OTTAWA (Reuters) - The Canadian dollar's race to parity with the greenback may not bring shoppers much relief at the checkout counter any time soon, but it might just give a lift to retail stocks.

Retailers say that a host of hurdles, from higher costs to long buying cycles, curb their ability to quickly cut prices and pass along savings as the currency rises.

But a bulked-up loonie — so-called because of the bird on the one-dollar coin — cuts the cost of imports, producing savings that can boost profits and in turn, share value.

The currency finished last Friday at C$1.0009 to the US dollar, or 99.91 US cents, after hitting parity with the greenback on Thursday for the first time in 31 years.

Clothier Reitmans is one example of a Canadian company that has cashed in on currency gains because it buys the bulk of its goods overseas in US dollars.

"Any rise in the Canadian dollar makes its purchases cheaper, and Reitmans can pocket the savings," RBC analyst Tal Woolley said in a recent note. "This is savings that flows directly to the bottom line."

Based on historical buying patterns, he estimates that Canadian dollar gains contributed about one-third of gross margin growth over the past three years.

Such savings could be tonic for Canadian retail stocks that have been relatively stagnant in recent months.

The TSX consumer discretionary sector, which includes retail issues, is up seven percent in 2007, slightly underperforming the broader index. The consumer staples sector which includes food retailers, is up 1.5 percent.

"The question is, do they pass on the lower cost of imported goods to consumers in the form of lower retail prices," said associate professor Guy Holburn from the University of Western Ontario Richard Ivey School of Business.

"My sense is that retailers are pretty keen to maximize their profits ... I suspect they'd be faster to increase prices when costs go up than they will be to reduce prices when costs go down in an industry where you don't have a strong degree of competition."