MOSS ADAMS CAPITAL: Apparel and foowear market monitor highlights notable deals, stock prices and results.
Details on Industry Insight.
This news came out this afternoon. Funny, I was just checking out the demo store at Brea Mall yesterday that the company turned into an all-women's location and made it look like a boutique. It didn't have a hip hop feel at all.
Here's the release:
ANAHEIM, Calif., Oct. 24, 2007 (PRIME NEWSWIRE) -- Pacific Sunwear of California, Inc. (NasdaqGS:PSUN - News) (the ``Company') today announced that it will explore strategic alternatives for the Company's demo stores and close its One Thousand Steps stores. The determination to take these actions resulted from a comprehensive review and evaluation of the real estate portfolio and profit performance of the Company's demo and One Thousand Steps stores. The Company plans to engage an investment banker to assist in identifying and evaluating strategic alternatives for the demo stores, and to close the One Thousand Steps stores as soon as is practical.
``We believe the best way to enhance shareholder value at this time is to focus management's attention and capital on the core PacSun business. Over the past two years, our demo team has made many efforts to improve this business. However, as is evidenced by our demo division comp store sales, the urban streetwear business has been very challenging. At this time, the Board has chosen to explore strategic alternatives for this division,' stated Sally Frame Kasaks, Chief Executive Officer of Pacific Sunwear.
``Regarding One Thousand Steps, we learned a great deal from our nine-store test, and have concluded that our shareholders are unlikely to benefit from the continued operation of this division,' Kasaks concluded.
The demo and One Thousand Steps stores collectively have generated a total pre-tax operating loss of approximately $21 million during the first three quarters of fiscal 2007 (excluding previously announced lease termination and asset impairment charges). As a result of the actions announced today, the Company estimates that it will recognize non-cash fixed asset impairment charges on demo stores of approximately $48 million and inventory reserve charges for demo and One Thousand Steps aggregating approximately $4 million in its third quarter ending November 3, 2007. The Company may incur additional charges, both cash and non-cash, in the future related to potential lease terminations and related costs, inventory liquidation costs, employee retention and severance obligations, and/or agency fees associated with the evaluation or implementation of potential strategic alternatives. The actual amounts and timing of such charges, if any, will not be known until various strategic alternatives are evaluated and a definitive course of action is determined.
About Pacific Sunwear of California, Inc.
Pacific Sunwear, operating under three distinct retail concepts, is a leading specialty retailer of everyday casual apparel, accessories and footwear designed to meet the needs of active teens and young adults. As of October 24, 2007, the Company operated 837 PacSun stores, 119 PacSun Outlet stores, 154 demo stores and 9 One Thousand Steps stores for a total of 1,119 stores in 50 states and Puerto Rico. PacSun's website address is http://www.pacsun.com, merchandise carried at demo stores can be found at http://www.demostores.com and information about One Thousand Steps can be found at http://www.onethousandsteps.com.