Orange County Business Journal

Pacific Sunwear Warns of Wider Loss in Current Quarter

Kari Hamanaka Tuesday, May 24, 2011

Mall retailer Pacific Sunwear of California Inc. warned of a wider loss than expected for its current quarter as it ramps up marketing efforts and tests clothing styles in stores.

Pacific Sunwear, based in Anaheim, said it expects a loss of $23.2 million to $29.7 million for the current quarter ending in July.

Analysts on average expected a loss of $11.6 million.

Pacific Sunwear operates 827 stores selling clothes and accessories inspired by surfing, skateboarding and snowboarding.

The company didn’t provide a revenue outlook for its current quarter. It said it expects sales of stores open at least a year to fall as much as 3% or rise as much as 2%.

Pacific Sunwear saw same-store sales increase 1% for the three months through April.

The company is working on a turnaround that includes more marketing, new clothing styles, playing up big-name brands in stores and pricing competitive with fast-fashion retailers such as Los Angeles-based Forever 21 Inc.

“Getting back to a positive comp is certainly an important step in the turnaround of our business,” said Pacific Sunwear Chief Executive Gary Schoenfeld. “As our new team comes together, we have initiated a number of important changes in merchandising, marketing and in-store experience that customers are beginning to respond to.”

The company launched a new ad campaign last month that spanned TV, print and digital media.

The ads featured sponsored athletes, musicians and artists from brands such as Costa Mesa-based Volcom Inc. Irvine-based Billabong USA, Billabong’s Rvca Clothing in Costa Mesa and others.

Pacific Sunwear is also dabbling in collaborations with independent designers under its new Trade Collective program.

The first of those collaborations debuts next month in stores with a new line from Seneca Rising, a vintage-inspired brand from Los Angeles.

The company's current quarter outlook followed results for the three months through April.

Pacific Sunwear beat Wall Street’s forecast on revenue with $186 million for its first quarter, down 2% from a year earlier.

Analysts on average expected $181.3 million in revenue.

Pacific Sunwear missed on profit with a $31 million loss that was unchanged from a year earlier, but higher than the $21.3 million Wall Street expected.