Pacific Sunwear of California Inc. (
PSUN) reported fiscal third quarter results after the closing opening bell on Monday. The company posted a wider net loss of $10.9 million, or 17 cents per share, compared to a loss of $2.5 million, or 4 cents per share in the year-ago period. However, the result came in ahead of the Zacks Consensus Estimate for a 19-cents loss.
Pacific Sunwear is a lifestyle specialty retailer and offers casual apparel with a limited selection of accessories and footwear targeted towards teens and young adults. The company operates a nationwide, primarily mall-based chain of retail stores, under the names “Pacific Sunwear" and “PacSun". As of October 31, 2009, the company operated 904 stores in 50 states and Puerto Rico.
The company recorded a 17.1% decline in net sales to $268.3 million during the quarter, compared to $323.6 million in the year-ago period. The decrease was primarily the result of an 18% reduction in same-store sales coupled with the closure of 36 stores in the last one-year period.
Pacific Sunwear’s gross profit plunged 20.8% year over year to $73.4 million, while gross margin fell by 130 basis points (bps) to 27.4%. The decline was mainly caused by the deleveraging impact of buying and occupancy costs on lower sales, partially offset by improved merchandise margins.
Selling, general and administrative expenses decreased 6.2% year over year to $89.4 million, mainly due cost savings associated with store payroll. However, the slump in revenue caused Pacific Sunwear to post an operating loss of $15.9 million during the quarter, compared to a loss of $2.5 million in the year-ago quarter.
The company ended the quarter with cash and cash equivalents of $15.6 million, compared to $4.8 million in the year-ago period. Pacific Sunwear’s initiatives to optimize merchandise levels in accordance with sales trends led a 28.0% year-over-year decrease in inventories to $168.4 million at the end of the fiscal third quarter.
Looking ahead, the company expects to post a net loss 28 cents to 35 cents per share during the fourth quarter of fiscal 2009 assuming a same-store sales percentage decline in the low twenties. The Zacks Consensus Estimate for the quarter, derived from 14 covering analysts, is currently pegged at a loss of 11 cents per share, which has remained constant over the past 2 months.
Meanwhile, the Zacks Consensus Estimate on the company’s earnings for the year ending January 2010 has worsened by a penny over the past month and currently stands at a loss of 65 cents per share.
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