NEW YORK ( TheStreet) -- Throughout 2011, TheStreet will track the major market-moving events of the retail sector. Click on for a slideshow of the year's biggest retail headlines -- from now through the beginning of the year....

March 29: Wal-Mart Faces Biggest Class-Action Suit In History

The Supreme Court heard opening arguments on March 29 in Wal-Mart's ( BLOAQ.PK) sex-suit case to decide whether to let the case proceed to trial.

The decade-long case involves more than 1 million former female employees who claim managers at the discount giant made sexist decisions about promotions and pay.

Wal-Mart protested that the class action, the largest employment discrimination class-action suit in American history, has gotten out of control. The No. 1 retailer denied the allegations and says the women involved have worked at thousands of stores and make claims involving many different issues. As a result, Wal-Mart insisted the case is too big to hear en masse.

Allowing the lawsuit, according to Wal-Mart, would also prevent the company from denying claims made by each individual woman.

If Wal-Mart is defeated the class action could cost billions of dollars in back pay and potential damages.



March 10: Blockbuster Auction Approved

Blockbuster ( BLOAQ.PK) and its creditors reached an agreement on the sale of the company in March.

The revised deal received a favorable ruling from the bankruptcy court reviewing the company's reorganization Thursday, allowing the flailing movie retailer to avoid a Chapter 7 liquidation filing.

"The parties have come to an accord and presented us with a more palatable situation," said U.S. Bankruptcy Judge Burton Lifland in Manhattan.

The agreement sets up an auction. A date has not yet been set.

A list of 45 creditors, including Walt Disney ( DIS), Yahoo ( YHOO) and Sony ( SNE), had previously opposed a "stalking horse" bid of $290 million Blockbuster received in February from Cobalt Video, a limited liability company formed by funds managed by Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital Management and Värde Partners.

The parties were able to agree that if the consortium were to purchase Blockbuster, it could not force the company into Chapter 7, which would essentially liquidate it.

Under the agreement, movie studios and other creditors would receive more money upfront for what they are owed and would receive a share of any offer about the $290 million bid.

Blockbuster owes major studios like Fox, Warner Brothers and Paramount about $100 million in administrative fees. They will receive about 24% of that money right away if a deal is completed by Cobalt.

Unsecured lenders could get up to $7.5 million of the approximately $40 million Blockbuster owes them and also share in the money from any higher bid.

Blockbuster filed for a Chapter 11 bankruptcy reorganization at the end of September, at the time saying it would continue to operate stores and pay employees.

At the time, it had been speculated that Blockbuster would be forced to enter Chapter 7 liquidation, following the path of now defunct rival Movie Gallery.

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March 10: Amazon Severs Ties Illinois Affiliates

Amazon ( AMZN) has long been battling states attempting to collect taxes from online retailers.

On March 10, another front in Amazon's war was opened when Illinois' governor signed an e-fairness law that requires online retailers that work with affiliates in the state to collect sales taxes on purchases made by Illinois residents and businesses.

Amazon responded by cutting ties to its Illinois-based affiliates, which are blogs and other websites that refer traffic to Amazon's website and get paid commissions if customers make purchases there.

Amazon has previously battled other state governments and ended affiliate programs in Hawaii, North Carolina and Rhode Island. It is also fighting a court battle in New York.

Last fall, Texas sent Amazon a bill for $269 million, after determining that the retailer's warehouse, owned by a subsidiary, qualified as a local address under state tax rules. Amazon argued that since it does not have stores and offices in the state, it does not have to collect sales tax. The dispute is set to be decided in court.

Amazon retaliated by announcing in February that it will close the Texas warehouse and cancel plans to build another.

The e-commerce giant collects sales tax in only five states -- Kansas, Kentucky, New York, North Dakota and Washington -- where it has offices or another physical presence.

In response to breaking ties with some affiliates, several retailers including Wal-Mart ( WMT), Sears ( SHLD), Lowe's ( LOW) and Barnes & Noble ( BKS), have issued letters welcoming Amazon affiliates to their Web sites.

March 9: American Eagle Outfitters CEO Announces Retirement

American Eagle Outfitters ( AEO)announced on this day that it is on the hunt for a new leader, after CEO James O'Donnell announced his retirement in March.

The news came after several days of speculation that O'Donnell, 70, was planning to vacate his post. He will continue at the teen retailer until a replacement is named.

O'Donnell joined American Eagle as chief operating officer in 2000, was then appointed Co-CEO in 2002 and was named CEO in 2003.

But in recent years American Eagle has struggled to compete against rivals Abercrombie & Fitch ( ANF) and Aeropostale ( ARO). The company became even more strained when Abercrombie began lowering price points amid the recession.

Wall Street Strategies analyst Brian Sozzi had been theorizing O'Donnell's resignation since the beginning of the year.

"O'Donnell was on the hot seat coming into 2011 as a result of poor relative performance in 2010," he wrote in a note. "While other teen apparel chains returned to some form of health last year, reflecting the recharged U.S. consumer and more interesting products and promotions, American Eagle generally had inconsistent performance."

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March 7: M&A Activity Heats Up

Retail M&A activity heated up at the end of 2010 and that momentum continued into 2011.

