Flashy and fashionable retailers are getting hammered in the current economy. That was driven home when I opened up my news reader this morning and scanned through the first 10 headlines. Here is what I saw:

• Cache (NASDAQ: CACH) 1Q same-store sales sink 20.7 percent
• Bebe (NASDAQ : BEBE) same-store sales decline 23.5 percent in 3Q
• Limited Brands (NYSE: LTD) March same-store sales decline (a click on the link shows a 9% drop)
• Stage Stores (NYSE: SSI) same-store sales dive in March (off 15%)

This is pretty bad news for the specialty retailers. From a macro economic point of view I see these numbers as indicators of a couple of trends. The first, and obvious one, is that consumers are severely cutting back on their discretionary spending. This will hit the retailers that have a fashion theme especially hard. Second, going forward from here, the sales rates of these companies will be a good indicator of consumer sentiment and the direction of the overall economy. Just do not hold your breath for any improvement soon.

Fashion retailers are not the only ones being hit by slower sales. Costco Wholesale Corp. (NASDAQ GS:COST) has reported same store sales down 5% for March. Household supply manufacturer WD-40 Co. (NASDAQ GS:WDFC) released their second quarter results yesterday and sales were 21.7% lower than the same quarter a year earlier. The American (and worldwide) consumer is serious about curbing their spending until economic times start to improve. The problem with that scenario, is that I do not see the economy starting to rev up until consumers spending does likewise. Quite the Catch 22.

As an investor, I see only one solution for someone who wants to have exposure to the retail sector: Wal-Mart Stores Inc. (NYSE: WMT). I have been stating since the recession got seriously in gear that Walmart was one of a handful of companies that could continue to thrive in tough economic conditions. They have released their sales figures for the 5 weeks bracketing March and they continue to show slow but steady growth. Here are a couple of figures: Walmart same store sales were up 0.6% over a year earlier. Sam's Club sales (ex-fuel) showed a 6.1% increase over a year earlier. (What happened Costco?). Total international sales were up 6.8% in local currencies, but prevailing exchange rates caused international sales to fall 14.8% when converted to dollars. In the current global environment I find any level of sales growth impressive and it seems that Walmart management has plan that is working.

As I write this before the market open on Thursday, it seems that the traders in Walmart disagree with my analysis. WMT is trading down over 4% in pre-market trading. You need to decide if this is the market dumping retailers in general or if they are disappointed with the slow growth numbers. As I hopefully made clear above, any retailer that shows any level of sales growth in the current economy impresses me. Let us see what the rest of the day brings to Walmart's share price. Until consumer spending starts to increase again, I will stick with Walmart as the stock to own in this sector.