PacSun Announces Layoffs
josh hunter
- January 28 2009
- 41 comments
Pacific Sunwear of California announced its cost reduction plans for fiscal 2009. Among the actions being taken, the company says it plans to reduce planned inventory levels by 20-percent and eliminate more than 50 positions.
Here’s the press release:
Pacific Sunwear Announces Cost Reduction Actions for Fiscal 2009
ANAHEIM, Calif., Jan. 28, 2009 (GLOBE NEWSWIRE) — Pacific Sunwear of California, Inc. (Nasdaq:PSUN) today announced a number of cost reduction actions aimed at strengthening the Company’s operational and financial position in fiscal 2009. In anticipation of a continuing difficult economic environment in the coming year, the Company has:
* Reduced planned inventory levels by at least 20 percent throughout
the year, thereby significantly reducing the amount of cash that
will be invested in inventory at any one point in time;
* Reduced planned capital expenditures to not more than $30 million
for the year, a reduction of over $50 million from the fiscal 2008
level; and
* Reduced planned selling, general and administrative expenses on a
GAAP-basis by approximately $35 million versus the fiscal 2008 level
(2008 includes total non-recurring impairment charges for goodwill
and the Anaheim distribution center of approximately $15 million).
These reductions are most prominently within headquarters and field
management expenses.
Taking these factors into account, the Company currently expects to maintain sufficient borrowing availability for the foreseeable future under its $150 million revolving credit facility. The credit facility expires in 2013 and contains no financial covenants unless the Company is drawn to the last 10 percent of the credit facility. The Company also currently expects to begin fiscal 2009 with cash balances of at least $20 million and no borrowing-based debt.
As part of the reduction in selling, general and administrative expenses, the Company announced a workforce reduction resulting in the elimination of 47 positions at the Company’s Anaheim headquarters and 10 field management positions. This action reduces the Company’s headquarters and field management staff by approximately 11 percent.
The Company expects to incur pre-tax severance charges of approximately $1.5 million during the fourth quarter of fiscal 2008 ending January 31, 2009 in connection with the workforce reduction. The Company estimates this action will result in pre-tax savings of approximately $5 million per year beginning in fiscal 2009, which begins February 1, 2009.
“The actions announced today are aimed at putting our Company in a stronger position to weather the continuing challenges in the macroeconomic environment while enabling us to continue moving forward with the key strategic initiatives we have underway,” said Sally Frame Kasaks, Chairman and Chief Executive Officer. “We are very disappointed to announce the workforce reductions, but believe we must be prudent in managing our costs and strengthening our balance sheet and liquidity as we meet head-on the unprecedented conditions that the retail industry is currently facing.”
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January 28th, 2009 at 12:14 pm
Coming soon : Zumiez announces Layoffs!
January 28th, 2009 at 12:49 pm
PacSun layoffs? That’s no suprise. We knew that was coming…
January 28th, 2009 at 1:57 pm
Unfortunate that peolpe are getting laid off by management that needs to be blown out..
January 28th, 2009 at 2:02 pm
Don’t think they’ll be doing any layoffs. From all the info that has been released, they have 0 debt and plenty of cash on hand. They should pull thorugh just fine considering they are opening more stores in 2009.
January 28th, 2009 at 4:25 pm
I went into Pac Sun for the first time in years. Jeezus christ these guys just don’t get it. How about starting with hiring buyers that actually participate in surf, skate, or snow? Right now they stock their stores with absolute crap. It’s all reject wardrobe from The Hills. All the Corpo Companies were stoked to get rid of the stuff that nobody else wanted. Just because it’s brigh, tight, and gay doesn’t mean it sells. There’s not 1 goddamm product in there that an self respectin shredder would steal, let alone actually pay for it. I’m surprised I didn’t see any TapouT, Affliction, or Ed Hardy in there. Fawk.
January 28th, 2009 at 4:56 pm
Why is Pac Sun an industry leader being run by grandma? These layoffs are no suprise. I believe that Zumiez will be next, those books are cooked! They had a problem with the books when they went public, and I bet they are still cooked now.
January 28th, 2009 at 5:53 pm
THEY DID DO LAYOFFS TODAY! They laid off the entire Juniors design team this morning!
