Pacific Sunwear of California, Inc.'s decreased 8.5% in the fourth quarter ended Jan. 31, to $351.7 million from $384.3 million a year ago as comps slumped 10%. The company recorded a loss from continuing operations of $27.6 million, or 42 cents a share, compared to income from continuing operations of $19.6 million, or 28 cents, a year ago.
Fourth quarter results for each period exclude the results from demo and One Thousand Steps due to the designation of these divisions as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively. Results for the fourth quarter of fiscal 2008 include the pre-tax gain on the sale of the company's closed Anaheim distribution center of $9.7 million, or 10 cents per diluted share, and a pre-tax, non-cash impairment charge of $4.6 million, or 5 cents per diluted share, associated with a reduction in the fair value of certain land that was held by the company for sale during the quarter.
“While we are disappointed with our operating results for fiscal 2008, we accomplished several key objectives focused on reducing inventory levels, managing costs and preserving our liquidity in this challenging retail environment,'' commented Sally Frame Kasaks, CEO. “We expect the retail industry will continue to face significant challenges in 2009, but we believe that we have taken appropriate and decisive steps to help us improve profitability in the long term.''
2008 Accomplishments
During fiscal 2008, the company accomplished several strategic and business objectives, including the following:
* Closed the company's underperforming demo business, thereby
allowing the company to focus solely on its core PacSun concept
* Exited the company's underperforming and lowest margin sneaker
category to focus its merchandising efforts on its higher margin,
faster turning apparel business
* Consolidated to a single distribution center to lower costs,
enhance efficiency and improve time to market within the
company's supply chain
* Implemented a series of actions to better position the company in
the current economic environment, including significantly
reducing inventory levels and planned capital expenditures and
SG&A expenses for fiscal 2009;
* Exceeded the company's goal for fiscal 2008 of apparel
representing at least 80% of its merchandise mix, with its
Juniors' business accounting for 50% of its apparel assortment
* Established a $150 million, asset-backed credit facility with JP
Morgan and Bank of America as its primary lenders
* Ended fiscal 2008 with nearly $25 million in cash on the balance
sheet and no direct borrowings under the company's credit
facility.
Full Year Results
Total sales for fiscal 2008 ended Jan. 31, 2009 were $1.25 billion, a decrease of 3.9% from total sales of $1.31 billion during fiscal 2007 ended Feb. 2, 2008. Total company same-store sales decreased 5 percent during fiscal 2008.
For fiscal 2008, the company recorded a loss from continuing operations of $39.4 million, or 59 cents per diluted share, compared to income from continuing operations of $45.6 million, or 65 cents per diluted share, in fiscal 2007. Results for fiscal 2008 include the previously announced non-cash, pre-tax asset impairment charge of $8.0 million, or 7 cents per diluted share, incurred in the first quarter related to the materials handling equipment in the company's closed Anaheim distribution center, the non-cash, pre-tax goodwill impairment charge of $6.5 million, or 6 cents per diluted share, incurred in the third quarter, the pre-tax gain on the sale of the company's closed Anaheim distribution center of $8.7 million, or 9 cents per diluted share, and a pre-tax, non-cash impairment charge of $4.6 million, or 5 cents per diluted share, associated with a reduction in the fair value of certain land that was held by the company for sale during the fourth quarter.
Financial Outlook for First Fiscal Quarter of 2009
PSUN is now providing earnings guidance only on a quarter-to-quarter basis due to the unprecedented and uncertain nature of the current economic and consumer environment. Assuming a same-store sales decline in the negative low-twenty percent range for the first quarter, the company expects to report a loss of 26 cents to 31 cents per diluted share for the first quarter of fiscal 2009.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)
Fourth Quarter Ended Fiscal Year Ended
———————– ————————-
01/31/09 02/02/08 01/31/09 02/02/08
———- ———- ———- ———-
Net sales $ 351,682 $ 384,274 $1,254,886 $1,306,028
Gross margin 56,608 122,156 320,107 413,926
Selling, G&A
expenses 99,845 92,332 381,008 344,295
———- ———- ———- ———-
Operating (loss)/
income from
continuing (43,237) 29,824 (60,901) 69,631
operations
Other income, net (2,830) (850) (2,369) (3,012)
———- ———- ———- ———-
(Loss)/income from
continuing
operations before
income taxes (40,407) 30,674 (58,532) 72,643
Income tax
(benefit)/expense (12,764) 11,117 (19,108) 27,023
———- ———- ———- ———-
(Loss)/income from
continuing
operations (27,643) 19,557 (39,424) 45,620
Discontinued
operations, net
of tax 583 (14,327) (24,416) (75,987)
———- ———- ———- ———-
Net (loss)/income $ (27,060) $ 5,230 $ (63,840) $ (30,367)
========== ========== ========== ==========
(Loss)/income from
continuing
operations per
share:
Basic $ (0.42) $ 0.28 $ (0.59) $ 0.65
========== ========== ========== ==========
Diluted $ (0.42) $ 0.28 $ (0.59) $ 0.65
========== ========== ========== ==========
Net (loss)/income
per share:
Basic $ (0.42) $ 0.07 $ (0.96) $ (0.44)
========== ========== ========== ==========
Diluted $ (0.42) $ 0.07 $ (0.96) $ (0.44)
========== ========== ========== ==========
Weighted average
shares
outstanding:
Basic 65,059,597 69,961,943 66,652,088 69,749,536
========== ========== ========== ==========
Diluted 65,059,597 70,069,528 66,652,088 70,020,500
