Anaheim-based retailer Pacific Sunwear of California Inc. is looking to sell its struggling demo clothing store chain and plans to close its fledgling One Thousand Steps stores selling shoes, the company said Wednesday.
Pacific Sunwear plans to hire an investment banker to help with plans for its demo stores, which sell urban, hip-hop style clothes.
One Thousand Steps stores, which debuted last year, are set to close “as soon as is practical.”
The moves will leave Pacific Sunwear with its dominant PacSun chain, which sells clothes inspired by surfing and skateboarding at malls across the country.
The company runs about 960 PacSun stores, including 117 outlet stores. It has 150 demo stores and nine One Thousand Steps stores.
“We believe the best way to enhance shareholder value at this time is to focus management’s attention and capital on the core PacSun business,” Chief Executive Sally Frame Kasaks said.
Demo and One Thousand Steps lost $21 million during the three quarters through Nov. 3. The company estimates a charge of $48 million related to the two chains, including $4 million in the quarter through Nov. 3.
Demo has been a drag on Pacific Sunwear’s results for some time.
The chain’s September same-store sales fell by 15.4%, versus a 5.4% gain at PacSun stores.
The demo and One Thousand Steps chains both came under former chief executive Greg Weaver, who left in 2004 after a substantial growth run at the company.
Demo was started to check a challenge to surfwear as the dominant style for teens by urban style clothes inspired by the streets of New York. The chain helped spur Pacific Sunwear’s growth early on.
One Thousand Steps was planned as a third chain as growth at PacSun and demo started to slow from their peaks around 2004.
