PacSun shows declines in Q4; problems in junior's continued

PacSun continues to struggle as the junior’s business stays on its downward trend.

 

Here’s a quick summary of Q4 and full year results. We’ll have more information from the company’s conference call this afternoon.

 

Q4

 

Sales: down 10% to $263 million

 

Same store sales: Down 7%. Men’s posted a positive comp while junior’s continued to decline.

 

Net loss: $35 million vs. a net loss of $36 million in Q4 2009.

 

Cash at quarter end: $64 million and no debt.

 

2010

 

Sales: down 10% to $930 million

 

Same store sales: down 8%

 

Net loss: $97 million vs. a $70 million loss in 2009.

 

On page 2: Full text of PacSun’s press release

 

 

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PacSun’s full press release

 

ANAHEIM, Calif., March 15, 2011 (GLOBE NEWSWIRE) — Pacific Sunwear of California, Inc. (Nasdaq:PSUN – News) (the “Company”), announced today that total sales for the fourth quarter of fiscal 2010 ended January 29, 2011 were $263 million, a decrease of 10% from total sales of $293 million for the fourth quarter of fiscal 2009 ended January 30, 2010.

 

Total Company same-store sales decreased 7% during the fourth quarter of fiscal 2010.

 

The Company reported a net loss of $35 million, or $(0.53) per share, for the fourth quarter of fiscal 2010 compared to a net loss of $36 million, or $(0.56) per share, for the fourth quarter of fiscal 2009.

 

Results for the fourth quarter of fiscal 2010 reflect the continuing impact of a valuation allowance against the Company’s deferred tax assets. On a comparable non-GAAP basis, using a normalized 38% income tax rate, the Company’s non-GAAP net loss for the quarter was $22 million, or $(0.33) per share.

 

“Our fourth quarter results ended up in line with the lower guidance that we indicated in early January. Our Men’s business achieved a positive comp for the quarter and year, yet our Women’s business continued its downward trend of the past two years,” said Gary H. Schoenfeld, President and Chief Executive Officer.

 

“While we believe we have made progress in several critical areas, we clearly have much still to accomplish to turn this business around. Among our highest priorities include reestablishing our Spring/Summer Women’s business, mitigating product cost pressures and attracting new customers to PacSun.”

 

Full Year Results

Total sales for fiscal 2010 ended January 29, 2011 were $930 million, a decrease of 10% from total sales of $1.03 billion during fiscal 2009 ended January 30, 2010. Total Company same-store sales decreased 8% during fiscal 2010.

 

The Company reported a net loss of $97 million, or $(1.46) per share, for fiscal 2010 compared to a net loss of $70 million, or $(1.07) per share, in fiscal 2009. Results for fiscal 2010 reflect the continuing impact of a valuation allowance against the Company’s deferred tax assets. On a comparable non-GAAP basis, using a normalized 37% income tax rate, the Company’s non-GAAP net loss for the year was $60 million, or $(0.91) per share.

 

Financial Outlook for First Fiscal Quarter of 2011

The Company’s guidance range for the first quarter of fiscal 2011 contemplates a GAAP net loss per share of $(0.46) to $(0.55) which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and thus a very low effective tax rate.

 

On a non-GAAP basis, using a normalized effective income tax rate of 36% to 37%, the Company’s guidance range translates to a net loss of $(0.29) to $(0.35) per share for the first quarter of fiscal 2011. The forecasted first quarter GAAP earnings range is based on the following major assumptions:

• Change in same-store sales of -3% to +2%;
• Gross margin rate, including buying, distribution and occupancy, of 18% to 20% versus last year’s 22%;
• SG&A expenses in the range of $67 million to $69 million versus last year’s $73 million; and
• Minimal income tax expense for the quarter as the Company no longer records income tax benefits against its operating losses.

About Pacific Sunwear of California, Inc.

Pacific Sunwear, Inc. and its subsidiaries (collectively, the “Company”) is a leading specialty retailer rooted in the action sports, fashion and music influences of the California lifestyle.

 

The Company sells a combination of branded and proprietary casual apparel, accessories and footwear designed to appeal to teens and young adults. As of March 15, 2011, the Company operates 839 stores in 50 states and Puerto Rico. PacSun’s website address is www.pacsun.com.