Pac Sun Loses $10.9 Million

by The Editors on November 16, 2009

Pacsun-2What do you know? Pac Sun shares reportedly “plunged in after-hours trading” today after the company announced that it lost $10.9 million in the Q3, according to the Associated Press.

Revenue fell 17 percent to $268.3 million from $323.6 million. Sales at stores open at least a year fell 18 percent during the quarter. Sales at stores open at least a year are a key measure of retailer performance because they measure growth at existing stores rather than from newly opened ones.

Shares were only down 19 percent. Follow the jump for the full press release.

[Link: Associated Press]
Pacific Sunwear Announces Third Quarter Earnings Results

ANAHEIM, Calif., Nov. 16, 2009 (GLOBE NEWSWIRE) — Pacific Sunwear of California, Inc. (Nasdaq:PSUN) (the “Company”) today announced that net sales for the third quarter (13 weeks) of fiscal 2009 ended October 31, 2009 were $268 million versus net sales from continuing operations of $324 million for the third quarter (13 weeks) of fiscal 2008 ended November 1, 2008. Total Company same-store sales decreased 18 percent during the period.
The Company recorded a net loss of $10.9 million, or $(0.17) per diluted share, for the third quarter of fiscal 2009 compared to net loss from continuing operations of $3.5 million, or $(0.05) per diluted share, for the third quarter of fiscal 2008.

“Through the first 11 weeks of the third quarter, our business performed at the higher end of our internal expectations led by some improving trends in our Young Mens business,” stated Gary Schoenfeld, President and Chief Executive Officer. “We’ve since seen a precipitous decline across both genders during the last two weeks of the third quarter and into the first two weeks of the fourth quarter. Thus, while we still expect an improvement over the fourth quarter last year, we remain intently focused on several key initiatives toward getting this company turned around.”

Financial Outlook for Fourth Fiscal Quarter of 2009
Assuming a same-store sales percentage decline in the low twenties for the fourth quarter of fiscal 2009, the Company expects to report a loss of approximately $(0.28) to $(0.35) per share. This earnings range includes estimated non-cash store asset impairment charges of approximately $5 million. Any non-cash tax valuation allowance charges or additional store asset impairment charges that the Company may incur during the fourth quarter would increase the level of losses for the quarter.

About Pacific Sunwear of California, Inc.
Pacific Sunwear is a leading lifestyle specialty retailer rooted in the youth culture of California. The Company sells casual apparel with a limited selection of accessories and footwear designed to meet the needs of teens and young adults. As of October 31, 2009, the Company operated 904 stores in 50 states and Puerto Rico. PacSun’s website address is www.pacsun.com.

              PACIFIC SUNWEAR OF CALIFORNIA, INC.
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   (unaudited, in thousands except share and per share data)


                            Third Quarter        First Three Quarters
                                 Ended                  Ended
                        ----------------------  ----------------------
                          Oct. 31,    Nov. 1,     Oct. 31,    Nov. 1,
                           2009        2008        2009        2008
                        ----------  ----------  ----------  ----------
 Net sales              $  268,280  $  323,612  $  734,539  $  903,204
 Gross margin               73,441      92,776     192,423     263,499
 Selling, G&A expenses      89,365      95,308     245,477     281,163
                        ----------  ----------  ----------  ----------
 Operating loss from
  continuing operations    (15,924)     (2,532)    (53,054)    (17,664)
 Other expense, net             17       1,100         180         461
                        ----------  ----------  ----------  ----------
 Loss from continuing
  operations before        (15,941)     (3,632)    (53,234)    (18,125)
  income taxes
 Income tax benefit         (5,036)       (112)    (19,431)     (6,344)
                        ----------  ----------  ----------  ----------
 Loss from continuing
  operations               (10,905)     (3,520)    (33,803)    (11,781)
 Income (loss) from
  discontinued
  operations, net of
  tax                           --       1,046          --     (24,999)
                        ----------  ----------  ----------  ----------
 Net loss               $  (10,905) $   (2,474) $  (33,803) $  (36,780)
                        ==========  ==========  ==========  ==========
 Loss from continuing
  operations per share:

   Basic                $    (0.17) $    (0.05) $    (0.52) $    (0.18)
                        ==========  ==========  ==========  ==========
   Diluted              $    (0.17) $    (0.05) $    (0.52) $    (0.18)
                        ==========  ==========  ==========  ==========

 Net loss per share:
   Basic                $    (0.17) $    (0.04) $    (0.52) $    (0.55)
                        ==========  ==========  ==========  ==========
   Diluted              $    (0.17) $    (0.04) $    (0.52) $    (0.55)
                        ==========  ==========  ==========  ==========

