ANAHEIM, Calif., Aug. 21, 2008 (GLOBE NEWSWIRE) -- Pacific Sunwear of California, Inc. (Nasdaq:PSUN) (the "Company") today announced that total sales for the second quarter (13 weeks) of fiscal 2008 ended August 2, 2008, were $312.7 million, a slight increase over total sales of $311.8 million for the second quarter (13 weeks) of fiscal 2007 ended August 4, 2007. Total Company same-store sales decreased one percent during the second quarter of fiscal 2008.
The Company recorded income from continuing operations of $3.7 million, or $0.06 per diluted share, for the second quarter of fiscal 2008 compared to income from continuing operations of $9.3 million, or $0.13 per diluted share, for the second quarter of fiscal 2007. Second quarter results for each period exclude the income statement impact of demo and One Thousand Steps due to their being designated as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively.
"Although our earnings for the second quarter were in line with our expectations, our results continue to reflect the impact of a weakening economy on the retail sector. With the possibility of an even tougher environment ahead, we plan to maintain strong operating discipline while weathering these economic headwinds in order to position our business for success when the environment improves," commented Sally Frame Kasaks, Chief Executive Officer.
Total sales for the first half (26 weeks) ended August 2, 2008 were $579.6 million, a slight decrease from total sales of $579.9 million during the first half (26 weeks) ended August 4, 2007. Same-store sales decreased one percent during the same period. For the first half of fiscal 2008, the Company recorded a loss from continuing operations of $8.3 million, or $(0.12) per diluted share, compared to income from continuing operations of $8.9 million, or $0.13 per diluted share, in the first half of fiscal 2007. The first half earnings result includes the asset impairment charge of $0.07 per diluted share incurred in the first quarter related to the materials handling equipment in the Company's closed Anaheim distribution center.
Financial Outlook
Given the increasingly difficult economic environment and challenging retail conditions in some of the Company's key markets, the Company is revising its outlook for the third and fourth quarters of fiscal 2008. Assuming same-store sales in the negative high-single digit range and year-over-year selling, general and administrative expense growth of not more than five percent, the Company anticipates earnings from continuing operations of $0.00 to $0.05 per diluted share for the third quarter of fiscal 2008 and non-GAAP earnings from continuing operations of $0.11 to $0.16 per diluted share for the fourth quarter of fiscal 2008. The earnings range for the fourth quarter excludes the anticipated gain of approximately $0.23 per diluted share from the sale of the Company's closed Anaheim distribution center, which is currently expected to close during the fourth quarter. On a GAAP basis, after giving effect to the anticipated gain associated with the sale of the Anaheim distribution center, the Company anticipates earnings from continuing operations for the fourth quarter of fiscal 2008 in the range of $0.34 to $0.39 cents per diluted share.
About Pacific Sunwear of California, Inc.
Pacific Sunwear is a leading lifestyle specialty retailer rooted in the youth culture and fashion vibe of Southern 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 August 2, 2008, the Company operated 815 PacSun stores and 123 PacSun Outlet stores for a total of 938 stores in 50 states and Puerto Rico. PacSun's website address is www.pacsun.com.
The Pacific Sunwear of California logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2087
The Company will be hosting a conference call today at 4:30 pm Eastern Time. A telephonic replay of the conference call will be available beginning approximately two hours following the call for one week and can be accessed in the United States/Canada at (800) 642-1687 or internationally at (706) 645-9291; pass code: 59389512. For those unable to listen to the live Web broadcast on the Company's investor relations website www.pacsun.com, or utilize the call-in replay, an archived version will be available on the Company's investor relations Web site through midnight, November 17, 2008.
Pacific Sunwear Safe Harbor
This press release contains "forward-looking statements" including, without limitation, statements regarding the Company's earnings projections, same-store sales and selling, general and administrative expense assumptions for the third and fourth quarters of fiscal 2008. In each case, these statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company intends that these forward-looking statements be subject to the safe harbors created thereby. These statements are not historical facts and involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in such forward-looking statements. Such uncertainties which could adversely affect our business and results include, among others, the following factors: our assumption of same-store sales during the third and fourth quarters of fiscal 2008 may be wrong and actual same-store sales may be higher or lower; adverse changes in economic conditions generally; changes in consumer spending, demands and preferences; higher than anticipated markdowns and/or higher than estimated selling, general and administrative costs; competition from other retailers and uncertainties generally associated with apparel retailing; merchandising/fashion sensitivity; sales from private label merchandise; expansion and management of growth; reliance on key personnel; economic impact of natural disasters, terrorist attacks or war/threat of war; shortages of supplies and/or contractors, as a result of natural disasters or terrorist acts, could cause unexpected delays in new store openings, relocations, renovations or expansions; reliance on foreign sources of production and other risks outlined in the company's SEC filings, including but not limited to the Annual Report on Form 10-K for the year ended February 2, 2008 and subsequent periodic reports filed with the Securities and Exchange Commission. Historical results achieved are not necessarily indicative of future prospects of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur after such statements are made. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)
Second Quarter Ended First Half Ended
--------------------- ---------------------
AUG. 2, AUG. 4, AUG. 2, AUG. 4,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $312,726 $311,775 $579,592 $579,881
Gross margin 95,258 101,846 170,723 177,044
Selling, G&A expenses 90,173 86,933 185,985 163,638
---------- ---------- ---------- ----------
Operating income (loss)
from continuing
operations 5,085 14,913 (15,262) 13,406
Interest income, net 11 541 769 1,510
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes 5,096 15,454 (14,493) 14,916
Income tax expense
(benefit) 1,388 6,196 (6,232) 5,996
---------- ---------- ---------- ----------
Income (loss) from
continuing operations 3,708 9,258 (8,261) 8,920
Loss from discontinued
operations, net of tax
benefit (912) (19,760) (26,045) (24,480)
---------- ---------- ---------- ----------
Net income (loss) $2,796 $(10,502) $(34,306) $(15,560)
========== ========== ========== ==========
Income (loss) from
continuing operations per
share, basic $0.06 $0.13 $(0.12) $0.13
========== ========== ========== ==========
Income (loss) from
continuing operations per
share, diluted $0.06 $0.13 $(0.12) $0.13
========== ========== ========== ==========
Net income (loss) per
share, basic $0.04 $(0.15) $(0.50) $(0.22)
========== ========== ========== ==========
Net income (loss) per
share, diluted $0.04 $(0.15) $(0.50) $(0.22)
========== ========== ========== ==========
Weighted average shares
outstanding, basic 66,664,245 69,692,827 68,290,024 69,635,543
========== ========== ========== ==========
Weighted average shares
outstanding, diluted 66,704,159 70,064,804 68,290,024 69,986,773
========== ========== ========== ==========
Note: All periods presented above exclude the income statement impact
to continuing operations of demo and One Thousand Steps, which were
designated as discontinued operations during the first quarter of
fiscal 2008 and the fourth quarter of fiscal 2007, respectively.
