Pac Sun Sales Drop 15% in Q1

Pacific Sunwear of California, Inc. claims that net sales for the first quarter of fiscal 2010 ended May 1, 2010, were $190 million versus net sales of $223 million for the first quarter of fiscal 2009 ended May 2, 2009. Total Company same-store sales decreased 15% during the period.

“Our first quarter results were at the higher end of our expectations led by improving trends in our Young Mens business and better than expected merchandise margins in both Young Mens and Juniors,” stated Gary H. Schoenfeld, President and Chief Executive Officer. “While having a lot still to accomplish, we continue to be optimistic about the prospects for sequential quarterly improvements and achieving the targets we outlined at the beginning of the year.”

Financial Outlook for Second Quarter of Fiscal 2010

The Company expects to report a GAAP net loss per share of $(0.35) to $(0.45) for the second quarter of fiscal 2010 which will reflect the continuing impact of maintaining a valuation allowance against deferred tax assets and a very low effective tax rate. On a non-GAAP basis, using a normalized income tax rate of approximately 36% to 37%, the Company expects a net loss of $(0.22) to $(0.28) per share for the second quarter of fiscal 2010. The forecasted second quarter GAAP earnings range is based on the following significant assumptions:

•Same-store sales decline of 9% to 14%;
•Gross margin rate, including buying, distribution and occupancy costs, of 21% to 24%;
•SG&A expenses in the range of $72 million to $75 million;
•As the Company no longer records income tax benefits against its operating losses, tax expense will be approximately $300,000 due to taxable income projected to be generated in certain state and local tax jurisdictions.