US: Pac Sun swings to Q1 loss, sticks with Q2 forecast
Pacific Sunwear of California on Monday (21 May) reported a first quarter loss on lower same-store sales, but reiterated guidance for a rebound in both profitability and sales progress in the current period.
In the three months ended 5 May, the net loss totalled US$5.1m, or $0.07 a diluted share, versus net income of $11.9m, or $0.16, in the year-ago quarter.
The more recent period's loss included charges of $0.03 a share to cover the cost of charges associated with its closure of 74 of its Demo units, putting the first quarter performance in line with analysts' expectations of a loss of $0.04 a diluted share.
Sales were up 6.9% to $320.6m from $299.9m during the comparable 2006 period. Comparable-store sales declined 1.2% as PacSun was down 0.5% and Demo comps slid 12.1%.
Gross margin plummeted to 25.8% of sales from 32.4% in the year-ago period.
"Although we ended the quarter with a difficult April, we exited the month with an improved inventory position and an encouraging juniors business trend," said Sally Frame Kasaks, interim CEO of the Anaheim, California-based teen and young adult specialty chain.
Pac Sun said it "remained comfortable" with its projections of second quarter EPS of $0.18 to $0.20 a diluted share, excluding charges tied to the Demo closures. That's in line with the current analyst consensus estimate for earnings of $0.18 a diluted share. The guidance assumes a low-single digit increase in comps.
Pac Sun finished the quarter with a total of 1183 units, including 845 PacSun stores, 117 outlets, 212 Demo units and nine of its new One Thousand Steps shops.
As of 5 May, the company had closed 14 of the 74 Demo stores slated for phasing out. The other 60 are expected to close during the early part of the current second quarter.
By Arnold J Karr.
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