Citing “the difficult economic environment and the company's regional exposures to the challenging retail markets of California, Florida, Nevada and Arizona,” Pacific Sunwear of California lowered its earnings outlook for the second quarter and the full year. The retailer updated its earnings guidance while reporting a net loss from continuing operations of $12 million, or 17 cents a share. Sales from continuing operations for the first quarter slid 0.4% to $266.9 million from $268.1 million a year ago. Comps declined 1%.



The loss in the quarter compared to a net loss of $0.3 million, or less than one cent per diluted share, for the first quarter of fiscal 2007. First quarter results for each period exclude the income statement impact of demo and One Thousand Steps due to their being designated as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively. First quarter results for fiscal 2008 include an after-tax asset impairment charge of $4.9 million, or $0.07 per diluted share, associated with the company's materials handling equipment in its closed Anaheim distribution center. Assuming all contingencies to closing are satisfied, the company currently expects the previously announced sale of its Anaheim distribution center to be completed by the end of fiscal 2008.



“Although our first quarter was disappointing, we successfully accomplished four meaningful initiatives that position us well going forward. We completed the liquidation of our demo business; consolidated distribution activities to into our Olathe, Kansas Distribution Center; entered into an agreement to sell our Anaheim Distribution Center, and transitioned sneakers and fashion footwear from our PacSun stores,'' commented Sally Frame Kasaks, CEO. “I am proud of the efforts undertaken by our team during this difficult period of transition. With these significant activities behind us, we are singularly focused on our core PacSun business and remain committed to our business strategy.''



Financial Outlook for Fiscal 2008



Given the difficult economic environment and the company's regional exposures to the challenging retail markets of California, Florida, Nevada and Arizona, Pacific Sunwaer of California said it is revising its outlook for the second quarter and full year of fiscal 2008. Assuming same-store sales in the range of negative three percent to flat for the second quarter of fiscal 2008, the company anticipates earnings from continuing operations of 3 to 5 cents per diluted share.



For the full year, assuming flat same-store sales for the second half of fiscal 2008, the company anticipates non-GAAP earnings from continuing operations for fiscal 2008 in the range of 59 cents to 64 cents cents per diluted share. This range excludes the previously noted asset impairment charge of 7 cents a share incurred in the first quarter of fiscal 2008 and the anticipated gain of approximately 23 cents a share from the sale of the company's closed Anaheim distribution center, which is currently expected to occur by the end of fiscal 2008. On a GAAP basis, after giving effect to the impairment charge and anticipated gain associated with the sale of the Anaheim distribution center, the company anticipates earnings from continuing operations for fiscal 2008 in the range of 75 to 80 cents per diluted share.