Poor Pacific Sunwear. It appears they didn’t find anyone to help them pay the rent and are now going to be forced to close up to 200 stores in the coming 14 months, according to a story in the Wall Street Journal.
In a deal announced with PacSun’s earnings Wednesday, Golden Gate Capital will receive the option to buy up to 19.9% of PacSun’s shares at a price of $1.75 in exchange for a five-year $60 million secured-term loan expected to help PacSun buy out leases and shutter struggling stores. Golden Gate will also receive two seats on PacSun’s board.
Sadly, this is the best news the street has heard from the company all year and it sent the company stock price rocketing up 37 percent in after hours trading to a whopping $1.85 a share, according to the story. Just think if they closed 400 stores.
[Link: Wall Street Journal]
So lets say that your brand had 10k worth of product in these 200 stores. 2500.00 per season. That’s reasonable right?
Pac Sun closes 200 doors… it means you are looking at a loss of 2,000,000.00
Not really sure how much a poorly located Pac Sun retail store does but it’s got to be close to 1,000,000.00 in so that’s 600,000.00 in product at wholesale granted they make 40% on average….
That’s a lot of dollars coming out of the industry. I doubt that the local retailer will see an increase in T Shirt sales from this. But who knows.
Sounds like another big hit for brands with large exposure to Pac Sun.
Downward trend continues. And all the more reason for brands to invest in a more vertical strategy.
poor volcom,
if they continue to go vertical, they will be more and more on their own. They need specialty to keep themselves cool. The only way it may work is to buy chains and let them run under separate names. Factory stores have performed bad. No one working there cares like a specialty door would
…and Pac Sun was famous for a splash of name brands in the window and the bulk of their inventory was low selling private label brands on their shelf. assortment. product mix and their lack of buying deep in brands is why the have been in trouble for so long… and CEO Gary S is not a product and consumer visionary like the late Steve Jobs….
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