Pacific Sunwear is also in the pink for 2004, as February sales at both the PacSun and d.e.m.o. nameplates continue the strong performance of 2003.

The company is looking at broader expansion into power strip centers for PacSun moving forward, with the venue expected to make up 10% of the 1,000 PacSun stores projected by 2007. The d.e.mo. push to 400 doors in the same time frame is expected to take place in the traditional mall venues.

Sales for the fourth quarter ended January 31 increased 22.9% to $326.3 million from sales of $265.6 million in the year-ago period. Same-store sales increased 12.0% for the quarter, with with PacSun same store sales up 11.9% and d.e.m.o. same store sales up 12.6%.

At PacSun, footwear comps were up more than 20% for the quarter, while accessories comps increased in the “high teens”, young men’s rose in the “mid single digits” and girl’s delivered a “high single digit” gain.

For the year, PacSun stores generated $359 per square foot on annualized basis, or an average per store “in the $1.3 million range. Men’s was 36% of total sales for the year, girl’s was 31.5% of sales, accessories delivered 20% of sales, and footwear was “just under 13%” of the total. Girl’s was 47% of apparel sales.

Private label was 33% of total PacSun sales versus 34% last year.

PSUN feels that footwear and accessories could make up approximately 35% of PacSun sales in 2004. The company said the biggest driver in footwear continues to be the skate category, specifically skate retro looks from etnies and more technical product from Adio and DC Shoes. In girl’s footwear, it looks like anything trimmed in pink is working.

At d.e.m.o., girl’s comps were up in excess of 20%, accessories were up in the “high teens”, and the guys business was up in the “low single digits”. Footwear launched at the company’s suburban hip-hop format in Q3 and is expected to be a comp drive throughout the first half of the current year.

Girl’s is expected to grow to at least 34% of sales at d.e.m.o. this year and 50% in the next two years. Girl’s was 31.5% of sales in 2003 and 27% in 2002.
Private label was 10% of d.e.m.o. sales versus 13% in the previous year.

Annualized sales at new d.e.m.o. stores opened in 2003 are trending at more than $1.1 million per store. The average for all stores was $970,000 for the year. The stores are delivering $405 per square foot.

For the company, the number of transactions on a comp store basis were up 9.0%, while the number of units per transaction were up 2.0%. The average selling price was up 1.0% for the year.

Gross margins rose 70 basis points to 36.5% in Q4 versus 35.8% in the year-ago period, despite flat merchandise margins and slight increase in distribution and buying costs as a percentage of sales. Net income for the fourth quarter increased 47.8% to $34.3 million, or 43 cents per diluted share, compared to $23.2 million, or 31 cents per diluted share, for the fourth quarter of fiscal 2002.

Merchandise margins are around 52% and are expected to go to 52.5% to 52.8% “over time”. The increasing girl’s business should help here as they deliver approximately five points more in margin than the guy’s business. Part of the differential is the larger portion of the girl’s business that is attributed to private label.

For fiscal 2004, PSUN plans to open 110 net new stores, including 65 PacSun stores, 5 PacSun Outlet stores, and 40 d.e.m.o. stores, and expand or relocate approximately 35 stores, for a year-end 2004 store count to 987. Square footage is expected to grow approximately 15%.

PSUN sees earnings growth of 20% equating to $1.22, assuming same-store sales growth of approximately 5% for the year. Analysts are forecasting earnings of $1.21 per share on $1.19 billion in sales.

For February, total sales increased 26.8% to $67.7 million from $53.4 million in the year-ago month. Total company same-store sales increased 14.1%, with PacSun comps rising 14.8% and d.e.m.o. same store sales increasing 10.3%.

At PacSun, footwear and accessories were up in “double digits” for the month, while guy’s posted a “mid single-digit” comp increase and girl’s grew in the “low single-digits”. At d.e.m.o., girl’s and accessories were up in “double digits” for the month, while men’s comps showed a rare decline for the chain, posting a “low double-digits” decrease.

E-commerce sales were up 89% for the month and merchandise margins showed an improvement over the year-ago period.