Today at 1:30 PM PST Pacific Sunwear’s CEO Sally Frame Kasaks and CFO Michael Henry spent a little over 40 minutes answering analyst’s questions. It sounded a lot like good news for people who like bad news. Here are some highlights from the call:
- Juniors sales up 16 percent in the quarter driven primarily by their house brand Bullhead denim and tops.
- Young men’s sales saw a slight decline in denim and tops
- Branded goods represent 71 percent of total sales.
- The company continues to review fashion brands by their collections and no one is a done deal. “I’m not sure I want to refer to any of our brands as tried and true,” Kasaks said.
- Accessory sales were down 28 percent, but they hope to better manage the category to about 15 percent of sales rolling forward
- Inventory are high and the company will be going very promotional in Q4. Sally Kasaks said the company would “aggressively clear inventory while holiday traffic is available to us.. . . We may have bought too much this year, and I will take full responsiblity for that. On the other hand I think we have done a good job managing the new brands.”
- Approximately 100 of the 940 stores are not profitable, 24 are cashflow negative
- PacSun has said all along that they would be closing 30-40 stores a year as part of normal business. They see no reason to close a larger number of stores this year, mostly because getting out of leases is costly and could take up to two years.
- Footwear down to 4 percent of the business; will be 3 percent by the end of the year
- Capital expenditures for 2009 will be cut by over 50 percent to $30 million total.
- The e-commerce business growth is outpacing the retail store environment so “we will continue to fund that.”
- Michael Henry says they are planning for the market to remain tough for the foreseeable future.
Guess we’ll know tomorrow how the market reacts in the stocks that are listed in the upper right hand corner of the site. It doesn’t sound good. To read a transcript of the entire call click here.