 Weighted average
  shares outstanding:

   Basic                65,563,721  64,968,707  65,380,726  67,182,918
                        ==========  ==========  ==========  ==========
   Diluted              65,563,721  64,968,707  65,380,726  67,182,918
                        ==========  ==========  ==========  ==========

               PACIFIC SUNWEAR OF CALIFORNIA, INC.
             CONDENSED CONSOLIDATED BALANCE SHEETS
                  (unaudited, in thousands)


                                           Oct. 31,  Jan. 31,   Nov. 1,
                                            2009      2009      2008
                                          --------  --------  --------
 ASSETS
 Current assets:
 Cash & cash equivalents                  $ 15,564  $ 24,776  $  4,817
 Inventories                               168,417   107,205   233,814
 Other current assets                       15,774    58,943    73,635
                                          --------  --------  --------
  Total current assets                     199,755   190,924   312,266
 Property and equipment, net               272,596   323,344   353,934
 Other long-term assets                     64,944    55,241    47,060
                                          --------  --------  --------
   Total assets                           $537,295  $569,509  $713,260
                                          ========  ========  ========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
 Accounts payable                         $ 63,298  $ 45,263  $113,799
 Short-term borrowings                          --        --    43,100
 Other current liabilities                  40,159    47,564    47,365
                                          --------  --------  --------
  Total current liabilities                103,457    92,827   204,264
 Deferred lease incentives                  42,229    52,313    55,054
 Deferred rent                              21,872    23,008    23,471
 Other long-term liabilities                27,863    29,374    32,213
                                          --------  --------  --------
 Total liabilities                         195,421   197,522   315,002
 Total shareholders' equity                341,874   371,987   398,258
                                          --------  --------  --------
 Total liabilities and
  shareholders' equity                    $537,295  $569,509  $713,260
                                          ========  ========  ========

           PACIFIC SUNWEAR OF CALIFORNIA, INC.
           CONDENSED CONSOLIDATED CASH FLOWS
               (unaudited, in thousands)

                                                  Three Quarters Ended
                                                  --------------------
                                                   Oct. 31,    Nov. 1,
                                                    2009        2008
                                                  ---------  ---------
 Cash flows from operating activities:
 Net loss                                         $ (33,803) $ (36,780)
 Depreciation & amortization                         53,326     58,743
 Asset impairment                                    16,538     21,313
 Non-cash stock based compensation                    5,030      4,442
 Tax deficiencies related to exercise of
  stock options                                      (1,702)    (1,413)
 Loss on disposal of property and equipment             555      2,368
 Changes in operating assets and liabilities:
  Inventories                                       (61,212)   (63,632)
  Accounts payable and other current liabilities      9,985     29,674
  Other assets and liabilities                       17,510    (28,030)
                                                  ---------  ---------
   Net cash provided by/(used in)
   operating activities                               6,227    (13,315)

 Cash flows from investing activities:

  Capital expenditures                              (19,540)   (71,528)
  Proceeds from sale of land                          3,705         --
  Proceeds from sale of property and equipment           28        275
                                                  ---------  ---------
   Net cash used in investing activities            (15,807)   (71,253)

 Cash flows from financing activities:

  Proceeds from exercise of stock options               374      1,618
  Principal payments under long-term leases              (6)        (9)
  Repurchases of common stock                            --    (52,911)
  Borrowings under credit facility                       --    168,739
  Principal payments under credit facility               --   (125,639)
                                                  ---------  ---------
   Net cash provided by/(used) in
   financing activities                                 368     (8,202)
                                                  ---------  ---------

 Net decrease in cash and cash equivalents           (9,212)   (92,770)
 Cash and cash equivalents, beginning of period      24,776     97,587
                                                  ---------  ---------
 Cash and cash equivalents, end of period         $  15,564  $   4,817
                                                  =========  =========


             PACIFIC SUNWEAR OF CALIFORNIA, INC.
                SELECTED STORE OPERATING DATA

                                              Fiscal 2009  Fiscal 2008
                                              -----------  -----------
 Stores open at beginning of fiscal year              932          954
 Stores opened year-to-date                             2           13
 Stores closed year-to-date                           (30)         (27)
                                              -----------  -----------
 Stores open at end of third quarter                  904          940
                                              -----------  -----------
 Square footage (000s)                              3,494        3,608
CONTACT:  Pacific Sunwear of California, Inc.
          Gar Jackson, Vice President, Investor Relations
          (714) 414-4049

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