May brought lackluster sales results for U.S. retailers, with discount chains turning in the strongest performance, as consumers again showed their cautious side in a seasonally weak period for spending.

Based on 28 retailers tracked by Thomson Reuters, sales at stores open at least a year rose 2.5 percent, just shy of the 2.6 percent that Wall Street predicted.

These results are disappointing, especially considering where the estimates have come down since the earnings calls from retailers in the latter part of May, said Wall Street Strategies analyst Brian Sozzi.

Sozzi did not rule out the idea of a double-dip recession as California, one of the leading U.S. states at the start of the most recent downturn, was showing weakness again.

We will continue to experience volatility in the pace of economic recovery, Target Corp Chief Executive Officer Gregg Steinhafel said in a statement. The company reported May sales just above analysts' expectations and forecast a low single-digit percentage rise for June.

So far this year, U.S. consumers have shown they are willing to open their wallets for nice-to-have goods like clothes after focusing on basics during the recession.

But shoppers are still very selective about where and when they spend, and overall consumer sentiment has remained roughly unchanged from February.

The May results follow a lackluster 0.5 percent increase in April, when a majority of the 28 retailers tracked by Thomson Reuters missed expectations. An early Easter had prompted many consumers to shift spring shopping to March.

Also on Thursday, new data on jobless claims showed the U.S. labor market was improving.

The Standard & Poor's retail index <.RLX> rose 0.7 percent in early trading, while Target shares were up 1.3 percent.

DISCOUNTERS AMONG TOP PERFORMERS

BJ's Wholesale Club Inc's 11.3 percent increase in same-store sales topped expectations for a 6.6 percent gain. TJX Companies Inc also posted a better-than-expected gain and said it saw demand pick up substantially in the second half of the month as the weather turned warmer.

Limited Brands Inc said May same-store sales rose 5 percent, easily topping the 2.1 percent gain analysts had forecast. It said it expected June same-store sales to be flat to up in the low single-digits.

Other retailers reporting better-than-expected May same-store sales included Macy's Inc , Aeropostale Inc , Gap Inc , Dillards Inc , Kohl's Corp and Saks Inc .

However, Costco Wholesale Corp disappointed with a 9 percent gain for the month. That was below the 9.7 percent increase analysts polled by Thomson Reuters had expected and the warehouse club operator's shares fell 1.5 percent.

Others that fell short include Abercrombie & Fitch Co , Nordstrom Inc , JC Penney Co Inc and Rite Aid Corp . But teen retailer Abercrombie's shares were up 5 percent.

Factors that influenced May shopping included a Memorial Day holiday that fell on the last weekend of the month. Analysts said that probably dragged sales down by a low- to mid-single-digit percentage rate, with more shopping pushed into June.

Cooler weather everywhere but the Northeast, as well as heavier rain in the Northwest, hurt sales of summer apparel, analysts said.

On Wednesday, teen apparel retailers showed a similar mix as Zumiez Inc reported a gain of 7.1 percent, compared with the 3.6 percent increase analysts had expected. Even the highest forecast had been for a rise of 5.5 percent.

Rival Hot Topic Inc saw a drop of 9 percent, worse than the 8.3 percent decline analysts had expected.

(Additional reporting by Phil Wahba, Martinne Geller, Dhanya Skariachan, Helen Chernikoff and Abhishek Takle; Editing by Michele Gershberg and Lisa Von Ahn)

California Retail Marketing