PacSun to Cut Up to 200 Stores in Next 14 Months
In a dramatic conference call, long-suffering Pacific Sunwear of California Inc. announced Dec. 7 it would close 175 to 200 of its underperforming stores in the next 14 months. The mall-based surf, skate and fashion retailer’s store count will decline from its current 819 stores to a little more than 600 locations across the continental United States and Puerto Rico by the end of 2012.
With the store fleet declining, the finances of the Anaheim, Calif.–based retailer received a vote of confidence on Dec. 7. PacSun President and Chief Executive Gary Schoenfeld announced a five-year, $100 million revolving credit facility with Wells Fargo Capital Finance and a five-year, $60 million senior secured term loan funded by private-equity firm Golden Gate Capital.
“The combination of these transactions greatly enhances our financial and operating position and is another critical step forward as we work to re-establish PacSun as a leading specialty retailer across the U.S.,” Schoenfeld said.
Also on Dec. 7, PacSun released sales results for its third fiscal quarter of 2011. Same-store sales declined 3 percent during the third quarter. Net sales were $242 million, compared with $257.9 million in the same quarter in the previous year.
The beleaguered retailer has not reported positive same-store sales since June 2008, when it reported a monthly increase of 3 percent compared with the same month in the previous year. Its last profitable quarter was the third fiscal quarter of 2007, when sales increased 5 percent.
Recent history has proven a tough slog for PacSun, which once dominated malls with its 1,000 store locations. In January 2008, it closed d.e.m.o. division of shops focused on urban fashions. In the period between 2007 and 2009, two chief executives resigned, and Schoenfeld joined PacSun in June 2009 with the promise to bring success back to the retail giant.
The stores scheduled to be shuttered mostly are in low-performing malls, Schoenfeld said. Most of these stores averaged same-store declines of 9 percent, while PacSun stores that will remain in business averaged same-store-sales declines of 1 percent.
With a more focused base of stores, Schoenfeld said, he would be better able to execute company reforms, which include a more localized buying program.
During the comments section of the call, Schoenfeld noted Black Friday was a success for PacSun. “We were more promotional on Black Friday,” he said. “[Female customers] responded well to product. We were quite pleased with the response.”—Andrew Asch
