Anaheim-based clothing retailer Pacific Sunwear of California Inc. plans to close 154 stores selling urban styles as well as a distribution center at its headquarters.
The company plans to take a charge of $35 million to $50 million to close its remaining demo stores, which sell clothes inspired by hip hop music.
About $3 million to $4 million of the charge is expected in the current quarter through Feb. 2, the company said.
The rest of the charge, driven by lease terminations, employee severance and other shutdown costs, is expected in Pacific Sunwear’s next quarter, which runs through May 3.
The company expects all of its demo stores to be closed by then.
Pacific Sunwear had been trying to sell the struggling demo chain for the past couple of months.
The company also is moving its Anaheim distribution center to one in Olathe, Kan. It expects a charge of about $3 million in the current and next quarters for the move.
Pacific Sunwear said it is considering a sale or lease of its Anaheim distribution center, set to close by April.
The moves are part of an ongoing restructuring at Pacific Sunwear, which plans to focus on its dominant chain of PacSun stores selling clothes inspired by surfing and skateboarding.
The company said in October it planned to sell its demo chain and close its fledgling One Thousand Steps stores selling shoes.
Demo and One Thousand Steps lost $21 million during the three quarters through Nov. 3.
“We strongly believe that the best course for enhancing shareholder value is to focus our attention and resources on the PacSun business,” Chief Executive Sally Frame Kasaks said.
Pacific Sunwear runs 961 PacSun stores. It has 54 demo stores and six One Thousand Steps.
Investors sent shares of Pacific Sunwear down about 6% in late New York trading. The company has a market value of about $870 million.
The inability to sell the demo chain and the shutdown charges likely weighed on the stock.
Pacific Sunwear also has been slumping on Wall Street along with related companies such as Huntington Beach-based Quiksilver Inc. and Costa Mesa’s Volcom Inc.
Concerns about weak holiday sales and a tough outlook for early 2008 are driving the downturn.
