Specialty retailers got hit hard Thursday after a disappointing round of February sales results and signs of uncertainty coming out of the holiday quarter.

While discounting chains and department stores fared reasonably well, sales shortfalls from Wall Street darlings such as Abercrombie & Fitch ( ANF) and Chico's ( CHS) weighed on the market and sent momentum traders scrambling for cover.

Pacific Growth Equities analyst Christine Chen says there may be some overreaction in the market's response to the disappointment.

"January surprised on the upside when there was good weather and everyone praised the consumer," Chen says. "Now we get a surprise on the downside after there was a big snowstorm in the Northeast, and everyone is predicting doom and gloom. You have to remember that last year, February was a very strong month, and many companies were up against very high comparisons."

Thomson First Call reported that 59% of retailers missed Wall Street's estimates, and the bulk of the disappointments came from specialty chains. Abercrombie, which was widely viewed as a holiday standout for fickle teen shoppers, said its same-store sales, or comps, rose 5.9% from a year ago, below analysts' average prediction for 13.9% growth. Its shares recently were down $7.10, or 10.6%, to $60.15.

Chico's, which caters to women of the so-called baby boomer generation, said late Wednesday that its comps rose 5.7%, missing analysts' forecast for a gain of 8.7%. The company's fourth-quarter earnings missed Wall Street's consensus estimate by a penny, and it warned that rising expenses could weigh on gross margins in 2006. It projected margin declines between 10 and 50 basis points in the first half of the year, with less of an impact in the second half. Chico's shares recently were down $6.64, or 13.9%, to $41.12.

Gap's ( GPS) sales woes continued as it reported its same-store sales plunged 11% because of weak traffic at its Banana Republic and Old Navy divisions. The decline was roughly twice as bad as analysts had projected. Its shares recently were down 49 cents, or 2.6%, to $18.17.

Casual clothing chain Aeropostale ( ARO) reported an unexpected decline of 5.4% in its comp for the month, and Hot Topic ( HOTT) said its same-store sales fell 8.4%, pulled down by weakness in the men's and accessories categories.

Chen says the late Easter holiday this year is pushing back plans for spring break and family vacations, which often drive second-quarter apparel sales. She predicts a back-end-loaded quarter, with sales becoming stronger toward April.

"In the meantime, it's difficult for retailers to gauge whether the present slowness is stemming from seasonal issues or merchandise issues," she says. "Will they start marking merchandise down early to ensure that they're not stuck with a big inventory glut after the spring, or will they wait for things to get better? Those are the sort of things we're going to see play out over the next two months."

Concerns that excess inventory could eventually wreak havoc on profit margins, particularly in the denim category, were raised again after Pacific Sunwear of California ( PSUN) reported earnings for its holiday quarter on Tuesday. Its fourth-quarter results were in line with analysts' estimates, but the retailer said February sales dropped unexpectedly by 3.1%. Analysts were expecting an increase of 1.4% for the month, according to Thomson First Call.

Meanwhile, the company's inventory levels were up by 7.8% per square foot at the end of the year, and management indicated that it expected to continue at that level.

"I think the inventory concerns at Pacific Sunwear will work themselves out once the spring shopping season really kicks in," Chen says. "They've got a little more clearance in the stores now than I would like to see at this time of year, but that should work its way through. They had a merchandise miss with their private-label line in girls denim, but it's a problem that can be fixed easily."

American Eagle Outfitters ( AEOS) provided a rare bright spot in the specialty space, with a 6% comps gain for February, solid fourth-quarter results and a solid guidance. Despite the performance, wider concerns about the sector had its shares recently trading down 60 cents, or 2.1%, to $28.31.

Chen says she likes Abercrombie's stock after Thursday's selloff, since it looks cheap for a company well-situated for spring shopping. Also, her positive outlook on Aeropostale was bolstered despite its sales miss. The company sounded a note of confidence.

"During the month, consistent with our merchandise strategy, we were able to increase our average unit retail and gross margins despite weaker-than-expected traffic," Aeropostale said in a statement. "We continue to be pleased with the direction of our merchandise assortment and we believe we are well positioned to capitalize on our opportunities during the remainder of the spring selling season."

Its shares were down 30 cents, or 1%, to $28.59.

"Short-term investors might be heeding the negative comp on that one, but long-term investors like the news that margins are better than last year, because they understand that it's all about profitability in the long run," Chen says. "You can always buy your comp by giving away the farm."