Pacific Sunwear of California, Inc. lost $31.5 million in the second quarter as the surf-inspired retailer continues to undergo an image revival to help spark sales for a consumer base that is growing increasingly disinterested.
In March, management for PacSun vowed to deeply embrace a culture shift by bolstering a struggling womens line and revamping the companys image. In doing so, PacSun has cut selling prices and emphasized the importance of introducing new apparel styles more quickly. The $31.5 million loss, which compares to a loss of $31.0 million a year-ago, was somewhat expected as the retailer sinks resources into the rebranding initiative.
In a conference call with analysts, CEO Gary Schoenfield noted that PacSun has hired eight new executives over the past 18 months, including tapping former Gap executive Michael Kaplan as CFO in early May. Schoenfield added that PacSun has completely transformed its womens merchandising and design, closed nearly 100 stores and rebuilt brand relationships in efforts to establish the companys new culture.
Among other results, total sales dipped 2 percent to $186.8 million from $190.3 million a year-ago. Same-store sales for the quarter increased 1 percent on 4 percent comp growth from the womens business, which offset a 3 percent comp dip in the mens business that stemmed from weakness in seasonal categories of board shorts and sandals.
Gross margins for the quarter were 19.1 percent, down 320 basis points from 22.3 percent in the year-ago period.
PSUN said it expects a net loss of between 36 cents to 46 cents per share in the second quarter, or a loss of between 22 cents to 29 cents excluding items, the retailer expects. Same-store sales are expected to be between -3 percent and +2 percent with gross margins of between 19 percent and 21 percent. Schoenfield added that sales in May have been slower-than-expected due to a later Easter and colder temperatures across most regions.
