Pacific Sunwear of California, Inc. reported a net loss of $19.3 million, or 29 cents per share, in the second quarter compared to a net loss of $23.5 million, or 36 cents, a year ago.

Results for the second quarter of fiscal 2011 and 2010 reflect the
continuing impact of a valuation allowance against the company's
deferred tax assets. On a non-GAAP basis, using a normalized annual
income tax rate of approximately 36 percent, the company's net loss for
the second quarter was $12.2 million, or 18 cents per share, as compared
to a net loss of $14.7 million, or 22 cents per share, for the same
period a year ago.

Sales for the second quarter were $214.9 million versus net sales of $218.3 million a year ago. Same-store sales increased 1 percent during the period. The company ended its second quarter of fiscal 2011 with 821 stores, as compared to 880 for the second fiscal quarter of 2010.

“We continued to make progress in the second quarter as evidenced by our results, which included our second consecutive quarter of positive comps, better than expected merchandise margins, reduced inventories, and further reductions in operating expenses,” said Gary H. Schoenfeld, president and chief executive officer. “Until recently we had expected this positive momentum to continue, yet we are now more cautious in our near term outlook due to a combination of factors including macroeconomic pressure, along with a highly promotional start to the back to school season.”

Financial Outlook for Third Fiscal Quarter of 2011

The company's guidance range for the third quarter of fiscal 2011 contemplates a GAAP net loss per share of $(0.16) to $(0.29), which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and a low effective tax rate. On a non-GAAP basis, using a normalized annual income tax rate of approximately 36 percent, the company's guidance range translates to a net loss of $(0.10) to $(0.18) per share for the third quarter of fiscal 2011. The forecasted third quarter GAAP guidance range is based on the following assumptions:

         — Same-store sales of mid to high negative single digit comps;
        
         — Gross margin rate, including buying, distribution and occupancy, of
            22 percent to 24 percent;
       
         — SG&A expenses in the range of $66 million to $68 million; and
       
         — Minimal income tax expense as the company no longer records income
            tax benefits against its operating losses.