January 28th, 2009 at 10:09 pm
I hope that CEO Grandma lady Sally stops baking holiday cookies in the kitchen and wakes up to what’s going on! Hopefully her grandkids can give her some pointers.
Seriously, all they need to focus on is “new & different” product. The old way is NOT working. Stop doing blanket, all store buys of soft pastel Quiksilver/Billabong/Volcom/O’neill type beachy junk and buy according to defined regions. Just because a soft yellow Quik tee sells to the gay community in So-Cal does not mean that it’s a legit choice for all stores across the country…. ah forget it… what’s the use………. Keep baking cookies, it’s not gonna make a difference.
January 28th, 2009 at 10:14 pm
PACSUN IS A JOKE, YOU DESERVE TO GET FIRED IF YOU ARE WORKING FOR THEM.
January 28th, 2009 at 10:26 pm
Great point Layoffs! Companies need to buy product for certain regions. Alot of those types of companies are out of touch with allocation and the customers buying preference in each region. These big corporations just see #s on excel program and ship. A lot of companies should look at The Buckles buying and allocation methods. They send similiar product to the product that is currently selling in the store. If the product is not selling in a certain store they ship it out to a store/area thats pushing the product.! It not like FL needs heavy ass coats in Aug! Some of these stores sit on the same product for 3 or more months
January 29th, 2009 at 4:36 am
Laid off or just fired because their Juniors section is kinda wack?
January 29th, 2009 at 4:42 am
Their stuff looks like it’s from the Hills because most of their product is private label. Those Corpo Companies didn’t get rid of it, they made it solely for Pac Sun. Ever notice they will have the same Vneck tee, henley, or polo in brands like Fox, Volcom, DC, and Element? It’s because Pac Sun pays those brands to put their logo on private label merchandise that Pac Sun thinks will sell to the Hollister/Aero demographic. You can’t go to the Volcom website and see the merch they have in their store because it doesn’t exist anywhere outside of the Pac Sun world. That’s why the stores are so bland and boring.
January 29th, 2009 at 9:51 am
Pacsuns executive and merchandising teams have their heads hopelessly up there own asses and are completley out of touch with their demographic. There are/were people on the inside that had great, innovative ideas but these were systematically squashed. Ironically, they ( Grandma, VPs & co.) are constantly squaking about how crucial it is to be “fully immersed in youth culture”. BULLS*HT!!!!
They have no trust in anyone without a calculator. At the same time the Brands, large and small, need to quit bitchin about it if they arent going to get off the tit. Pacsun is NOT an authentic surf/skate or even “socal lifestyle” shop. And they are not trying to be. They are no different than Gap,Limited Brands or Walmart. They are in it to make money for their shareholders. Period.
January 29th, 2009 at 10:15 am
giving pac sun the chance to get at anything that inst wardrobe rejects from the hills or whatever is handing a dick sandwich to core shops that do still carry dope shit. let the kooks in the mall have their kooky shit, they dont know any better.
January 29th, 2009 at 2:01 pm
Wilma, what do ya mean Pac Sun isn’t a “socal lifestyle” shop? It’s right there in the name girl… PACIFIC SUNWEAR! Duuuhh?!! It’s authenticity personified. True to the core.
“Pac Sun - It’s all about the Pacific Ocean maaan and like, bein’ out in the sun ya know, and like, totally wearing the sweetest new beach gear as we live it up playing volleyball…”
I think the Grandma CEO would be great for the Food Network (TV) though, don’t you? Heck, if this whole “actions sports” thing doesn’t work out for Pac Sun because they weren’t “authentic” enough, there’s always Grammy’s first love….. BAKING
January 29th, 2009 at 6:58 pm
Are you kidding me, with all of this? Comments like this are just proof that most people don’t know what the hell they are talking about! PAC is just like every other teen retailer, yes, you are right. BUT, unless you work for a retailer, you don’t have a clue what that world is all about. All of the so called, SO CAL teenagers are nothing but fake and talk more than they know! Go out there, get a job and contribute to society more than running your mouths! It must be easy to say words about the CEO when you know you will never hold a position like that in your life.
