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Retail Stocks: Year in Review

NEW YORK (TheStreet) -- With unemployment close to 8% and consumer confidence at all-time lows, investors entered 2013 with plenty of reasons to expect lackluster results from the retail industry. But investors weren't buying that.

Not only has the sector produced gains of 40% year-to-date, but the likes of Staples (SPLS) and Radio Shack (RSH), names we've come to know as perpetual laggards, reversed last year's losses to post gains of 40% and 26%, respectively. But that was not the case for J.C. Penney (JCP), which posted losses of 60% on a well-publicized rebranding failure and reminded investors that things can always get worse.

I expect that there will be many who disagree with me, but I believe that 2013's best retail performer was Best Buy (BBY), a company many had written off for dead. This recognition has nothing to do with the fact that the stock posted gains of 260%. Well, maybe a little. Last year Best Buy posted gains of only 9% to go along with its 3-year average of 8%.

Even more impressive was that the electronics giant entered 2013 on its death bed after being butchered by Amazon (AMZN) and, to a lesser extent, by Wal-Mart (WMT). The company's founder and largest shareholder, Richard Schulze, even offered to take the company private at a price of $24 to $26 per share, or over 80% below Best Buy's recent high of $44.

The winners in Best Buy's turnaround are (obviously) the shareholders. But they have the company's board to thank for opting to not take the easy way out and bow down to Amazon, while also establishing partnerships with Samsung (SSNLF) to introduced the "store-within-a store" concept. This (and other moves) brought new life back into the stores. But for how long?

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