SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 31, 2012 08:20 ET

Retailers Look to Benefit as U.S. Consumer Spending in September Increases the Most in Six Months

The Paragon Report Provides Stock Research on J.C. Penney and Wal-Mart

NEW YORK, NY--(Marketwire - Oct 31, 2012) - Retail stocks have performed admirably in 2012 despite concerns of a global economic slowdown. The Standard and Poor's 500 Retailing Index has gained 22 percent year-to-date, compared to a gain of 12 percent for the S&P 500 Index. Retail Metrics Inc. earlier this month reported that U.S. same store sales of the companies tracked by the research firm increased 3.9 percent in September, topping analysts' estimates of 3.7 percent. The Paragon Report examines investing opportunities in the Retail Industry and provides equity research on J.C. Penney Company, Inc. (NYSE: JCP) and Wal-Mart Stores, Inc. (NYSE: WMT).

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Recent data has shown that consumer spending in September saw its biggest increase in 6 months. The Commerce Department on Monday reported that consumer spending increased 0.8 percent in September, which was twice the gain seen in personal income, after a 0.5 percent gain in August. According to Bloomberg economists had predicted a gain of 0.6 percent.

"The strength in September gives consumer spending a good lift for the fourth quarter," said Stephe Stanley, chief economist at Pierpont Securities LLC. "The housing market seems to have turned. Consumers are clearly feeling better and are going out and spending a bit more."

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In February J.C. Penney began moving away from the discount retailer label by getting rid of it coupon and percent-off promotions. The retailer's transformation has caused a 20 percent sales drop through July. The company plans to transform roughly 700 of the 1,100 J.C. Penney stores into shopping centers made up of 100 individual specialty shops of brands such as Joe Fresh, Martha Stewart and Disney.

During the fiscal year ended January 31, 2012 (fiscal 2012), Walmart's U.S. segment accounted for approximately 60% of its net sales. In an effort to increase its share of China's online shopping market Walmart recently purchased a majority stake in Chinese e-commerce company Yihaodian, who had sales of $428 million in 2011.

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