Clothing Retailer’s Expansion Continues, but Same-Store Sales Slip
An aggressive expansion program and solid increases in same-store sales have fueled Anaheim-based Pacific Sunwear of California’s rapid revenue growth over the past several years. But the second half of that formula has faltered in recent months.
The mall-based specialty retailer, which sells apparel and accessories to teenagers and young adults, has grown its sales 177% over the past three years, from $180.3 million in the 12 months ended June 30, 1997, to $499.4 million for the 2000 period. That places it at No. 16 on the Business Journal’s list of fastest-growing companies.
Annual profits have nearly doubled in the same period, to $37.1 million. And the company’s employment has grown 77%, to 5,600, with 153% job growth in Orange County to a staff of 400.
The 553-unit chain operates in 48 states including Alaska under store names Pacific Sunwear, PacSun, Pacific Sunwear (PacSun) Outlet and d.e.m.o.
The company’s 5-year-old juniors’ section, “Betty’s Space,” has grown to account for 25% of sales and is projected to reach nearly 30% of sales this year. The company’s own private-label items, which have better profit margins than branded apparel from other manufacturers, have grown to account for 36% of sales.
This year, the company has continued its rapid expansion, opening 94 new stores in the first half of 2000, including 61 PacSun stores, 14 PacSun Outlet stores and 19 d.e.m.o. stores.
But same-store sales increased just 2.4% for the first half of fiscal 2000 ended July 30, well below the annual increases of 7.8% to 15.7% posted in the previous four years. Worse, same-store sales have declined in each of the past three months, down 0.1% in June, 4.4% in July and 2.5% in August.
The sluggish sales are reflected industry-wide by other big retailers such as Target Stores.
Meanwhile, many analysts have been downgrading the company’s stock for the past year. Pacific Sunwear’s stock price has taken a hit, falling about 56% year-to-date to 13 1/4 in Nasdaq market trading late last week. Its 52-week high was 39.
Additionally, Gary Hunt, the firm’s vice president of product development, resigned on Aug. 31. No replacement has been named. n
