Employees at Anaheim-based teen clothes retailer Pacific Sunwear of California Inc. are bustling around the stores.
They’re cleaning up aisles. Moving out old clothes. Setting up fresh marketing displays with holiday garb.
Pacific Sunwear has wasted no time revamping things under interim Chief Executive Sally Frame Kasaks, who took charge of the company last month after Seth Johnson resigned amid poor results.
In a recent conference call, Kasaks said she’s moving “aggressively” with changes to reverse a slump in sales that’s plagued the retailer for most of this year.
Kasaks, a Pacific Sunwear director, knows the retail ropes.
During her career, she’s served as chief executive of Ann Taylor Inc., Talbots Inc. and Abercrombie & Fitch Co.
Kasaks has been out talking to apparel makers about what’s working and what’s not at the company’s dominant PacSun chain, which sells surf-inspired clothes.
“It’s a company in transition at this point,” said Jeff Van Sinderen, analyst at B. Riley & Co. “Sally has gone in and in a little more than a month she’s started taking some definitive action.”
PacSun has been under pressure to regain footing after a series of fashion misses in shoes,particularly sneakers,girls clothing and accessories.
Same-store sales were down 6.7% in the third quarter. Profit was $9 million, down about 76% from last year. The company said the profit decline was due to weaker sales, charges related to Johnson’s departure and unsold merchandise.
The move lets Pacific Sunwear “get the hit out of the way” and clear space for full-priced holiday merchandise, Van Sinderen said.
Plus, PacSun can do a better job displaying clothes so they’re easier for shoppers to find, Van Sinderen said.
In the past, PacSun stores have been so jammed it was hard for people to navigate through aisles and find what they’re looking for, according to Van Sinderen.
More changes are to come.
Pacific Sunwear is feverishly trying to recharge its lagging shoes and girls businesses.
Kasaks said it was “no secret” that in the past year shoes accounted for a “significant portion” of PacSun’s slumping sales. She was unavailable for comment for this story.
Last month, the company brought on merchandiser Rick Higgins to restructure the division. He’s brought different shoe styles, particularly slip-on sneakers made of canvas, for the holidays and spring.
Expect to see more from Cypress-based Vans Inc. and Nike Inc., which are doing well, and a new shoe line, called Creepers, from Costa Mesa-based Volcom Inc.
PacSun also will get new shoes from Huntington Beach-based Quiksilver Inc.’s Roxy girls brand.
“This is not a quick fix,” Kasaks said. “But rather a deliberate effort to rebuild this important business for us.”
Bringing on Higgins, a former buyer at Genesco Inc.’s teen shoe retailer Journeys, is a plus, said Mitch Kummetz, analyst at Robert W. Baird & Co.
Journeys caters to kids and teens that dig the action sports lifestyle, which includes surf, skate and snow.
“He understands what styles are trending,” he said. “He’s got a better feel for the business.”
In the past, some shoemakers “were frustrated dealing with PacSun,” Kummetz said. “Now (PacSun) has the right person in charge of the business.”
Pacific Sunwear also tapped a new leader, Brad Cunningham, for its struggling girls clothing division. Cunningham is a former general merchandise manager for trendy young women’s clothing retailer Charlotte Russe Holding Inc. of San Diego.
Girls clothing accounted for about 30% of PacSun’s sales last year. The company said it hopes to grow it to 50% alongside men’s.
Shoppers will start to see Cunningham’s changes during the holidays but most won’t play out until next year, B. Riley’s Van Sinderen said
“You’ve got to give him time to start to turn around the assortment,” he said.
Three years ago, female teens “connected” a bit more with surf brands, and were a big driver of PacSun’s sales.
Girls have “sort of lost that connection,” Kummetz said.
“Those girls are more interested in buying fashion at the right price,” Kummetz said. “She needs a reason to go into (PacSun) stores.”
Competitors that do a better job catering to girls have snatched up PacSun’s marketshare, such as Abercrombie & Fitch Co.’s Hollister surfwear chain, said analyst Christine Chen at Pacific Growth Equities.
Hollister lures girls with cool displays that show them to buy a complete outfit, from shoes to clothes, to belts and bags. It’s something PacSun hasn’t done well, Chen said.
PacSun is ready to battle.
The company has been testing different display strategies at new and remodeled stores, both of which carry less clothing, shoes and accessories and have more room to display garb.
Pacific Sunwear said it has toned down its expansion plans for next year to concentrate on fixing problems.
The retailer has nearly 1,200 stores. The bulk are PacSun followed by d.e.m.o., a seller of urban and hip-hop style clothes that’s seen its own struggles.
The company also has nine One Thousand Steps shoe and accessories stores, a new chain that it’s testing.
Pacific Sunwear recognizes the “competitive landscape has intensified in the past few years” and needs to “move more quickly,” Kasaks said.
“This is especially true at PacSun where we have historically depended upon shoes and additional product categories to drive sales and have not seized opportunities to strengthen our (girls) business,” Kasaks said. “We want to regain the marketing edge that helped us communicate with (our) target skate and surf customer.”
The company had started revamping marketing under Johnson, trying to incorporate more imagery shots of kids enjoying themselves surfing or skating.
But during the past few years, PacSun’s marketing has been “inconsistent,” said Roth Capital Partners LLC analyst Elizabeth Pierce in a recent report.
Magazine ads looked “contrived” and didn’t “play up the company’s California lifestyle heritage,” which would help set it apart from competitors, Pierce wrote.
In the search for a chief executive, it will be critical to find a person who understands action sports and is a strong merchant, B. Riley’s Van Sinderen said.
Pacific Sunwear doesn’t expect to find someone until next year, he said.