January 29th, 2009 at 9:36 pm
Unfortunately Pacsun lost their core customers when they started going away at what they did best! Sold what the kids were asking for.. They stopped listening to our customers and the corporate buyers thought they new better than our own customers. The entire upper management changed and had no values or ethics and are only out for themselves. It is amazing how just changing a very few people in upper management can ruin a company! TILLYS is now the place to SHOP!
January 29th, 2009 at 9:56 pm
Haha Tillys only caters to the bro’s. If you like tapout,fox, and black thats the place to shop. That place is a joke just like pac. Support your local shops
January 30th, 2009 at 7:55 am
I totally agree with some of the things being said about the company. Ive worked for them for several years now. They have changed their core style of merchandise, but style changes, and it is the close minded people that dont except change that think stuff is wack. I agree that we should carry more core brands in the store, we sell them online! We need to bring that so-cal lifestyle back to the stores, not this emo crap. Tapout, So-cal, Skin, affliction, independent, etnies! what sells in one area doesnt sell well in others, they need to come up with a better demographic of what sells well and where!
January 30th, 2009 at 9:16 am
Ever since Sally became CEO… she ran the place down! I used to work there and loved it, till she came in the picture… I never understood why they have old folks like her running it…. she’s a suit. They need younger minds to manage the place. Pac is geared towards the teens and young adults…Why would you let old folks manage. Just doesn’t make sense!!!!!!!!!
January 30th, 2009 at 9:50 am
CUZ Granny knows what’s best for you silly ! Now come eat your veggies and Granny will will give you a nice cookie with your milk !
January 30th, 2009 at 2:14 pm
They are still opening stores in 2009 and have lots of cash, around 65-75 million. PSUN is closing stores and is borrowing money. Sales suck for both but look at a balance sheet bro!
January 30th, 2009 at 3:41 pm
Pacfudge Sunwear
January 30th, 2009 at 5:29 pm
Ever since Gregg Weaver left, we’ve been going to hell. Just when it seemed we were about to bounce back from the Seth Johnson debacle, here comes Sally. I have said it was a mistake from day one. What a middle aged woman knows about action sports merchandise is beyond me. The obsession with increasing the juniors’ share has done a lot to alienate our customer. I still believe that losing shoes (which has hurt our store noticeably)was simply an easy way to drive up junior percentages. If that wasn’t enough, the vain attempts to woo customers away from Hollister, A&F and AE may end up being the final nail in the coffin. I don’t care about those people and I really don’t care if they come in my store. I always took pride in the fact that most of our customers were real. Sadly, that seems less and less the case. It should be apparent that whatever experiments they have undertaken in Anaheim are not working. The time has come to send Sally packing and bring in some new blood. There are some of us at the store level that still believe in this company. It’s time for corporate to prove to us that they do too.
February 2nd, 2009 at 8:26 pm
Wow, I am shocked at the ignorance people have; even those who work for the company. A) The company was started in Huntington Beach, SO-CAL. Clearly they originated as a core company, much more so than the Hollisters or Zumiez of the world that started in Ohio, and Washington State. B) THEY ARE A CORPORATE COMPANY - That means that they have to make a profit, so unfortunetly balance sheets and xcel spreadsheets are necessary. C) Because of how large they are they cannot buy the “core” product from Volcom, Element, etc. because those companies cannot mass produce enough for Pac to sell, so Pac Sun pays them to mass produce product specifically for them. Also, just an FYI; PAC SUN’s core market is 13-18 year olds, not 20+ somethings that want to wear tap-out! D)If you have ever been to SOCAL they all wear the same stuff they wear on the Hills, remember the Hills is REALITY t.v. show E)Finally, if Grandma Kasaks hadn’t come on board PacSun wouldn’t even have a chance in this market - Seth would have tanked it years ago!
February 2nd, 2009 at 9:15 pm
Kuddos to you my fellow co-worker!!! I totally agree, the only people that see a huge change are the people that have been there long enough to see all the drastic changes!!!
February 3rd, 2009 at 2:24 pm
zumiez is a mall shop, but let’s be honest, a comparison to hollister is a stretch. and washington state? that makes them ‘not core’? tell red from grindline he’s not core because he lives in washington state. so-cal is where much of the core industry is located, but if you had ever spent even one day skating the concrete in arlington, snowboarding at baker, or surfing la push, you would be a bit more in tune with what being core is. the hills is reality tv, washington state is reality shredding poser.
