Pacific Sunwear Announces Second Quarter Earnings Results

josh hunter

• August 21 2008
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Aug 21, 2008-Pacific Sunwear of California, Inc. (Nasdaq:PSUN) today announced that total sales for the second quarter (13 weeks) of fiscal 2008 ended August 2, 2008, were $312.7 million, a slight increase over total sales of $311.8 million for the second quarter (13 weeks) of fiscal 2007 ended August 4, 2007. Total Company same-store sales decreased one percent during the second quarter of fiscal 2008.

The Company recorded income from continuing operations of $3.7 million, or $0.06 per diluted share, for the second quarter of fiscal 2008 compared to income from continuing operations of $9.3 million, or $0.13 per diluted share, for the second quarter of fiscal 2007. Second quarter results for each period exclude the income statement impact of demo and One Thousand Steps due to their being designated as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively.

“Although our earnings for the second quarter were in line with our expectations, our results continue to reflect the impact of a weakening economy on the retail sector. With the possibility of an even tougher environment ahead, we plan to maintain strong operating discipline while weathering these economic headwinds in order to position our business for success when the environment improves,” commented Sally Frame Kasaks, Chief Executive Officer.

Total sales for the first half (26 weeks) ended August 2, 2008 were $579.6 million, a slight decrease from total sales of $579.9 million during the first half (26 weeks) ended August 4, 2007. Same-store sales decreased one percent during the same period. For the first half of fiscal 2008, the Company recorded a loss from continuing operations of $8.3 million, or $(0.12) per diluted share, compared to income from continuing operations of $8.9 million, or $0.13 per diluted share, in the first half of fiscal 2007. The first half earnings result includes the asset impairment charge of $0.07 per diluted share incurred in the first quarter related to the materials handling equipment in the Company’s closed Anaheim distribution center.

Financial Outlook

Given the increasingly difficult economic environment and challenging retail conditions in some of the Company’s key markets, the Company is revising its outlook for the third and fourth quarters of fiscal 2008. Assuming same-store sales in the negative high-single digit range and year-over-year selling, general and administrative expense growth of not more than five percent, the Company anticipates earnings from continuing operations of $0.00 to $0.05 per diluted share for the third quarter of fiscal 2008 and non-GAAP earnings from continuing operations of $0.11 to $0.16 per diluted share for the fourth quarter of fiscal 2008. The earnings range for the fourth quarter excludes the anticipated gain of approximately $0.23 per diluted share from the sale of the Company’s closed Anaheim distribution center, which is currently expected to close during the fourth quarter. On a GAAP basis, after giving effect to the anticipated gain associated with the sale of the Anaheim distribution center, the Company anticipates earnings from continuing operations for the fourth quarter of fiscal 2008 in the range of $0.34 to $0.39 cents per diluted share.