Casual apparel company Pacific Sunwear of California plans to close its remaining 154 Demo stores as soon as is practical, and to relocate its distribution activities.

The company said its decision follows a review of strategic alternatives for the Demo division, as previously announced in October 2007.

In February last year, the company announced the planned closure of 74 underperforming Demo stores, all of which were closed as of the end of May 2007.

Pacific Sunwear's chairman and CEO Sally Frame Kasaks said: "As we previously announced, we strongly believe that the best course for enhancing shareholder value is to focus our attention and resources on the PacSun business.

"We engaged an outside financial advisor to help us carefully evaluate strategic alternatives for demo and have determined on the basis of this review that it is in the best interests of our investors to close our remaining demo stores and concentrate our efforts on our core business."

The company expects to incur aggregate pre-tax charges in the range of approximately $35m to $50m as a result of anticipated lease terminations, employee severance charges, inventory reserves, and agency fees.

Upon completion the company expects the net cash outflow of the Demo store closings to be in the range of near neutral to approximately $10m.

Separately, the company also announced today that it will relocate all of its distribution activities to its distribution center in Olathe, Kansas, and close its distribution centre in Anaheim, California.

Kasaks added: "In analysing our operations, it became clear that we can better leverage our existing capacity at our Olathe distribution centre to improve the efficiency of our supply chain, better service our stores and reduce certain costs.

"We regret the impact on our associates of both of these decisions, but recognise these actions are necessary in order to improve our financial performance and best position the company for future growth."

The relocation is expected to result in pre-tax charges of approximately $3m, and the company said it plans to gradually phase down its operations in the Anaheim distribution centre, with the facility expected to close by the end of April 2008.