The 4 best retailers of 2013

While the opening two weeks of December have put a bit of a dampener on the stock market’s return for the year, with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) falling around 6% so far this month, the index is still up over 9% for 2013.

This year has been tough on businesses in many sectors with the retail sector no exception. Rising unemployment, below-trend economic growth, online competition and stubbornly high and rising costs have created a ‘perfect storm’ for retailers in recent years, but despite all these headwinds some companies have seen their share prices rocket during calendar year 2013.

Kathmandu (ASX: KMD) reported sales growth of 10.6% and profit growth of 17.8% for the year ending July 2013. The outdoor adventure retailer also managed to boost its dividend by 20% and issued positive guidance for 2014. In response the share price has increased a massive 91% over the year.

During the year JB Hi-Fi (ASX: JBH) managed to reverse a decline in earnings which occurred during the 2011 and 2012 financial years. In 2013 it posted an 11.2% increase in net profit after tax. The results restored the market’s confidence in the stock and in turn the shares have gained 88% during the year.

Nick Scali (ASX: NCK) is a stock that certainly flies under the radar of many investors. However those investors who managed to accurately assess the company’s potential and buy in when the share price was trading around $1.50 have enjoyed an 81% gain during 2013. The share price rise has been helped along by a 35.6% increase in underlying net profit and the positive outlook for the company thanks to its leverage to the improving housing sector.

Identifying exactly why Harvey Norman’s (ASX: HVN) share price is up 55% this year is perhaps not as obvious as the reasons for the other four. Both sales and profits declined for the group, however the outlook provided by management during the full-year results presentation was positive, with sales in July showing improvement year-on-year.

Foolish takeaway

While there is no guarantee that the underperformers from 2013 will be the outperformers in 2014, a look back shows that in 2012 Harvey Norman, Nick Scali and JB Hi-Fi all underperformed the market by over 10%. Kathmandu however has outperformed in both years.

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


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