PacSun Q4 Sales Dip 10%

 

Total company same-store sales decreased 7% during the fourth quarter of fiscal 2010. The company reported a net loss of $35 million, or 53 cents per share, for the fourth quarter of fiscal 2010 compared to a net loss of $36 million, or $56 cents per share, for the fourth quarter of fiscal 2009.

 

Results for the fourth quarter of fiscal 2010 reflect the continuing impact of a valuation allowance against the Company's deferred tax assets. On a comparable non-GAAP basis, using a normalized 38% income tax rate, the company's non-GAAP net loss for the quarter was $22 million, or $33 cents per share.

 

“Our fourth quarter results ended up in line with the lower guidance that we indicated in early January. Our Men's business achieved a positive comp for the quarter and year, yet our Women's business continued its downward trend of the past two years,” said Gary H. Schoenfeld, President and Chief Executive Officer. “While we believe we have made progress in several critical areas, we clearly have much still to accomplish to turn this business around. Among our highest priorities include reestablishing our Spring/Summer Women's business, mitigating product cost pressures and attracting new customers to PacSun.”

 

 

Total sales for fiscal 2010 ended Jan. 29, 2011 were $930 million, a decrease of 10% from total sales of $1.03 billion during fiscal 2009 ended Jan. 30, 2010. Total company same-store sales decreased 8% during fiscal 2010. The company reported a net loss of $97 million, or $(1.46) per share, for fiscal 2010 compared to a net loss of $70 million, or $(1.07) per share, in fiscal 2009. Results for fiscal 2010 reflect the continuing impact of a valuation allowance against the company's deferred tax assets. On a comparable non-GAAP basis, using a normalized 37% income tax rate, the Company's non-GAAP net loss for the year was $60 million, or 91 cents per share.

 

 

The company's guidance range for the first quarter of fiscal 2011 contemplates a GAAP net loss per share of 46 cents to 55 cents which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and thus a very low effective tax rate. On a non-GAAP basis, using a normalized effective income tax rate of 36% to 37%, the company's guidance range translates to a net loss of 29 cents to 35 cents per share for the first quarter of fiscal 2011.

 

The forecasted first quarter GAAP earnings range is based on the following major assumptions:

�Change in same-store sales of -3% to +2%;

�Gross margin rate, including buying, distribution and occupancy, of 18% to 20% versus last year's 22%;

�SG&A expenses in the range of $67 million to $69 million versus last year's $73 million; and

�Minimal income tax expense for the quarter as the company no longer records income tax benefits against its operating losses.