SOURCE: Five Star Equities

Five Star Equities

March 15, 2013 08:20 ET

Retail Stocks as Commerce Department Reports Retail Sales Surge 1.1% in February -- Largest Gain in Five Months

Five Star Equities Provides Stock Research on The Gap and The Men's Wearhouse

NEW YORK, NY--(Marketwire - Mar 15, 2013) - Retail stocks have received a boost recently from a report released Tuesday showing U.S. retail sales in February posted its biggest gain in 5 months. The sharp rise comes as a welcome sign as it shows the consumer is gaining confidence in the U.S. economy despite higher taxes in 2013. Five Star Equities examines the outlook for companies in the Retail Industry and provides equity research on The Gap Inc. (NYSE: GPS) and The Men's Wearhouse, Inc. (NYSE: MW).

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The Commerce Department reported retail sales in February increased 1.1% to a seasonally adjusted $421.40 billion, which was the fourth consecutive month of gains. When compared to a year ago sales increased 4.6 percent. Additionally, the Commerce Department reported U.S. business inventories in January grew by 1 percent, the most since May 2011. The increase in inventories suggests companies expect demand to pick up in the months to come.

"This all suggests that the hit to spending from the payroll tax cut and higher gasoline prices, which reduce the amount of cash available to spend on other items, hasn't been too bad," said Paul Dales, senior U.S. economist at Capital Economics. "The recent pickup in both employment and earnings growth bodes well for consumption growth later in the year, too."

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Shares of the Gap have gained approximately 18 percent in 2013. The company and affiliated brands ended fiscal year 2012 with 3,407 store locations in 47 countries, 3,095 of which are company-operated. For the full year 2012, the Gap reported net sales totaling $15.7 billion, an increase of $1 billion when compared with a year ago.

The Men's Wearhouse is a specialty retailer of men's suits and a provider of tuxedo rental product in the United States and Canada. Shares of the company spiked sharply Thursday after releasing strong results for the fourth quarter and full year 2012. The Men's Wearhouse's Board of Directors has approved a new share repurchase program of $200 million.

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