder agrees the fashionistas are still spending.

“There is still a demand for fashion, it is definitely down, but there is a consumer who will still pay up for a differentiated product,” he said.

Beder says he thinks the best way for investors to play that trend is with Warnaco , which sells the Calvin Klein, Speedo, and Warners brands, among others, and True Religion , which is known for its jeans and sportswear.

“We are starting to see traffic somewhat normalize on a year-to-year basis,” Beder says. “The consumer just isn’t shopping right now; they are going to malls. We probably have at least a quarter or two before we see some potential for the slope to stop declining.”

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