PacSun Slows Expansion, Concentrates on Sales

ANAHEIM, CA-Pacific Sunwear will focus on productivity over growth for the foreseeable future, with expansion giving way to refreshing existing units, executives said at the company’s fourth quarter conference call. Its demo division will close down in the first quarter, while the company continues to renovate 70 to 75 PacSun stores annually. The chain plans to open 18 to 20 new stores, renovate and expand 15 to 20 more units, and refresh about 60 to 70 units this year.

“Our goal is to grow earnings through our existing portfolio for the next few years,” said Sally Frame Kasaks, CEO. “We believe the opportunity to grow to $500 per sf (in sales) over time is a reasonable objective.”

Approximately 30 to 40 units will close this year, largely through lease expirations. The company closed 110 stores in 2007, including 76 demo and nine One Thousand Steps units.

For the quarter, total sales from continuing operations were $420.1 million, down 7.8% from the previous year. Total company same-store sales decreased 2.2% during the fourth quarter of fiscal 2007. Net income from continuing operations was $7.6 million, compared to $11.5 million the previous year.

Total sales for fiscal 2007, a 52-week year, were $1.45 billion, an increase of 0.8% over fiscal 2006, a 53-week year. Total company same-store sales increased 0.7%. For the year, the company posted a net loss from continuing operations of $18.6 million, compared to net income from continuing operations of $43.9 million in 2006. As of March 1, the company operated 824 PacSun stores and 120 PacSun Outlet stores in 50 states and Puerto Rico, and is liquidating 153 demo stores.