Sales at US apparel retailers continued to trend upwards in February as the warmer weather enticed shoppers out in search of spring merchandise and clearance bargains. But while February's same-store sales results largely followed in the footsteps of a buoyant January, rising fuel and food prices may well dampen demand in the months ahead, industry observers warned.

"February held onto the momentum from the last few months," explains Michael McNamara, vice president of research and analysis at MasterCard Advisors SpendingPulse, which follows retail sales across all payment forms.

"Ongoing strong performance by the financial markets and growing consumer confidence may have contributed to ongoing retail growth, especially in the upper tier of the different categories. This is even in the face of the disruptive weather that put a damper on spending in several sectors."

Consultancy and research firm Kantar Retail estimates sales at stores open at least a year grew 4.4% in February. While this was down slightly from the 4.9% same-store sales gain last month, it was up from the 3.9% gain in February 2010.

Meanwhile, according to SpendingPulse figures, total apparel sales grew by 6% year-on-year in February - making for seven straight months of growth. On the downside, though, it was at the lowest rate since September.

Sales in all apparel sub-sectors were in positive territory, from a modest increase of 0.8% for footwear to a 10.7% rise in children's. Online apparel sales grew by 13%, marking the 15th straight month of double-digit increase, with double digit gains in every category except women's clothing, which still grew by 7.7%.

"Good strength across the board," is how Michael Niemira, chief economist at the International Council of Shopping Centers (ICSC), describes February's performance.

As always, there were winners and losers, with the former largely driven by luxury chains and department stores. Those for whom February was a month to celebrate include Limited Brands, operator of the Victoria's Secret chain; upscale department store chains Saks, Nordstrom and Neiman Marcus; discounters Kohl's and TJX; and teen retailers Zumiez and Wet Seal.

Perhaps the biggest disappointment was Gap Inc, where same-store sales fell 3%. But discounter Target Corp, department store retailer Dillard's, and teen retailer The Buckle, also fell short of expectations.

Clouds are looming on the horizon too.

"The results held up despite slightly tougher year-ago comparisons, but those comparisons are likely to take a toll in the coming months," notes Badillo.

"Higher fuel prices will have an ongoing impact on shoppers, particularly lower-income shoppers, but that impact will be offset somewhat as long as households see a continuing pickup in income and job gains in the months ahead."

SpendingPulse's McNamara also believes that the effects of rising gasoline prices have not yet been fully felt in the market. "If gasoline prices continue to rise, this would mean less disposable income for other retail sectors."

With oil prices already topping $100 a barrel, consumers in the lower-income segment are likely to feel the pinch on their purses harder than most. But shoppers may also cut back on driving, favouring online retail instead of trips to the mall.

The industry is also bracing itself for the impact rising cotton, transport and labour costs. And the worry is that retailers will have to lift prices at a time when consumers have less 'extra' money or discretionary funds to spend.

Looking ahead, there's also the Easter shift from March to late April this year to factor in. But while this is likely to lead to a fall in same-store sales next month, the timing of Easter should benefit April's receipts as shoppers begin to stock up on summer clothes.

As well as being one of the smallest months of the year for sales, February is a transition month as US clothing retailers continue to clear winter merchandise and bring in the first spring lines. A better indicator of consumer demand, analysts say, will come in March and April.