Billabong ▼ -0.015 | PPR ▲ +1.00 | American Apparel ▼ -0.010 | The Buckle ▲ +0.42 | Columbia ▼ -0.42 | Deckers Outdoor ▲ +0.20 | Dicks ▲ +0.14 | Foot Locker ▲ +0.36 | Genesco ▼ -0.37 | Iconix Brand Group ▼ -0.28 | Jarden Corp ▼ -0.39 | Nordstrom ▼ -0.46 | Luxottica ▼ -0.44 | Nike ▼ -0.60 | Pacific Sunwear ▲ +0.03 | Skullcandy ▼ 0.00 | Sport Chalet - 0 | Urban Outfitters ▲ +0.09 | VF Corp ▼ -0.21 | Quiksilver ▼ -0.25 | Zumiez ▲ +0.01 | Macys ▼ -0.50 | Tillys ▲ +0.08 |
Ticker Sponsor
Readers Say
The one, undisputed leader
The one, undisputed leader

It is common knowledge in our industry that there is one undisputed leader in reporting on the topics, businesses and trends that impact all of us the most, and it is shop-eat-surf.com. Their access to those who make our industry happen is second to none, and we value not only the content of their reporting but the editorial thought on what it all means both in the present as well as the future. If we were asked to give a rating, it would be five out of five stars.

- By Craig Levra, CEO, Sport Chalet
Executive Edition is a must have
Executive Edition is a must have

Before Shop-Eat-Surf, there were two sites I paid for premium content on. One is Surfline, the other is the Wall Street Journal. One is about all things surf, the other, the best business content site in the world. Shop-eat-surf is the intersection of those two worlds. Shop-Eat-Surf provides everything from coverage of events, people, brands and trends. However, beyond the Executive Edition "wall" is more meaty analysis and interpretation of financial statements, business models and brand philosophies; why certain brands and companies are succeeding, where others aren't. The Executive Edition is a must have read if the business of surf and action sports are on your radar screen.

- By Jeff Berg, Co-owner, Surfline
Industry Insight

SIA: More on 2014 snow rep and retailer of the year awards + video recap.
SES: The monthly Credit Managers' Index dips to levels last seen during the credit crunch.
Details on Industry Insight.

Tiffany Montgomery
Print This Article

More details about PacSun value stores and 2008 results

By Tiffany Montgomery
March 12, 2009 4:48 PM

Increased discounting battered PacSun's gross margins in the fourth quarter as the industry's largest customer moved to aggressively unload merchandise.

The company said during its earnings conference call that gross margin as a percentage of sales was 16.1 percent in the fourth quarter vs. 31.8 percent the same period last year.

The company ended the year with inventory per square foot down 30 percent.

CEO Sally Frame Kasaks also provided more detail for the first time about the chain's value stores. (See our previous story about the value stores here.) She said the idea evolved after the company sent footwear to some of its lower volume stores to be liquidated. It found that customers at the lower-tier malls and shopping centers were more price sensitive and responded to discounts. That led the company to begin lowering prices for apparel at those stores as well. Of the company's 932 stores, Sally said 525 are core, or full-priced stores and the rest are outlet and value stores.

That means that 43 percent of PacSun stores are now discount stores - 126 are outlet stores and 281 are value stores.

After switching to a value format, the stores have shown a modest improvement in sales and gross margins. However, the company has no plans to rename the stores.

Other highlights from the call:

Fourth quarter results

Revenue: down 8 percent to $352 million

Net loss: a $27.6 million loss vs. net income of $19.6 million during the same period last year.

Same-store sales: down 10 percent

E-commerce sales: up 35 percent to $18 million

Full year results

Revenue: down 3.9 percent to $1.2 billion

Net loss: $39.4 million loss vs. income of $45.6 million the same period last year

Same-store sales: down 5 percent


PacSun ended the year with $25 million in cash and no direct borrowings against its line of credit. It will also receive a $25 million tax refund about mid-year because of its losses. The company said it is well prepared to weather a continuing difficult environment.

Full year category sales

Apparel sales: up 11 percent

Junior's apparel: up 23 percent, accounting for 51 percent of apparel sales.

Young men's apparel sales: up 1 percent, accounting for 49 percent of apparel sales. Sally said the company has plans to regain its momentum in young men's and grow the business. She seemed very bullish about an improved T-shirt assortment with an art-driven bent.

Accessories: Accounted for 13 percent of total sales. Sally said the company cut accessories too much and expect it to grow to 15 percent of total sales this year. Growing categories will be jewelry, sunglasses, sandals for girls, scarves and to a lesser degree, handbags. For men, hats, sunglasses and belts will grow.

Store openings/closings

The company cut $50 million from its capital expenditure budget, which now totals $30 million for 2009. PacSun will open three new stores, relocate or expand nine, and refresh three during the year.

In each of the next three years, 100 store leases expire. The company expects to close 35 to 55 stores per year as the leases expire.


The company stressed it has fresh inventory in stores, and it started the year with 85 percent of its inventory less that 90 days old vs. 71 percent at the start of 2008.

Boardshorts and swim

Sally said PacSun made the decision to bring in swim and boardshorts later this year because it believed those items were brought in too early in January and February before. But she stressed the company is not exiting that business and currently has the right level of swim and boardshorts at a more appropriate time of year.

Colored denim

The company sold out of its colored denim and said it has a new assortment coming soon that Sally is excited about.


This spring, the company is putting less emphasis on displaying key items and it has broadened its SKUS and fashion assortment.

"They'll be a little less high piles of key items," she said, and as a result she expects the stores will attract a more diverse junior's customer.

Key 2008 accomplishments

Sally highlighted the following:

Eliminating its other chains besides PacSun

Exiting footwear

Reducing to a single distribution center and enhancing supply chain

Reducing inventory, capital expenditures and SG&A

Growing apparel to 80 percent of total sales, with junior's approximately 50 percent of the total apparel sales

Securing a $150 million credit facility

Ending the year with 25 million in cash and no direct borrowings.

First quarter 2009

The company expects same-store sales to decline in the low 20s. It anticipates recording a loss of 26 to 31 cents per share.




Articles You Might Have Missed