Pacific Sunwear of California's sales slid 3.7% for the third quarter ended Oct. 30, to $258 million from $268 million a year ago. Comps dipped 3%. The retailer narrowed its loss in the period to $7 million, or 11 cents a share, net loss of $11 million, or 17 cents, a year ago.
Results for the third quarter of fiscal 2010 reflect the continuing impact of a valuation allowance against the company's deferred tax assets. On a comparable non-GAAP basis, using a normalized 39% income tax rate, the company's net loss for the third quarter was $4 million, or 7 cents a share.
“Our third quarter results were led by positive comps in our Men's business and significant improvement in the sales trending of our Women's business,” said Gary H. Schoenfeld, president and chief executive officer. “We are eagerly anticipating Black Friday and the kickoff of the holiday season and the prospects for further strengthening of both our Men's and Women's businesses.”
Financial Outlook for the Fourth Quarter
The company's guidance range for the fourth quarter of fiscal 2010 contemplates a GAAP net loss per share of $(0.10) to $(0.29) for the fourth quarter of fiscal 2010 which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and a very low effective tax rate. On a non-GAAP basis, using a normalized income tax rate of approximately 37%, the dompany's guidance range translates to a net loss of 7 cents a share to 18 cents per share for the fourth quarter of fiscal 2010. The forecasted fourth quarter GAAP earnings range is based on the following significant assumptions:
- Same-store sales in the range of flat to -5%;
- Gross margin rate improvement of 100 to 400 basis points versus last year's 22.6%;
- SG&A expenses in the range of $82 million to $84 million;
- Income tax expense is expected to be minimal for the quarter because the company no longer records income tax benefits against its operating losses.
As of Oct. 30, the company operates 877 stores in 50 states and Puerto Rico.
