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10 Retail Stock Losers of 2011: Which Will Recover in 2012?

1. Pacific Sunwear of California

Pacific Sunwear of California (PSUN - Get Report) needed to do something fast or it was facing its demise, and the company answered the call somewhat after Wednesday's closing bell, revealing plans to close as many as 200 underperforming stores and obtaining a loan from private equity firm Golden Gate Capital.

As of Wednesday's close, the stock was down 76% for the year. In after-hours action, the shares gained more than 40%.

The company has suffered with teens choosing to go to Zumiez (ZUMZ) for their action sports apparel and gear and American Eagle Outfitters (AEO)or Abercrombie & Fitch (ANF) for fashion.

Even prior to Wednesday's news, Needham analyst Christine Chen was saying merchandise assortment and store environment have improved at PacSun in recent months. But while its girls business finally turned positive, its guys segment turned negative and inventories are high versus sales trends.

"We would like to see more evidence that a margin recovery is underway or stronger sales momentum, before we become more positive on the stock," Chen wrote in a note.

Wednesday's news may be the beginning of a turnaround but significant challenges remain.

>>To see these stocks in action, visit the 10 Retail Stock Losers of 2011 portfolio on Stockpickr.

- Reported by Jeanine Poggi in New York.

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