Updated from 10:39 a.m. EDT

:

And finally, some good news.

Teen-oriented apparel chains

Abercrombie & Fitch

(ANF) - Get Report

and

Gap

(GPS) - Get Report

Thursday highlighted surprisingly strong April sales figures from U.S. retailers. Both companies said they would beat quarterly earnings estimates, while joining a slew of retailers in reporting much better-than-expected sales.

Overall, Thursday's same-store sale figures blew away analysts' expectations, which had been

extremely cautious. Analysts had expected weak numbers, saying the slowing economy and the prospect of job losses would keep most shoppers home. But the strong numbers sent shares in most retailers up Thursday, with the

S&P Retail Index

up 3%. The index has gained 25% over six months.

Strong Gains

Of 21 companies followed by

Thomson Financial/First Call

, 16 beat estimates, many by substantial margins. The specialty apparel sector was especially strong, with all nine companies beating estimates.

American Eagle Outfitters

(AEOS)

posted the largest surprise, reporting an increase in same-store sales of 22.7%, compared with expectations of a 2.7% increase. After surging in early trading its shares retreated, recently trading up 91 cents at $40.51.

Other companies that reported significant upside surprises were

Kohl's

(KSS) - Get Report

,

Talbots

(TLB)

and

AnnTaylor

(ANN)

. Kohl's shares were up $4.81, or 8%, to $62.09; AnnTaylor shares were up $3.03, or 10%, to $34.28; and Talbots shares were up $3.29, or 8.4%, to $42.29.

Traffic was up in the shops of companies, like Gap, that report such figures, and inventories were remarkably clean among specialty retailers,

Prudential Securities

analyst Stacey Pak noted in a conference call Thursday to discuss the results.

"Those two issues -- traffic and tighter inventories -- combined with some decent fashion, particularly in women's, lead us to be more bullish on the group," she said.

Wal-Mart

(WMT) - Get Report

, the nation's largest retailer, said April same-store sales rose 6.5%, outpacing the expected 4% rise. Shares climbed, trading lately at $53.34, up $1.75.

Gapping Up

Thursday's news marks the first bit of good news in some time for Gap, a company that has been beset by fashion missteps and earnings warnings. In Abercrombie & Fitch's case, the news validates what many analysts have been chirping about recently: that the company, which

once faced its own Gap-like problems, is on the rebound.

Gap reported that April same-store sales, which gauge activity in shops open at least a year and are a key indicator for the retail sector, declined just 2% from a year ago, a much slower decline than the consensus estimate of an 8.6% drop, according to Thomson Financial/First Call. The San Francisco-based company said it expected quarterly earnings of 12 cents to 13 cents a share, slightly above the Wall Street consensus of 11 cents a share. However, the company did say comparable store sales in the second quarter will likely still be negative.

Shares were up $3.08, or 11%, to $31.88.

Analysts also anticipated that Abercrombie, based in New Albany, Ohio, would see its comparable-store sales fall for the month. Yet the company reported a 6% increase, well above the consensus estimate of a decline of 0.2%. The company also said it would top the Wall Street consensus estimate, which is 16 cents a share for the first quarter.

Its shares climbed $3.35, or 10%, to $37.24.

For the most part, even companies that undershot estimates did so only by a slim margin. The exception was

May Department Stores

(MAY)

, which reported a same-store sales decline of 8.3%, compared with an expected drop of 3.9%. Still, its shares were up $1.04 cents to $36.65.

Staying the Course

Revisions of earnings estimates were relatively minor.

Goldman Sachs

, for example, raised its estimates slightly for Kohl's,

Kmart

(KM)

, which reported sales in line with its plans, and

J.C. Penney

(JCP) - Get Report

, which beat expectations. The investment bank lowered its estimates for May Department Stores by a penny.

J.C. Penney shares were up 85 cents at $21.39, while Kmart gained 36 cents to trade at $10.84.

Prudential Securities, meanwhile, lowered estimates for Gap -- its expectations had been well above the Wall Street consensus -- and May, while raising its earnings estimate for Abercrombie to match the company's new guidance.

My Modesty!

While most numbers beat expectations, actual sales levels are still modest, many analysts note.

"Everything's relative to what people were expecting," says Ken Perkins, an analyst at First Call/Thomson Financial. "If you look at them at face value, they weren't outstanding by any stretch." The aggregate gain in sales at the 21 companies Perkins follows was 3.3%, below the levels seen in 1999 and early 2000, he noted.

Meanwhile, the

Redbook Same-Store Sales Index

, a broader index published by

Instinet

that tracks 60 companies, rose 2.9% in April. Catlin Levis, the analyst at Instinet who compiles the index, says this was below her expectations.

"April sales showed only modest gains led by warehouse clubs and discount stores as a sluggish economy and rising energy prices have taken a toll on consumer confidence and spending," she says.

Well, that is one way to look at it.

But weighed against what analysts and investors expected, the picture appears much rosier.