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PacSun Slumps After Analyst Warns of Tough Back-to-School

Shares of Pacific Sunwear of California Inc., an Anaheim-based seller of surf inspired clothing, fell on Monday after an analyst lowered its outlook on the company’ earnings due to a struggling back-to-school shopping season for retailers.

Pacific Sunwear shares fell 4% at close of trading on a market value of about $550 million.

The company runs 938 PacSun stores across the country that sell clothes inspired by surfing and skateboarding.

The decline in Pacific Sunwear’s share price comes after analyst Adrienne Tennant of Friedman, Billings, Ramsey lowered her 2008 and 2009 earnings estimates on the company in a note to investors on Monday.

Pacific Sunwear has a good product assortment and expects its skinny-leg jeans to sell well, but the company’s earnings outlook for the second half of the year may need to come down, Tennant said.

Tennant cited weak July sales for retailers for her outlook and wrote that trends “have not improved much in early August.”

“We believe that most investors should be expecting lowered numbers across the sector for the second half of 2008,” Tennant wrote.

The company is undergoing a restructuring period in which earlier this year it closed a smaller chain of stores selling urban-style clothes and a shoe store chain.

The company is battling a weak economy that has been especially hard on retailers.

Wall Street now expects the company to generate some $310 million for the three months ended Aug. 2.

Pacific Sunwear is set to release its earnings on Thursday.

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