Pacific Sunwear of California, Inc. reported sales from continuing operations for the fourth quarter decreased 7.8% to $420.1 million from $455.8 million. Same-store sales decreased 2.2%. By concept, PacSun same-store sales increased 2.1% and demo same-store sales decreased 31.0%. Net income from continuing operations fell 33.9% to $7.6 million, or 11 cents a share, from $11.5 million, or 16 cents, a year ago.
Fourth quarter results for each period exclude the income statement impact of One Thousand Steps in both years due to its designation as a discontinued operation during the fourth quarter of fiscal 2007. Due to the 53rd week in fiscal 2006, same-store sales for the fourth quarter of fiscal 2007 are compared to the thirteen-week period ended February 3, 2007.
On a non-GAAP basis, excluding all additional income statement impacts of the company's demo business, which is expected to become a discontinued operation during the first quarter of fiscal 2008, and other non-recurring charges, the company generated net income from continuing operations of $21.6 million, or $0.31 per diluted share, for the fourth quarter of fiscal 2007 compared to $22.8 million, or $0.33 per diluted share, for the fourth quarter of fiscal 2006. A reconciliation of the GAAP to non-GAAP financial measures above is contained at the end of this press release.
“I am very pleased by the continuing progress shown by our PacSun business during the fourth quarter,'' commented Sally Frame Kasaks, CEO. “We completed a solid holiday season, driven by continued progress in improving our apparel business.''
Total sales for fiscal 2007 (52 weeks) ended February 2, 2008 were $1,454.2 million, an increase of 0.8 percent over total sales of $1,442.0 million during fiscal 2006 (53 weeks) ended February 3, 2007.
Total company same-store sales increased 0.7 percent during fiscal 2007. By concept, PacSun same-store sales increased 3.4 percent and demo same-store sales decreased 19.6 percent. Due to the 53rd week in fiscal 2006, same-store sales for fiscal 2007 are compared to the 52-week period ended February 3, 2007.
For fiscal 2007, the company recorded a net loss from continuing operations of $18.6 million, or $(0.27) per diluted share, compared to net income from continuing operations of $43.9 million, or $0.62 per diluted share, in fiscal 2006. These fiscal year results exclude the income statement impact of One Thousand Steps in both years due to its designation as a discontinued operation during the fourth quarter of fiscal 2007.
On a non-GAAP basis, excluding all additional income statement impacts of the company's demo business, which is expected to become a discontinued operation during the first quarter of fiscal 2008, and other non-recurring charges, the Company generated net income from continuing operations of $47.9 million, or $0.69 per diluted share, for fiscal 2007 compared to $61.9 million, or $0.87 per diluted share, for fiscal 2006. A reconciliation of the GAAP to non-GAAP financial measures above is contained at the end of this press release.
Financial Outlook for Fiscal 2008
Assuming a 3 to 4 percent increase in PacSun same-store sales for the fiscal year ending January 31, 2009 (“fiscal 2008''), the company expects earnings from continuing operations in fiscal 2008 of $0.73 to $0.77 per diluted share. For the first quarter of fiscal 2008 ending May 3, 2008, and also assuming a 3 to 4 percent increase in PacSun same-store sales for the quarter, the company expects to report a net loss from continuing operations of $(0.06) to $(0.08) per diluted share. These earnings ranges exclude demo since it will be reported as a discontinued operation in quarterly filings beginning with the first quarter of fiscal 2008 ending May 3, 2008. Accordingly, the earnings ranges do not include the anticipated impact of any lease termination or other liquidation-related charges that will occur associated with the company's discontinuation of its demo business.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF INCOME
(unaudited, in thousands except share and per share data)Fourth Quarter Ended Fiscal Year Ended
———————— ————————
02/02/08 02/03/07 02/02/08 02/03/07
———– ———– ———– ———–
Net sales $ 420,142 $ 455,810 $ 1,454,163 $ 1,442,002
Gross margin 119,230 146,240 407,175 448,300
Selling, G&A
expenses 105,654 128,261 443,578 381,645
———– ———– ———– ———–
Operating income/
(loss)from
continuing
operations 13,576 17,979 (36,403) 66,655
Interest income,
net 851 1,026 3,012 4,620
———– ———– ———– ———–
Income/(Loss) from
continuing
operations before
income taxes 14,427 19,005 (33,391) 71,275
Income tax expense/
(benefit) 6,802 7,487 (14,820) 27,404
———– ———– ———– ———–
Net income/(loss)
from continuing
operations 7,625 $ 11,518 $ (18,571) $ 43,871
Loss on
discontinued
operations, net
of tax benefit (2,395) (2,455) (11,796) (4,250)
———– ———– ———– ———–
Net income/(loss) $ 5,230 $ 9,063 $ (30,367) $ 39,621
=========== =========== =========== ===========Net income/(loss)
from continuing
operations per
share, basic $ 0.11 $ 0.17 $ (0.27) $ 0.62
=========== =========== =========== ===========
Net income/(loss)
from continuing
operations per
share, diluted $ 0.11 $ 0.16 $ (0.27) $ 0.62
=========== =========== =========== ===========
Net income/(loss)
per share, basic $ 0.07 $ 0.13 $ (0.44) $ 0.56
=========== =========== =========== ===========
Net income/(loss)
per share,
diluted $ 0.07 $ 0.13 $ (0.44) $ 0.56
=========== =========== =========== ===========
Wtd avg shares
outstanding,
basic 69,961,943 69,481,032 69,749,536 70,800,912
=========== =========== =========== ===========
Wtd avg shares
outstanding,
diluted 70,069,528 69,815,699 69,749,536 71,170,181
=========== =========== =========== ===========
