Pacific Sunwear of California sales for the third quarter were $373.1 million, a decrease of 0.6% from total sales of $375.4 million for the third quarter of fiscal 2006. Total company same-store sales increased 5.0% during the third quarter of fiscal 2007. By concept, PacSun same-store sales increased 7.7% and demo same-store sales decreased 18.3%. Due to the 53rd week in fiscal 2006, same-store sales for the third quarter of fiscal 2007 are compared to the thirteen-week period ended November 4, 2006.
For the third quarter of fiscal 2007, the company recorded a GAAP net loss of $20.0 million, or 29 cents per diluted share, compared to GAAP net income of $9.0 million, or 13 cents per diluted share, for the third quarter of fiscal 2006.
Store asset impairments and inventory reserves associated with the Company's demo stores accounted for approximately $31 million in after-tax charges, or 45 cents per diluted share. Excluding these charges and their related tax rate implications, the Company generated non-GAAP net income of $11.1 million, or 16 cents per diluted share, for the third quarter of fiscal 2007. A reconciliation of the GAAP to non-GAAP financial measures above is contained at the end of this press release.
“I am very pleased by the progress shown by our core PacSun business during the third quarter,'' commented Sally Frame Kasaks, Chief Executive Officer. “We completed a strong back-to-school season, driven by continued progress in improving our juniors' business and steady performance from our guys' business.''
Total sales for the first three quarters (39 weeks) ended November 3, 2007 were $1,038.0 million, an increase of 4.9% over total sales of $989.0 million during the first three quarters (39 weeks) ended October 28, 2006.
PacSun same-store sales increased 2.0% during the first three quarters. By concept, PacSun same-store sales increased 4.0% and demo same-store sales decreased 13.7%. Due to the 53rd week in fiscal 2006, same-store sales for the first three quarters of fiscal 2007 are compared to the 39-week period ended November 4, 2006.
For the first three quarters of fiscal 2007, the Company recorded a GAAP net loss of $35.6 million, or 51 cents per diluted share, compared to GAAP net income of $30.6 million, or 43 cents per diluted share, in the first three quarters of fiscal 2006 ended October 28, 2006. Store asset impairments, lease termination charges, inventory reserves and other liquidation charges associated with the Company's demo and One Thousand Steps stores accounted for approximately $48 million in after-tax charges, or 69 cents per diluted share. Excluding these charges and their related tax rate implications, the Company generated non-GAAP net income of $12.8 million, or 18 cents per diluted share, for the first three quarters of fiscal 2007. A reconciliation of the GAAP to non-GAAP financial measures above is contained at the end of this press release.
Financial Outlook
Assuming a flat to low-single digit increase in total same-store sales for the fourth quarter, PacSun expects fourth quarter earnings in the range of 26 cents to 29 cents per diluted share. This earnings range does not include any potential lease termination or other disposition-related charges that may occur associated with the demo or One Thousand Steps businesses at any time in the future.
As a result of the PacSun's previously announced plans to explore strategic alternatives for its demo stores and to close its One Thousand Steps stores, and the uncertainty regarding the financial impact those plans may produce, the Company is also providing non-GAAP earnings guidance associated with its core PacSun business on a stand-alone basis. Accordingly, assuming a low-single digit increase in PacSun same-store sales for the fourth quarter, PacSun is comfortable with fourth quarter non-GAAP earnings, excluding demo and One Thousand Steps and any associated potential lease termination or other disposition-related charges that may occur at any time in the future, in the range of 32 cents to 35 cents per diluted share.
PACIFIC SUNWEAR OF CALIFORNIA, INC.SUMMARY STATEMENTS OF INCOME(unaudited, in thousands except share and per share data)
Third Quarter Ended First Three Quarters Ended------------------------ ------------------------NOV. 3, OCT. 28, NOV. 3, OCT. 28,2007 2006 2007 2006----------- ----------- ----------- -----------Net sales $ 373,148 $ 375,427 $ 1,037,951 $ 988,996Gross margin 111,099 106,342 284,988 301,049Selling, G&Aexpenses 148,849 92,562 350,491 255,355----------- ----------- ----------- -----------Operating (loss)/income (37,750) 13,780 (65,503) 45,694Interest income,net 652 709 2,162 3,594----------- ----------- ----------- -----------(Loss)/Incomebefore taxes (37,098) 14,489 (63,341) 49,288Income tax(benefit)/expense (17,061) 5,506 (27,744) 18,729----------- ----------- ----------- -----------Net (loss)/income $ (20,037) $ 8,983 $ (35,597) $ 30,559=========== =========== =========== ===========Net (loss)/incomeper share, basic $ (0.29) $ 0.13 $ (0.51) $ 0.43=========== =========== =========== ===========Net (loss)/incomeper share,diluted $ (0.29) $ 0.13 $ (0.51) $ 0.43=========== =========== =========== ===========Wtd avg sharesoutstanding,basic 69,765,113 69,344,402 69,678,733 71,274,716=========== =========== =========== ===========Wtd avg sharesoutstanding,diluted 69,765,113 69,561,420 69,678,733 71,657,385=========== =========== =========== ===========