February 3rd, 2009 at 5:52 pm
You might want to get your facts straight before you post anything. Zumiez is hiring if anyone needs a job.
February 9th, 2009 at 12:50 pm
they are firing managers from every store
February 9th, 2009 at 1:04 pm
No way ! Sally promised !
February 9th, 2009 at 1:21 pm
zumiez, pac sun, hollister they are all gay…and what they are doing to the skate scene is wack…it’s like H & R Block selling ice cream…shit just doesnt work
February 9th, 2009 at 1:28 pm
Wow you’re some buisness guru…quick give us some more great insight that will stop people from losing jobs and not being able to pay the bills.
February 9th, 2009 at 6:45 pm
I have worked for Pac for several years. It is true that companies like Volcom can not mass produce enough product for the whole chain. Pac is trying to appeal to more of a broad audience than “core” shops.
February 12th, 2009 at 4:16 am
First of all you should get your facts in order….try google! Pac sun has 0 debt go on there press release on there sight and there borrowing 0 dollars of there 150 million dollar credit line. We closed a handfull of stores in January as did most retailes! So maybe you can stop all the rumors and get the facts. Lets hope we all make it out of 09 because for every single retailer it’s going to be a bumpy ride!
February 12th, 2009 at 4:37 pm
I have been there for nine years and I couldn’t agree with you more. Seth was a diaster and sally is the sunami. Sad thing is they have great people with alot of heart! I just don’t think thats enouph to get us out of this mess.
February 12th, 2009 at 4:39 pm
Sally lied!!!
February 12th, 2009 at 8:44 pm
zumiez in a sense is worse than pacsun… pacsun is lame.. we know it.. they know it.. zumiez hides behind a mask of “core” ness… why because they throw a few parties every year… zumiez brings hardgoods to the mall putting your local mom and pop shops under the ground…. pacsun doesnt try to get the “core” customer. keep it out of the mall
November 4th, 2009 at 11:29 am
PacSun has become absolute garbage since Sally took over. I was a manager for PacSun. I quit when they started firing all of their good managers and hired idiots from Abercrombie, Hollister and AE. Thank god I left when I did. I've gone into the store twice since quitting and it looks way worse than before. Their clearance racks are full of merchandise that's been in the store forever. This place is the epitome of "How not to run your business!"
November 9th, 2009 at 2:01 pm
You're absolutely right. I'm one of the ones that got laid off in April, no severance, don't let the doorknob hit you. Core values, right. And the place looks like crap, and every time I go in there they've replaced the associate manager AGAIN and look more and more like they want to kill themselves. Whose idea was it to hire districts and regionals from outside the company? In the 5 years I was there, the company became nearly unrecognizable. The Pac I started with would not have treated a long term dedicated manager the way this Pac treated us, a kick in the ass on the way out the door.
November 9th, 2009 at 2:08 pm
When I started with Pac, they used to survey us after every key season to see what we, the people in the trenches, thought of the merchandise and why it sold or didn't. Remember when they cared what the customers wanted? And we screamed about it, and nobody listened, and what happened? Those of us in management trying desperately to make it work got the boot. My only consolation is that they lost more money the quarter AFTER they kicked the seasoned loyal management out than they lost while we were all still there. Wonder if the cluephone is ringing yet?
November 9th, 2009 at 2:19 pm
It's very sad what happened at this company in the last several years, and even since I was laid off. I don't even know where to start. They stopped asking store management what the kids wanted and started trying to compete with Aberzombie and AE. And it makes me extra pissed because the stupid stupid people in upper management had to fire me to save their own bottom line, and if they'd stuck with what we WERE I bet the company wouldn't be in so much trouble. They lost more money in the quarter AFTER the layoffs than in the quarter before. And if all the management fired across the country was as loyal and experienced and invested in the business as I was, they've made a serious error in getting rid of all of us. Well, they can do whatever they want. Everyone who remembers what Pac was like when it was a decent company will be gone soon. It's a shame, I wasted six years of my life thinking I was building a career with a company I cared about.