NEW YORK (TheStreet) -- The retail industry has been one of the best-performing groups in 2014. And there are plenty of reasons why that shouldn't have been the case. Not the least of which has had to do with investors entering the year with some economic indicators still pointing to weakness in U.S. economy.
But with year-to-date gains of 16% in multiline retail and 20% in specialty retail, investors demonstrated they were not as price sensitive in their stock selections as they were when shopping for their goods. Both groups, which are a part of the consumer discretionary sector (up 11%), have outperformed the 8% gain in the S&P 500 (SPY) and the 4% gain in the Dow Jones Industrial Average (DJI) .
Investors want to know if this performance can continue. The answer to that is yes. But before we discuss why, let's take a look at some of the storylines in retail that made 2014 one to remember.
Among the most compelling stories in 2014 was the drama that unfolded within the dollar discount store sector.
Charlotte, N.C.-based Family Dollar Stores (FDO) was the subject of a tug-of-war between Goodlettsville, Tenn.-based Dollar General (DG) and Chesapeake Va.-based Dollar Tree (DLTR) .
In July, Dollar Tree agreed to buy Family Dollar for $74.50 per share, assigning an enterprise value (cash, stock and debt) to Family Dollar of around $9.2 billion. Dollar General immediately responded with its own bid for Family Dollar, upping the offer to $80 per share bid in August, valuing Family Dollar at $9.7 billion.
Preferring to be acquired by Dollar Tree, Family Dollar rejected Dollar General's offer on Sept. 5. In order to gain antitrust approval, Family Dollar -- despite receiving a lower offer from Dollar Tree -- revised its deal with Dollar Tree, agreeing to divest as many stores as necessary so the deal will be cleared.
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