Despite signs of a slowing economy, Pacific Sunwear of California Inc. is stepping up its expansion.
The Anaheim-based retailer of surfwear and other apparel plans to spend up to $90 million this year building 125 new stores and upgrading 40 existing ones. The chain, which counts 589 stores, is looking to grow to 1,000 by 2003. The spending also includes $36 million for the company’s new, larger Anaheim headquarters.
Some of Pacific Sunwear’s oldest stores are set to double from about 2,000 to 4,000 square feet under the plan.
“As we have expanded our product offering, we’ve found the old size store doesn’t work anymore,” said Carl Womack, Pacific Sunwear’s chief financial officer.
Pacific Sunwear got its start as a seller of men’s surfwear, including clothing by local companies such as Quiksilver Inc. of Huntington Beach and Billabong USA and O’Neill, both of Irvine. But in recent years, the retailer has expanded into new areas, such as women’s, juniors, shoes and accessories. The growing interest in skateboarding and extreme sports has helped drive Pacific Sunwear’s growth.
The company’s plans include expansion of its 80-unit chain of d.e.m.o. stores, which sell street wear influenced by hip hop music.
The company has been a standout in a turbulent time for retailers. For the five weeks ended Feb. 4, Pacific Sunwear’s sales increased 67% to $36.8 million from the year-ago period. Same-store sales increased 3.8% for the period, a better showing than that of other specialty retailers.
Pacific Sunwear is looking to cultivate an edgier image with a series of five 30-second commercials it broke this month featuring actual teen skateboarders and surfers.
The campaign, pegged at $8 million to $10 million, airs on ESPN, MTV and the WB Television Network. Print ads are set to debut in the March issues of Seventeen, Spin, YM, Snowboarder and other magazines. Irvine-based Bates USA West, which won Pacific Sunwear’s ad account a year ago, created the spots and is handling media planning and buying.
“These spots present a personality for the brand,” said Mark Weinfeld, Bates senior vice president of strategic planning. “It’s really about the kids, not about the brand.”
Pacific Sunwear has expanded to include more skateboard gear, including some in its growing shoe division. The company’s T-shirt sales also have shifted toward skateboard brands, which now make up half of the category’s sales, the company’s Womack said.
“We are also really working closely with small skate brands to develop new product or expand out of the T-shirt categories just as we have always done,” he said.
Meanwhile, Pacific Sunwear’s online sales are expected to match those of eight or nine average retail stores this year,roughly $9 million vs. about $3 million in its first year of operation,or the equivalent of a single top-performing store, according to company officials. n
