US: Pacific Sunwear closing 74 Demo stores
Pacific Sunwear plans to close 74 unprofitable Demo stores, about one-third of the total, beginning during the first half of the 2007 fiscal year. It also will convert another 20 to 25 to a new prototype design.
Sally Frame Kasaks, interim chief executive of PacSun, estimated that the 74 stores being closed had aggregate pre-tax operating losses of $9m during fiscal 2006.
She cited mall demographics, store layouts and store economics among the reasons for their poor performance and noted: "We believe that Demo remains a viable concept".
She continued: "Exiting the stores now will allow us to focus our efforts on our better performing locations which we believe will improve our future financial results."
As a result of the closures, PacSun will take a pre-tax non-cash charge of between US$25m and $27m, or between 22 and 24 cents per share after taxes, during the fourth quarter of 2006, which has just concluded, and cash charges of approximately $10m to $15m attributable to lease termination, severance and other related costs during the new fiscal year.
The Anaheim, California-based youth specialty retailer also reported Tuesday (6 February) that its same-store sales for the five-week January period were down 7.7%, with PacSun down 7.3% and Demo off 9.5%.
The combination of weak sales and the fourth-quarter charge led PacSun to lower its guidance for the just-concluded period. Excluding the Demo-related impairment charge, earnings per share are anticipated to land between 36 and 38 cents a diluted share, putting year-end EPS, again exclusive of charges, at 78 to 80 cents a share.
Hilco Merchant Resources and Hilco Real Estate have been retained to manage the closures.
PacSun currently operates 849 PacSun stores, 116 PacSun Outlets, 225 Demo stores and 9 One Thousand Steps units for a total of 1,199.
The Demo stores have leaned more towards an emphasis on urban-influenced sportswear, a hard-pressed portion of the US sportswear market, while PacSun has focused on a more casual California lifestyle look.
With the announcement about Demo and disclosure of January results, PacSun also reported its revenues for the fourth quarter and year.
For the 53-week year, sales were $1.45bn versus $1.39bn during the 52-week prior year, an increase of 4%. However, same-store sales declined 4.7% during the period. Same-store sales were off 4.2% at PacSun and down 7.9% at Demo.
Revenues for the 14-week quarter were $458.2m versus $425m during the 13-week prior-year quarter. Same-store sales were down 4.3%, off 3.4% and 9.6% at PacSun and Demo, respectively.
By Arnold J Karr.
Aeropostale and Pacific Sunwear of California released fourth-quarter results after the close of the markets Thursday (15 March), and the distance between them was as great as the separation between t...
The following is a general roundup of apparel and shoe chains' March 2007 sales results. The list will be updated as new results become available....
The following is a general roundup of apparel and shoe chains' June 2007 sales results. The list will be updated as new results become available....
Pacific Sunwear has "eliminated" the position of chief operating officer as part of a shake-up of its organisational structure, meaning that Wendy Burden, former COO, will leave the company to pursue ...
Alain Mazer has joined Pacific Sunwear of California as marketing director of the Demo stores division, effectively immediately....
Sally Frame Kasaks, who's served as interim chief executive officer of Pacific Sunwear of California since last October, has been appointed chairman and CEO of the firm....
Urban Outfitters, the Philadelphia, Pennsylvania-based operators of the Urban Outfitters, Anthropologie and Free People brands, intends to launch a fourth brand early next year....
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 ...
- Fashion fit for the future – strategies for speed
- Will new Vietnam wage hinder competitiveness?
- Digitisation to drive new apparel-making models
- Under Armour Lighthouse will disrupt production
- How TAL Apparel is staying ahead of the game
- Gap to shutter all UK Banana Republic stores
- M&S "unappealing" clothing a barrier to growth
- MAS Holdings shares commitment to sustainability
- Reebok Liquid Factory reinvents shoe production
- Bangladesh tops China as lead cotton importer
- Africa-Med strategic sourcing review – comparing East Africa, North Africa and Turkey
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Apparel (GLOBAL) - Industry Report
- Global Sports and Fitness Wear Market 2016-2020