Pacific Sunwear sales are off 20% so far in the third quarter in those parts of the country hit worst by the subprime mortgage meltdown, said SVP and CFO Mike Henry.
The sharp declines are prompting the company to reconsider their decision to exit the footwear business. The company closed its One Thousand steps nine-store footwear chain and its 154-store demo chain this year. With footwear out of the equation, Henry noted that about 83% of the business is now apparel, as opposed to 2007 when it made up 71%.
Sales have continued to deteriorate from a 10% decline in Q1 to a 20% decline thus far in the third quarter in California, the desert Southwest and Florida, which make up about 24% of the companys store base. Additionally, the Pacific Northwest and Rocky Mountain Great Plains regions saw an 18% drop in September comps.
“Youre talking about a third of our stores that are in economic regions that appear to be very heavily influenced by the housing issue, by the credit issue, and other things that weve been hearing out there in the news,” said Henry.
Not all is bleak, however. Henry said PSUN is focusing inventory on “areas that are performing – like the Midwest, Texas, and the Northeast – and trying to contain inventory size in those difficult areas.”