Continuing operations, as presented above, include the operations of
the Company's PacSun and PacSun Outlet stores only.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
AUG. 2, FEB. 2, AUG. 4,
2008 2008 2007
-------- -------- --------
ASSETS
Current assets:
Cash & cash equivalents $ 1,560 $ 97,587 $ 26,264
Marketable securities -- -- 16,000
Inventories 229,738 170,182 256,084
Other current assets 83,288 52,818 56,954
-------- -------- --------
Total current assets 314,586 320,587 355,302
Property and equipment, net 373,045 376,243 434,600
Other long-term assets 39,323 55,313 43,418
-------- -------- --------
Total assets $726,954 $752,143 $833,320
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $131,990 $ 62,349 $114,120
Credit facility 10,780 -- --
Other current liabilities 68,843 71,107 80,470
-------- -------- --------
Total current liabilities 211,613 133,456 194,590
Deferred lease incentives 57,835 74,012 81,283
Deferred rent 23,824 27,669 29,158
Other long-term liabilities 34,487 33,661 35,831
-------- -------- --------
Total liabilities 327,759 268,798 340,862
Total shareholders' equity 399,195 483,345 492,458
-------- -------- --------
Total liabilities and shareholders'
equity $726,954 $752,143 $833,320
======== ======== ========
PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(unaudited, in thousands)
FOR THE FIRST HALF
ENDED
AUG. 2, AUG. 4,
2008 2007
--------- ---------
Cash flows from operating activities:
Net loss $ (34,306) $ (15,560)
Depreciation & amortization 40,685 38,027
Non-cash stock based compensation 2,463 3,023
Tax (deficiencies) benefits from exercise of
stock options (968) 369
Excess tax benefits related to stock-based
compensation -- (344)
Loss on disposal of property and equipment 13,354 12,197
Changes in operating assets and liabilities:
Inventories (59,556) (50,871)
Accounts payable and other current liabilities 65,345 53,338
Other assets and liabilities (33,684) (20,706)
--------- ---------
Net cash (used in)/provided by operating
activities (6,667) 19,473
Cash flows from investing activities:
Purchases of short-term investments -- (122,400)
Maturities of short-term investments -- 137,900
Purchases of long-term investments -- (23,300)
Capital expenditures (48,836) (63,175)
--------- ---------
Net cash used in investing activities (48,836) (70,975)
Cash flows from financing activities:
Repurchases of common stock (52,911) --
Excess tax benefits related to stock-based
compensation -- 344
Proceeds from exercise of stock options 1,614 1,896
Borrowings under credit facility 43,099 --
Principal payments under credit facility (32,319) --
Principal payments under capital lease
obligations (7) (41)
Borrowings under long-term debt obligations -- 23,300
--------- ---------
Net cash (used in) /provided by financing
activities (40,524) 25,499
--------- ---------
Net decrease in cash and cash equivalents (96,027) (26,003)
Cash and cash equivalents, beginning of period 97,587 52,267
--------- ---------
Cash and cash equivalents, end of period $ 1,560 $ 26,264
========= =========
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SELECTED STORE OPERATING DATA
Fiscal 2008 Fiscal 2007
----------- -----------
Stores open at beginning of fiscal year 1,107 1,199
Stores opened during the period 9 6
Stores closed during the period (178) (87)
----------- -----------
Stores open at end of period 938 1,118
Note: Fiscal 2008 store closures include 153 demo stores. demo became
a discontinued operation during the first quarter of fiscal 2008.
Aug. 2, 2008 Aug. 4, 2007
--------------- ---------------
Square Square
# of Footage # of Footage
Stores (000's) Stores (000's)
--------------- ---------------
PacSun stores 815 3,099 840 3,179
Outlet stores 123 497 117 474
demo stores -- -- 152 435
One Thousand Steps stores -- -- 9 24
--------------- ---------------
Total stores 938 3,596 1,118 4,112