AGENDA: GroupY's Emerge brand-building conference returns on Jan. 6.
SURFRIDER: "Protect What You Love" holiday appeal.
MOSS ADAMS: Plan now for tax season.
Details on Industry Insight.
Previously, if a young brand had good sell-through on a test, the 900-plus chain would quickly move to add the brand to all doors. This sometimes put a big strain on young companies and their relationship with PacSun.
Now, the goal is to develop brands more slowly and carry them on a regional level. This may improve relationships and provide customers with fresh, up and coming brands that can mix in with existing national brands, CEO Sally Frame Kasaks said.
Other interesting information from the call:
Juniors: The juniors business in 2007 grew $76 million or 20 percent on a comp store basis driven by the company's emphasis on more fashionable, private label apparel. Juniors is now 46 percent of store penetration. The goal is to get to 50 percent, CEO Sally Frame Kasaks said. Going forward, the company expects juniors to consist of half private label and half branded merchandise.
Young mens: Had steady growth in 2007, but a lesser growth rate than juniors. The company believes guys are more brand conscious than girls, and expects the apparel mix to remain 70 to 75 percent brands and the rest private label.
Footwear: The company expects its exit of the sneaker and fashion footwear business to be complete by back to school. The company believes the increase in apparel growth will offset the decline in footwear. Going forward, footwear will be 6 to 8 percent of the business. There will be a very edited sneaker collection, about a dozen styles, almost all guys, in 400 to 600 stores. The shoes will merchandise with apparel.
The footwear wall will be replaced with juniors apparel, such as a selection of swimwear or dormwear.
Store productivity: PacSun continues to lag competitors in store productivity with sales per square foot of $350 in 2007 versus peers that exceed $500 per square foot. A major goal for 2008 is to improve that number. A few ways the company plans to achieve that is better training of in-store staff to help customers. With footwear removed from the backrooms, there will also be more space for "floor-ready" shipments so store staff won't be stuck in the backroom processing shipments. Also, the company believes the merchandise initiatives below will increase productivity.
Merchandise initiatives for 2008 - PacSun will carry a bit more quantity in juniors and young mens. It will expand its private label Bullhead denim brand for young men. PacSun will also carry more fleece hoodies. There will be a greater emphasis on outerwear in November and December in certain parts of the country. The chain will add a half dozen styles of Bullhead denim for juniors and expand dormwear.
Store refresh: PacSun has refreshed 15 percent of its fleet including 75 stores in fiscal 2007. The goal is to refresh 70 to 75 stores a year.
Back end investments: The company has invested in design, merchandising and sourcing talent for its private label program. It has also beefed up marketing, and invested in supply chain and information technology improvements.
Volcom: In response to a question, Kasaks commented on the business with Volcom. She said Volcom has a strong polo shirt offering and a strong short in young mens this season, with young men overall a bit stronger than juniors. She acknowledged PacSun and Volcom had some difficult times in the past few years, but she believes PacSun has "found the center of gravity with them." She said the two companies are on "pretty steady ground right now."
Same-store sales for fiscal 2008: The company believes PacSun same-store sales will increase 3 to 4 percent.