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. Net sales at the PacSun concept decreased 0.5% to $384 million from $386 million for the fourth quarter last year, but increased 4.5% when excluding $18 million in sales from the year-ago quarters extra week. Total transactions for PacSun were down low-single-digits, offset by low-single-digit increases in average unit retail and average items per transaction.
Gross margin for the PacSun business declined 20 basis points to 33.2% of sales for the fourth quarter this year versus 33.4% in the fourth quarter last year. Merchandise margins increased 100 basis points due to lower markdowns and higher IMUs. PacSun net income was down slightly to $22 million or 31 cents per diluted share for fourth quarter this year, compared to $23 million or 33 cents per diluted share in Q4 last year.
Inventory per square foot at the end of the year was down 7% versus the prior year on a PacSun stand-alone basis.
During the quarter the company opened four new PacSun stores and closed seven. For the full year, the company opened 18 new stores and closed 110 stores; 76 of which were demo and 9 were One Thousand Steps.
Assuming a 3% to 4% increase in PacSun same-store sales for the fiscal year, the company expects earnings from continuing operations in fiscal 2008 of 73 cents to 77 cents per diluted share. For the first quarter of fiscal 2008, also assuming a 3% to 4% increase in PacSun same-store sales, the company expects to report a net loss from continuing operations of 6 cents to 8 cents per diluted share.
