For a sector that almost always seems to be grabbing headlines for the wrong reasons, it’s interesting to note that the consumer discretionary sector has been the best performing sector this calendar year with many of the most widely owned discretionary retailers significantly outperforming the S&P/ASX 200 Index’s (Index: ^AXJO) (ASX: XJO) 10% return.

JB Hi-Fi (ASX: JBH) has been the standout performer, rallying 80% this calendar year. The company has impressed investors with its improved sales and earnings performance, however, it is important to keep that growth in context as the company was cycling depressed results from the previous year. In fact, if investors look back a few years they will see that JB Hi-Fi sells more but earns less than it did in 2010 and 2011.

Harvey Norman (ASX: HVN) has also rallied hard after falling out of favour with investors who began questioning the company’s strategy and product mix. The stock is up nearly 50% so far this year. Meanwhile, department stores Myer (ASX: MYR) and David Jones (ASX: DJS) are still struggling to grow their sales line but their share prices have managed to increase by 20% and 17% respectively.

Foolish takeaway

The worry for investors in the sector is that the share prices of many retailers may have run ahead of underlying conditions. Bricks and mortar retailers still have many headwinds and sustained revenue growth is yet to appear – this could lead to another sell-off in the sector.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.