PacSun Q1 comp turns positive

PacSun posted positive same store sales for the first quarter, the first positive same store sales results since the fourth quarter of 2007.

Here is a short summary of first quarter earnings, then the full release.

Click here to read our Executive Edition story from the earnings conference call, including details about the remarkable turnaround in junior’s, how men’s, boardshorts, swim and footwear performed, plus CEO Gary Schoenfeld’s comments about the Volcom/PPR acquisition.

Same store sales

Same store sales: up 1%

What Pacsun had forecast: down 3% to up 2%.

In September, Schoenfeld had forecast positive comps by Q4 2010, but revised that after a rough start to the holiday shopping season. In November, he said comps should be positive by Q1. The company later revised the Q1 same store sales forecast in March to down 3% to up 2%.

Net loss 

Net loss (at normalized tax rate): 30 cents per share

What PacSun had forecast: net loss of 29 cents to 35 cents per share.

Total sales 

Total sales: down 2% to $186 million

Q2 forecast

Same stores sales: down 3% to up 2%

Gross margin: 19% to 21%

Net loss (using normalized tax rate): 22 cents to 29 cents per share. That forecast is below analysts expectations and drove PacSun’s stock down in after hours trading Tuesday.

Here is the press release:

ANAHEIM, Calif., May 24, 2011 (GLOBE NEWSWIRE) — Pacific Sunwear of California, Inc. (Nasdaq:PSUN – News) (the “Company”), announced today that net sales for the first quarter of fiscal 2011 ended April 30, 2011 were $186 million, a decrease of 2% from net sales of $190 million for the first quarter of fiscal 2010 ended May 1, 2010. Total Company same-store sales increased 1% during the first quarter of fiscal 2011.

The Company reported a net loss of $31 million, or $(0.48) per share, for the first quarter of fiscal 2011 compared to a net loss of $31 million, or $(0.47) per share, for the first quarter of fiscal 2010. Results for the first quarter of fiscal 2011 reflect the continuing impact of a valuation allowance against the Company’s deferred tax assets. On a comparable non-GAAP basis, using a normalized 36.5% income tax rate, the Company’s non-GAAP net loss for the quarter was $20 million, or $(0.30) per share.

“Getting back to a positive comp is certainly an important step in the turnaround of our business,” said Gary H. Schoenfeld, President and Chief Executive Officer. “As our new team comes together, we have initiated a number of important changes in merchandising, marketing and in-store experience that customers are beginning to respond to.”

Financial Outlook for Second Fiscal Quarter of 2011

The Company’s guidance range for the second quarter of fiscal 2011 contemplates a GAAP net loss per share of $(0.36) to $(0.46) which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and a 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 $(0.22) to $(0.29) per share for the second quarter of fiscal 2011. The forecasted second quarter GAAP guidance range is based on the following major assumptions:

• Same-store sales of -3% to +2%;

• Gross margin rate, including buying, distribution and occupancy, of 19% to 21%;

• SG&A expenses in the range of $67 million to $69 million; and

• Minimal income tax expense as the Company no longer records income tax benefits against its operating losses.

About Pacific Sunwear of California, Inc.

Pacific Sunwear of California, Inc. and its subsidiaries (collectively, “PacSun” or 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 May 24, 2011, the Company operates 827 stores in all 50 states and Puerto Rico.