Most top retail chains reported weaker-than-expected April same-store sales on Thursday, suggesting that Wall Street's hopes for a consumer rebound have gotten ahead of the actual pace of recovery.

Sales at stores open at least a year rose 0.5 percent in April, well short of Wall Street estimates of a 1.7 percent increase. Nearly 70 percent of 28 retailers tracked by Thomson Reuters disappointed, with the biggest misses seen among apparel retailers like Gap Inc and teen chains like Abercrombie & Fitch Co .

The lackluster results dragged down shares in the sector, including warehouse club Costco Wholesale Corp which closed down 3.9 percent and Target Corp , which fell 1.9 percent to close at $55.02. It also weighed on the wider market.

Gap shares closed down 7.2 percent at $22.91, while Abercrombie and rival Aeropostale Inc closed down 8.6 percent and 6.7 percent, respectively. The Standard & Poor's Retail Index <.RLX> fell 3.6 percent at close and Wal-Mart Stores Inc , which does not report monthly sales, fell 2.8 percent to close at $53.23.

We know that things probably are not going to get worse, but the consumer is not out there leading us forward, said Stephen Hoch, a marketing professor at Wharton School.

The results came a week after data showed that the U.S. economy expanded at a 3.2 percent annual rate in the first quarter, the fastest pace of consumer spending in three years.

But that translated into mixed results for U.S. businesses, as people are more selective about where they spend, analysts say. In addition, a fresh report on jobless claims showed a slightly smaller-than-expected drop in unemployment filings, suggesting a more gradual recovery.

This is still a fragile environment and the consumer is still fickle, said Matthew Katz at U.S. advisory firm AlixPartners. This is going to absolutely be a fits-and-starts recovery.

Retailers who want to win in this economy must go beyond controlling inventory and costs, and offer new products, he said. Many analysts also urged investors to be picky while investing in the retail space.

You're not at a point where the tide is going to lift all boats, Lazard Capital's Todd Slater said, recommending names of off-price retailer TJX Cos Inc and Limited Brands Inc , home to Bath and Body Works and Victoria's Secret.

EARLY EASTER STEALS APRIL THUNDER

An early Easter prompted many U.S. consumers to move up their spring shopping to March, stealing a good chunk of sales from April. Many industry experts look at the combined two-month results for a better read of the consumer sentiment.

In the final tally, same-store sales rose 4.8 percent in the March-April period, below the 5.4 percent average expected by Wall Street. Some retailers, including Limited and Macy's Inc , warned that a late Memorial Day could depress May sales while boosting June results.

Still, the April increase marks the eighth consecutive monthly rise after a year of declines during the recession. The International Council of Shopping Centers said same-store sales were heading toward the high end of its 2010 forecast for a 3 percent to 3.5 percent rise.

Michael Niemira, chief economist at the ICSC said the combined March and April same-store sales numbers were well above anything that I think will be sustainable.

Discount chain Target posted a 5.9 percent monthly sales drop, far steeper than the 2.3 percent decline predicted by analysts. It said a combined March-April same-store sales rise of 3 percent was better than any month since April 2008.

Costco saw an 11 percent rise in April same-store sales, missing an analysts' estimate of 11.2 percent.

Department store chains Macy's and higher-end Nordstrom Inc were among the few positive surprises, surpassing estimates with rises of 1.1 percent and 7.5 percent, respectively.

Teen retailers American Eagle, Abercrombie, Hot Topic Inc and Zumiez Inc posted weaker-than-expected same-store sales in the month as many teenagers finished shopping ahead of Easter, or had gone back to school.

A few retailers also raised their quarterly earnings forecasts, including Aeropostale, Macy's, JC Penney Co Inc and Kohl's Corp . TJX said it expected earnings at the high end of its forecast for 76 cents to 79 cents a share.

(Reporting by Dhanya Skariachan; additional reporting by Brad Dorfman, Ben Klayman, Jessica Wohl, Martinne Geller, Nivedita Bhattacharjee; Editing by Dave Zimmerman, Gunna Dickson and Andre Grenon)

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