(FORTUNE Magazine) – What we said

Last spring we looked past bad weather, terrorism threats, and economic malaise and went shopping for undervalued retail stocks. In "Is Retail Back In Fashion?" (April 14, 2003--see fortune.com) we scoured the FORTUNE 500 list looking for retail stocks with a fashionable future. We found three companies with growth potential and a good track record--each had better ten-year annual average returns than almighty Wal-Mart.

What happened

After 11 months the results are something of a mixed bag. Two of our picks have thrived, while our third looks a bit worse for wear. Kohl's (KSS, $50), which we thought was about to bounce back after a short dip, turned out to be in the middle of a prolonged slide, falling nearly 12% in the face of anemic same-store sales and inventory challenges. TJX (TJX, $24), parent of brand-names-for-less chains like Marshalls and T.J. Maxx, has turned out to be a solid purchase. The off-price merchandiser has used higher-than-expected margins and solid sales to help drive its stock's total return up 35%, just off the S&P 500's 35.5% return over the same period. Meanwhile Target (TGT, $42), which FORTUNE noted last year was being unfairly punished for other retailers' credit card woes, is separating itself from the pack. The company is up 44% and trading near a 52-week high. --Julie Schlosser