M-A-R-C-H S-A-M-E-S-T-O-R-E S-A-L-E-S.

The overwhelmingly dreary news today from U.S. retailers reporting March sales results was enough for Lazard Capital Markets analyst Todd Slater to utter the “R” word with gusto.

Referring to a recession in consumer discretionary spending, Slater said: “The numbers on consumer discretionary spending this month indicate that a recession is in full swing.”

According to the Free Dictionary , that means a recession is already “at the highest level of activity or operation.” Therefore, Slater reasoned, it may be time to start buying some retail stocks.

Slater was not alone. The Standard & Poor’s retail index was up more than 2 percent on Thursday afternoon.

According to Slater’s “Beat-O-Meter” only 30 percent of retailers posted March same-store sales that exceeded Wall Street estimates, well below the average of 50 percent. 

“While the first half of March was very strong, owing to early school vacations and the Easter shift, sales fell off precipitously at the end of the month, suggesting a bigger giveback than expected.”

But if you believe that things can only get better from here, Slater says investors should focus on companies that:

1) have strong top-line growth visibility, driven by increasing brand cachet and/or global exposure, such as American Apparel, Deckers Outdoor, Iconix Brand Group, Warnaco, Wolverine World Wide and VF Corp.

2) have already suffered through a self-imposed recession, have lowered expenses and inventory liability significantly and can meet/beat earnings estimates through margin expansion, even in a weak top-line environment, such as Limited Brands.

Case in point: Limited Brands said on Thursday that same-store sales at its Bath & Body Works chain fell 13 percent but that merchandise margins were up “significantly”.

Enchanted orchid or pineapple mango body cream anyone?