Shares of Anaheim-based Pacific Sunwear of California Inc. fell Wednesday, a day the mall retailer missed expectations with quarterly results and offered a disappointing outlook for the current quarter.
Pacific Sunwear’s shares closed down nearly 14% to a market value of about $245 million.
On Tuesday, the company reported an adjusted loss of $22 million for the three months through January, higher than the $21.3 million loss analysts had expected on average after a warning from the company in January.
Sales came in at $263 million, down 10% from a year earlier and below the $269.5 million Wall Street was expecting.
“While we believe we have made progress in several critical areas, we clearly have much still to accomplish to turn this business around,” Chief Executive Gary Schoenfeld said.
For the current three months through April, Pacific Sunwear forecasts a loss of $19.3 million to $22 million, versus the $14.7 million loss analysts had been expecting.
Pacific Sunwear, which runs stores selling clothes inspired by surfing, skateboarding and snowboarding, didn’t give a revenue outlook. It said it expects sales at stores open at least a year to range from a 3% decline to a 2% gain.
Same-store sales fell 7% in the recently ended quarter.
Pacific Sunwear is working on an ongoing turnaround focused on big local brands such as Huntington Beach-based Quiksilver Inc. and Costa Mesa’s Volcom Inc.
The company is “poised to get off to a slow start this year,” wrote Mitch Kummetz of Milwaukee-based investment bank Robert W. Baird & Co. in a note to clients. “While this could turn as the year progresses, the company is faced with the headwind of higher costs in the back half.”
Apparel makers and retailers are seeing a rapid rise in cotton prices, which stands to crimp profits.
Most plan to raise prices this year but are uncertain about how shoppers used to bargains during the downturn will react.
Pacific Sunwear’s costs are expected to be flat in the first half of the year and then up 10% to 15%, according to Kummetz.
