Anaheim-based Pacific Sunwear of California Inc. can feel the heat.
The once highflying teen clothing retailer now finds itself answering tough questions about why the company has cooled as competitors keep coming on strong.
“There’s no question they have struggled,” said Elizabeth Pierce, analyst at Sanders Morris Harris. “They will candidly admit they’ve made some mistakes.”
Pacific Sunwear, which sells clothes inspired by surfing and hip-hop music in more than 1,100 mall stores, got off to a rough start this year with fashion missteps and poor merchandising.
Sales at Pacific Sunwear’s stores open at least a year have flip-flopped about as much as the fickle teens the company targets.
In May, same-store sales were off 2% from a year earlier, echoing the trend from the first quarter, which saw a 1.8% drop.
On Wall Street, Pacific Sunwear’s shares are off by about 25% for the year with a market value of $1.4 billion last week.
Rivals American Eagle Outfitters Inc., Abercrombie & Fitch Co. and Zumiez Inc. have fared better, raising the bar with swanky store displays that are luring girl shoppers.
American Eagle and Zumiez posted double-digit same-store sales gains in May. Abercrombie was up 3%.
Shares of American Eagle and Zumiez are up more than 50% so far this year. Abercrombie is off about 14%.
“There’s a lot more competition,” Pierce said. Pacific Sunwear “has to be sharper.”
The company knows it.
Seth Johnson, chief executive since last year, told analysts at a June meeting about a slew of changes Pacific Sunwear is making to jump-start sales and attract shoppers in time for back-to-school,one of the most critical periods for retailers.
For more on this story, see the June 26 edition of the Business Journal.