Pacific Sunwear of California will explore strategic alternatives for
its demo urban chain and close its newer One Thousand Steps shoe
boutique concept. PacSun plans to engage an investment banker to assist
in the evaluation of
demo and close One Thousand Steps as soon as is practical. The two
chains collectively generated a pre-tax operating loss of approximately
$21 million during the first nine months of the year.
Pacific Sunwear estimates that it will recognize non-cash fixed asset
impairment charges on demo stores of approximately $48 million and
inventory reserve charges for demo and One Thousand Steps aggregating
approximately $4 million in its third quarter ending November 3.
The retailer also said may incur additional charges related to
potential lease terminations, inventory liquidations, employee
retention and severance, and/or agency fees associated with the
evaluation or implementation of potential strategic alternatives.
Pacific Sunwear said the determination to take these actions resulted
from a comprehensive review and evaluation of the real estate portfolio
and profit performance of the two chains.
“We believe the best way to enhance shareholder value at this time
is to focus management's attention and capital on the core PacSun
business,” said Sally Frame Kasaks, CEO of Pacific Sunwear. “Over the
past two years, our demo team has made many efforts to improve this
business. However, as is evidenced by our demo division comp store
sales, the urban streetwear business has been very challenging. At this
time, the Board has chosen to explore strategic alternatives for this
division,''
“Regarding One Thousand Steps, we learned a great
deal from our nine-store test, and have concluded that our shareholders
are unlikely to benefit from the continued operation of this
division,'' Kasaks added.
demo,
an urban chain selling labels such as Baby Phat, Ecko and Enyce, was
launched 1998 and now operates 154 stores. One Thousand Step, a women's
shoe boutique, was launched in April 2006 and has 9 stores.
