Pacific Sunwear Q1 Net Income Jumps 88%; Raises Guidance

Pacific Sunwear of California Inc. reported that net income for the first quarter ended May 1, 2004 increased 88% to $15.0 million, or 19 cents per diluted share, compared to $8.0 million, or 10 cents per diluted share, for the first quarter of fiscal 2003.

Total sales for the first quarter (13 weeks) ended May 1, 2004 were $245.1 million, an increase of 23.6% over total sales of $198.3 million for the first quarter (13 weeks) ended May 3, 2003. Same-store sales increased 12.7% for the comparable 13-week period ended May 1, 2004.

“I am pleased to report that we had a great first quarter with earnings up 88 percent over last year,” stated Greg Weaver, chairman and CEO. “Same store sales growth was a robust 12.7% for the quarter. For PacSun, we achieved strong double digit same store sales growth in footwear and accessories and high single digit comparable increases in guy's and low single digit increases in girl's apparel.

“We achieved a 6.0% same store sales increase in our d.e.m.o. chain in the first quarter against a very strong same store sales increase of 36.5% achieved in Q1 a year ago. Girl's apparel, accessories and footwear have been the comp drivers in d.e.m.o. while men's were down mid single digits. We opened 16 new d.e.m.o. stores in the first quarter with a projected first year average sales trend of $1.2 million for those stores.

“In the first quarter, we opened 30 net new stores. For the year, we are on plan to open 110 new stores and expand/relocate 35 stores to larger locations, which equates to square footage growth of 15 percent. We are currently tracking ahead of our 13 percent operating margin goal for fiscal 2004. Based upon first quarter earnings results and the completed $50.0 million stock repurchase which reduced share count by nearly 3 percent, the company is increasing its full year earnings per share guidance to $1.31 from the current consensus of $1.26, assuming same store sales growth of 5 percent for the balance of the year,” concluded Weaver.

                  PACIFIC SUNWEAR OF CALIFORNIA INC.
                      SUMMARY STATEMENT OF INCOME
                              (unaudited)
              (in $000s, except share and per share data)

                                                FIRST QUARTER ENDED
                                             MAY 1, 2004  MAY 3, 2003
Net sales                                    $   245,131  $   198,331
Gross margin                                      83,572       63,855
Selling, G&A expense                              59,951       50,962
Operating income                                  23,621       12,893
Interest income, net                                 457           61
Income before taxes                               24,078       12,954
Income tax expense                                 9,104        4,975
Net income                                   $    14,974  $     7,979
Net income per share, basic (a)              $      0.19  $      0.11
Net income per share, diluted (a)            $      0.19  $      0.10
Weighted average shares outstanding, basic
 (a)                                          78,157,771   74,524,548
Weighted average shares outstanding, diluted
 (a)                                          80,146,144   76,472,511

(a) Prior year share and per share amounts have been adjusted for the
three-for-two stock split effected Aug. 25, 2003.