2006 Retrospective: Specialty Chains: Pacific Sunwear, Chico's
Pacific Sunwear is on the rebound, according to many Wall Street analysts. Yet the rebound follows an uncharacteristically tough year for the surf-and-skate retailer.
In 2006, the Anaheim, Calif.–based company suffered through more than nine months of declining same-store sales. The slide followed the April 2005 retirement of Greg Weaver, the highly popular former chief executive who guided Pacific Sunwear to become one of the dominant mall-based specialty-store retailers in the United States. Pacific Sunwear currently operates more than 1,100 stores, including 842 Pacific Sunwear boutiques, as well as the urban-flavored d.e.m.o. chain and footwear concept One Thousand Steps, which debuted in April 2005.
Weaver’s successor, Seth Johnson, was held responsible for a number of merchandising mistakes, such as packing the stores’ inventories with warm Fall fashions this year when much of America was broiling under unseasonably hot weather.
Johnson resigned in October, and interim Chief Executive Sally Frame Kasaks set into motion several initiatives that she said would reverse the retailer’s sales slide. The new initiatives included keeping leaner inventories, slowing store expansion and renovating existing stores.
The past year also dealt some hard times to another specialty retailer with a stellar track record, Chico’s, based in Fort Myers, Fla.
The retailer for women aged 25 to 40 stumbled in its third quarter as it reported same-store declines in the low single digits. In its Securities and Exchange Commission documents filed on Nov. 28, the company dismissed the sudden slide as an anomaly. “The 13-week period decrease of 1.2 percent follows nine consecutive years of positive same-store sales growth. Eight of which were double-digit,” said the company’s Nov. 28 10-Q document.
Indeed, Chico’s grew from 250 stores in 2001 to 871 stores as of Oct. 26, 2006. Chief Executive Scott A. Edmonds blamed the bad third quarter on a series of mistakes, such as errors in fashion merchandising.
It may take time before this large retailer turns itself around. A promised revamp of merchandise may not hit stores until fall 2007. —Andrew Asch
