PacSun Q4 Sales Off 8.5%

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• March 12 2009
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Pacific Sunwear of California Inc (PSUN.O) released fourth quarter sales data today in which it posted an 8.5% decrease in revenue which it attributed to decreased consumer spending and falling sales. PacSun also forecast a larger-than-expected first quarter ‘09 loss, under the assumption same store sales will fall in the low-twenty percent range.

For the fourth quarter,  losses from continuing operations were $27.6 million, or 42 cents a share, compared to earnings of $19.6 million, or 28 cents a share for the same period last year.

Revenue for the period drpped 8.5% t to $351.7 million. The company already cut its 2009 capex budget  more than $50 million and eliminated jobs while inventories fell roughly 37 percent to $107.2 million.

According to the release:

2008 Accomplishments

During fiscal 2008, the company accomplished several strategic and business objectives, including the following:

*   Closed the company’s underperforming demo business, thereby
allowing the company to focus solely on its core PacSun concept
*   Exited the company’s underperforming and lowest margin sneaker
category to focus its merchandising efforts on its higher margin,
faster turning apparel business
*   Consolidated to a single distribution center to lower costs,
enhance efficiency and improve time to market within the
company’s supply chain
*   Implemented a series of actions to better position the company in
the current economic environment, including significantly
reducing inventory levels and planned capital expenditures and
SG&A expenses for fiscal 2009;
*   Exceeded the company’s goal for fiscal 2008 of apparel
representing at least 80% of its merchandise mix, with its
Juniors’ business accounting for 50% of its apparel assortment
*   Established a $150 million, asset-backed credit facility with JP
Morgan and Bank of America as its primary lenders
*   Ended fiscal 2008 with nearly $25 million in cash on the balance
sheet and no direct borrowings under the company’s credit
facility.

Full Year Results

Total sales for fiscal 2008 ended Jan. 31, 2009 were $1.25 billion, a decrease of 3.9% from total sales of $1.31 billion during fiscal 2007 ended Feb. 2, 2008. Total company same-store sales decreased 5 percent during fiscal 2008.

For fiscal 2008, the company recorded a loss from continuing operations of $39.4 million, or 59 cents per diluted share, compared to income from continuing operations of $45.6 million, or 65 cents per diluted share, in fiscal 2007. Results for fiscal 2008 include the previously announced non-cash, pre-tax asset impairment charge of $8.0 million, or 7 cents per diluted share, incurred in the first quarter related to the materials handling equipment in the company’s closed Anaheim distribution center, the non-cash, pre-tax goodwill impairment charge of $6.5 million, or 6 cents per diluted share, incurred in the third quarter, the pre-tax gain on the sale of the company’s closed Anaheim distribution center of $8.7 million, or 9 cents per diluted share, and a pre-tax, non-cash impairment charge of $4.6 million, or 5 cents per diluted share, associated with a reduction in the fair value of certain land that was held by the company for sale during the fourth quarter.