By early March, the sector had seen one deal completed and private-equity bids for several retailers. On March 7, TPG Capitaland Leonard Green finalized its purchase of J.Crew for nearly $3 billion, or $43.50 a share. The consortium made the offer in November, and the board approved the offer despite a flood of shareholder lawsuits and opposition by proxy advisory firm Institutional Shareholders Services.

Investors argued the share price was too low and alleged that CEO Millard Drexler breached his fiduciary duties to shareholders. Drexler held discussions with private equity firms for nearly two months without informing the board of directors. This raised questions about corporate governance.

The company settled these suits by agreeing to extend its "go shop" period that allowed it to entertain additional offers from potential buyers.

The first quarter of 2011 also brought about a private-equity offers for two major discounters.

Family Dollar Stores ( FDO) received a bid in February of $55 to $60 a share, or $7 billion, from Nelson Peltz's Trian Fund. But the dollar store later rejected the offer saying it undervalued the company.

More recently, 99 Cents Only Stores ( NDN) got a buyout offer from Leonard Green and the Schiffer-Gold family for $19.09 a share, or $1.34 billion. The company is currently evaluating the deal.

These potential deals ignited speculation over other possible takeover candidates.

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March 6: Cotton Causes Crisis

Cotton hit a record high on this date in March, reigniting sourcing cost concerns for retailers.

Overall, the consensus from retailers during their fourth-quarter conference calls was that they were going to make some price increases. The big question mark was how consumers would react to higher prices.

Initially, retailers anticipated prices would be up about 5% this spring, but revised estimates showed an increase of as much as 10% to 12% in the spring and 20% in the second-half of the year.

That would make for the first price increase for U.S. consumers in over a decade, after nearly 17 years of deflation.

Aside from raising prices, some retailers were tinkering with fabrics, removing some of the bells and whistles from apparel and looking outside of China for manufacturing. But both of those options, of course, could risk compromising the quality of the merchandise.

And it wasn't just apparel retailers who were being affected. Higher prices for diamonds, gold and silver were also forcing jewelers to make adjustments to their businesses.

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Feb. 24: Sears Hires New CEO

After a grueling three-year search, Sears ( SHLD) finally hired a new CEO in February -- a former tech executive with no retail experience.

The department store, with billionaire investor Eddie Lampert at the helm, named Lou D'Ambrosio as chief executive. He succeeded Bruce Johnson, who served as interim CEO since 2008.

D'Ambrosio, who was formerly head of Avaya, a telecommunications company, had an impressive resume. While his prior gigs included a 16-year stint at IBM ( IBM), his resume was void of any retail experience, raising questions about his ability to improve the struggling Sears.

In preparation for his new role, D'Ambrosio had spent the peior six months as a consultant to the board of directors on strategic and operational initiatives.

Analysts had agreed that Sears' biggest problem had been its merchandise mix and lackluster customer service. As a non-merchant, it was questionable if D'Ambrosio would be capable of fixing these major issues.

Wall Street speculated that Lampert's move to hire D'Ambrosio signaled the billionaire had no interest in reviving the company, but was, instead, bent on taking it private.

In a letter to shareholders, Lampert defended his choice by touting D'Ambrosio's success at taking Avaya private, "delivering attractive returns to its shareholders."

Of course, D'Ambrosio's appointment could also be viewed as a push by Lampert to move Sears into the 21st Century. Sears had been heavily investing in its online business, a difficult task after being largely known for its catalog.

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Feb. 16: Borders Goes Bankrupt

Borders ( BGP) filed for bankruptcy on this day, shaking up the entire book industry.

The book-selling giant won court approval for $505 million debtor-in-possession financing. The company said it would use these funds to pay vendors, publishers and other suppliers and run its day-to-day operations. It said it would continue to operate stores, pay employees and redeem gift and loyalty cards while in bankruptcy.

While battling it out in bankruptcy court Borders said it will shutter 200 stores -- reducing its footprint by a third. Reports also surfaced in March that the company would actually have to close an additional 75 locations on top of the 200 already announced.

In an interview with the Wall Street Journal, CEO Mike Edwards said the company hopes to emerge from bankruptcy by August or September. Borders, he said, expects to submit a business plan to publishers and creditors in April.

After publishers halted shipments to Borders when the company delayed payments, Edwards told the paper it is now receiving a steady flow of new titles.

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Feb. 2: Gap Reshuffles Business

Gap ( GPS) announced major changes to its business in February, including appointing a new president of its namesake brand.

Art Peck assumed the reigns of Gap brand's North American division, replacing Marka Hansen, the 24-year retail veteran. Peck, who joined Gap in 2005 from Boston Consulting Group, was the fourth person to fill the role of president in the past nine years.

Wall Street voiced concerns at Peck's lack of experience as a retailer, while Gap's choice to go internal for a new president also raised a red flag. Investors worried the company would continue to move in the same (mediocre) direction.

Aside from the shift in president, Gap announced nearly two dozen position changes, including the promotion of Pam Wallack to head of a new Global Creative Center. The new creative center will be based in New York, not at its headquarters in San Francisco.

Gap stores will also have a new ad agency, Ogilvy & Mather Worldwide. In October, the company received a backlash from shoppers when it quietly rolled out a new logo, designed by its previous ad agency Laird & Partners and supported by Hansen. Within days Gap abandoned the new logo, returning to its classic navy background and white lettering.

As part of the restructure, Gap planned to merge its operation of its Banana Republic and Gap chains with its outlet division.

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--Written by Jeanine Poggi in New York.

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