Pacific Sunwear had the closure of its demo and One Thousand Steps stores eat into the bottom line, as closure expenses accounted for more than $25 million of the reported loss for the period. For continuing operations, PSUN saw a loss of $12.0 million, or 17 cents per share, versus a loss of $300,000 in Q1 last year. The retailer was also cautious looking at the remainder of the year, citing worries of the difficult economy as they cut guidance for Q2 and full year.
Nonetheless, PSUN continued onward with its plans to get out of the urban business at demo, the footwear business at PacSun, and the distribution business in Anaheim. During the first quarter, PSUN closed 153 demo stores and by the end of the quarter, had come to agreement regarding approximately 85% of its demo lease obligations.
The company also consolidated its distribution work into a single facility in Olathe, KS, closing down its Anaheim, CA facility in the process. The retailer anticipates the sale of the Anaheim facility will net approximately $33 million towards the end of fiscal 2008.
Finally, PSUN further reduced its footwear penetration, transferring sneakers and fashion footwear out of the full line stores, and mainly into its outlet division.
Apparel same-store sales generated a 13% increase for Q1 accounting for 77% of total sales evenly divided between young men's and juniors. Young men's apparel continued its solid performance with a 5% same-store sales increase. Juniors same-store sales were up 23%.
Branded goods represented approximately 75% of the product mix. In the markets of California, Florida, and the desert Southwest, same-store sales were down 8% for Q1. E-commerce sales grew over 60% to $8 million for the period. Merchandise gross margins increased 250 basis points.
Branded goods represented approximately 75% of the product mix. In the markets of California, Florida, and the desert Southwest, same-store sales were down 8% for Q1. E-commerce sales grew over 60% to $8 million for the period. Merchandise gross margins increased 250 basis points.
Assuming same-store sales in the range of negative 3% to flat for the second quarter of fiscal 2008, the company anticipates earnings from continuing operations of 3 cents to 5 cents per diluted share. For the full year, comps should be flat with earnings from continuing operations in the range of 75 cents to 80 cents per diluted share.
