California Apparel News

Pacific Sunwear of California forecast a loss for its second quarter in 2012, but during a conference call with Wall Street analysts on March 13, the mall-based surf and skate retailer promised to become leaner and more fashionable in the upcoming year.

During the call, the retailer also reported its fourth-quarter earnings and its full-year sales results for its 2011 fiscal year.

The Anaheim, Calif.–based PacSun forecast a second-quarter loss of between 26 cents and 34 cents per share. Same-store sales were forecast to range from a 4 percent decrease to a 1 percent increase in the second quarter.

For its fourth quarter, PacSun reported net sales of $234.2 million, compared with $237.6 million the previous year. Same-store sales were even compared with the same quarter in the previous year.

For its full 2011 year, net sales were $833.8 million, compared with 837.1 million in the previous year. Same-store sales declined 1 percent.

Some of PacSun’s losses stem from the costs of shuttering low-performing shops in the company’s massive store fleet. In 2011, the company closed 119 stores. In 2012, it will close 110 stores, said Gary Schoenfeld, president and chief executive of PacSun. By 2013, it will run 550 to 600 stores.

“Exiting these underperforming stores has to help us directionally,” Schoenfeld said of his efforts to turn around the beleaguered retailer, which has rarely reported positive same-store sales in more than four years.

For the upcoming year, Schoenfeld promised to strengthen the position of PacSun’s e-commerce presence and develop its point of difference in the competitive marketplace for teens. Department stores dominate sales for its heritage brands, such as Quiksilver, Schoenfeld said. The company will put a stress on offering emerging labels, such as Tavik, while continuing to tend to its private-label business and its heritage brands. “We think this brand assortment will give us a point of difference if we execute it right,” he said.

Adrienne Tennant of Janney Capital Markets, in a research noted dated 
March 14, called the retailer’s guidance disappointing. “The visibility on when the business will begin to improve is very low,” Tennant wrote. “We believe the company is taking the right steps to improve the business by closing underperforming stores, striving to return to a healthy cash position and striving to return to sustainable positive comp performance; however, lack of product improvement and difficulty resonating with the customer clearly are challenges facing PSUN.”—Andrew Asch