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Retail sales have posted their first growth in five months, with a modest gain that is nonetheless raising hopes that the industry may be starting to bottom.

"It's encouraging in that the sales trends are stabilizing and not showing signs of further deterioration," said Jeff Black, retail analyst at Barclay's Capital.

Retail sales rose 0.3% in February according to final figures from Thomson Reuters. A 1.2% drop was expected.

Discounters carried the day, with comparable store growth of 2.9%, but three of the other four categories that Thomson Reuters tracks, while showing drops in same-store sales, were not a steep as expected. The fifth group, drug retailers, showed a drop when a small gain was expected.

Wal-Mart Stores Inc. (WMT) stood the tallest among discounters, with same-store sales rising 5.1% when a 2.4% increase was expected. The world's biggest retailer also upped its dividend 15% to $1.09 annually.

But BJ's Wholesale Inc. (BJ), Family Dollar Stores Inc. (FDO) and Fred's Inc. (FRED) are other discounters that beat expectations.

Even struggling Target Corp. (TGT) posted comps that fell, but by less than analysts' projections.

Discounters have been faring the best of the retail group during the downturn, but they were not alone in turning in a better-than-projected February performance.

Teen retailers that have been struggling also beat projections, including Aeropostale Inc. (ARO), American Eagle Outfitters (AEO), Hot Topic Inc. (HOTT) and Zumiez Inc. (ZUMZ) all topped expectations.

Analysts credit some pent up buying demand, the desire to look for spring fashions that came out this month after seeing months and months of winter wear on shelves and gas prices that were much lower this past February than they were a year ago.

But retailers are hardly out of the woods, analysts said.

Abercrombie & Fitch Inc. (ANF) is a major case in point, with February same-store sales falling 30% when 19.8% was projected.

And overall, "There is still no great reason for people to shop," said Erin Armendinger, managing director of the Baker Retailing Initiative at the Wharton School of Business.

"They may have bought one or two items, but with the economy and the employment picture they way it is, caution still prevails, as does discounting."

-By Karen Talley, Dow Jones Newswires; 201-938-5106; karen.talley@dowjones.com