Orange County Business Journal

PacSun Posts $106.4M Annual Loss, Continues Focus on Real Estate, Merchandise Mix

Kari Hamanaka Wednesday, June 27, 2012

Anaheim-based action sports retailer Pacific Sunwear of California Inc. continues to focus its turnaround efforts on improving its merchandise mix and closing underperforming stores.

Chief Executive Gary Schoenfeld told shareholders in the company’s 2011 annual report, released Wednesday, that improving “clarity with consumers about what PacSun stands for as a brand and why they should love to shop with us” is among its top priorities.

Pacific Sunwear operates a chain of more than 700 stores in the U.S. and Puerto Rico. It has been working on a turnaround for the past several years and reported a net loss of $106.4 million for the year ended Jan. 28, widened from a $96.6 million loss a year earlier. The company reported net sales down less than 1% from a year earlier to $834 million.

The retailer narrowed declines in sales of stores open at least a year, which ended fiscal 2011 down 1%. That’s an improvement from the 8% same-store sales decline in 2010 and 20% decline in 2009

Men’s apparel continued to account for 49% of the company’s sales followed by women’s apparel with 37% of sales.

The company continues to increase its mix of accessories and footwear, with 14% of the company’s 2011 sales attributed to non-apparel merchandise, up from 13% a year earlier. Pacific Sunwear reintroduced footwear into about 425 stores in January as part of that push.

The share of Pacific Sunwear proprietary brands, such as Bullhead and Black Poppy, continues to grow.

In-house brands accounted for 48% of sales last year, up from 45% a year earlier.

Big names from various labels—so-called heritage brands, which include O’Neill, Quiksilver and Volcom, among others—accounted for 52% of sales last year.

Pacific Sunwear accelerated closures on underperforming stores beginning last year. It shuttered 119 stores during the 12 months through Jan. 28.

The company is expected to close between 100 to 120 stores during the current year, which ends Feb. 2. Pacific Sunwear expects the closures this year to bring it a net cash savings of $9 million.

The company peaked at 950 stores prior to the recent recession.