PacSun Releases 10-K

josh hunter

April 01 2009
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Publicly traded companies are required to provide investors with year-end results. These things generally come in the form of a 10-K statement. If you own stock in the company, they mail you a nice, little package that includes the document. If you don’t, you can read it on the company’s investor relations site. Reading one of these documents is slightly more fun that swallowing a handful of thumb tacks, but there’s a ton of information jammed in there about the respective company’s performance over the past few years. In this case, we’re talking about Pacific Sunwear Of California, Inc.

- Number of Stores (as of Jan. 1, 2009): 932

- Locations: All 50 states + Puerto Rico

- Total Square-footage: 3,587,683

Breakdown Of Stores By State/ Region (Click To Enlarge)

Merchandise Assortment As A Percentage Of Net Sales Over Past Three Years:

On Brand Performance:

“We offer a wide selection of well-known action-sport inspired name brands, such as Billabong/Element (collectively, “Billabong brands”), Quiksilver/Roxy/DC Shoes (collectively, “Quik brands”), Fox Racing, Volcom and Hurley, among others. In addition, we continually cultivate relationships to add and support up-and-coming new brands, even if they are not of sufficient size to deliver to our stores on a nationwide basis. As a percentage of total net sales during fiscal 2008, Billabong brands accounted for 11% and Quik brands accounted for 10%. The next largest brand, Fox Racing, accounted for 9% of total net sales during fiscal 2008.“

Quick Analysis:

Here’s what we know: All of Quiksilver brands combined equaled 11-percent, all of Billabong’s brands equaled 10-percent, and Fox (on it’s own) accounted for 9-percent of PacSun’s net sales during 2008.

That’s good for Fox, unless something happens to PacSun. Considering that both Volcom and Billabong announced earlier in the year that they were taking measures to “reduce their dependency” on the retailer, one could reasonably gather that in the current economic climate it’s good to have your eggs in more than one basket. Fox is privately held, so there’s no way of knowing what percentage of it’s total sales is dedicated to PacSun. However, if PacSun’s net sales for 2008 were $1,255,000,000 and Fox accounted for 9-percent of that, (if my math is right) then PacSun sold roughly $112,950,000 in Fox product. That’s a big number.

On Private Label:

We supplement our name brand offerings with our proprietary brands, including Bullhead, Kirra, Kirra Girl, Vurt and Nollie. Proprietary brands provide us with an opportunity to broaden our customer base by offering merchandise of comparable quality to brand name merchandise, capitalize on emerging fashion trends when branded merchandise is not available in sufficient quantities, and exercise a greater degree of control over the flow of our merchandise. Our own product design group, in collaboration with our buying staff, designs our proprietary brand merchandise. Our sourcing organization oversees the manufacture and delivery of our proprietary brand merchandise, with manufacturing sourced both domestically and internationally. Our proprietary brand merchandise sales accounted for approximately 38%, 30%, and 30% of total net sales in fiscal 2008, 2007, and 2006, respectively.

Quick Analysis:

PacSun is increasing it’s private label. A quick walk through one of their stores, and this is pretty evident. I’m honestly surprised to see it only increased as a percentage of total net sales by 8-percent. Thirty eight percent of net sales ends up being something like $476,900,000. That’s a ton of Bullhead Denim!

Financial Performance: