Pacific Sunwear of California, Inc. saw sales for the first quarter increase 7.1% to $299.9 million from $280.0 million for the same period last year. First quarter net earnings were 16 cents per diluted share, including 3 cents related to stock option and pre-opening rent expenses. On a comparable non-GAAP basis, earnings per diluted share were 20 cents in the first quarter of 2005. Net income for the first quarter of fiscal 2006 was $11.9 million compared to $17.6 million for the first quarter of fiscal 2005. Same-store sales decreased 1.8% for the comparable thirteen-week period ended April 29, 2006.
“Although the quarter was difficult, I'm encouraged with the improvement we achieved in our sales trend in April. In April, we also successfully launched our latest retail concept, One Thousand Steps. We now have six stores open and are pleased with the initial customer response to our merchandise assortment and store design,” commented Seth Johnson, Chief Executive Officer.
Stock Repurchase Program
During the first quarter of fiscal 2006, the Company repurchased a total of 1.7 million shares of its common stock at an average price of $22.45. These repurchases occurred under the $100.0 million share repurchase authorization approved by the Company's board of directors on May 12, 2005. At the end of the first quarter, $11.7 million remained available for future repurchases.
Fiscal 2006 Outlook
Assuming a low to mid single digit comp store sales increase during the second quarter, the Company is comfortable with earnings per share estimates for the second quarter in the range of $0.26 to $0.28 per diluted share, which includes $0.03 attributable to adjustments for stock option expenses as related to FAS 123R and pre-opening rent expenses as related to FASB Staff Position 13-1, Accounting for Rental Costs Incurred during a Construction Period. For year-over-year comparison purposes, this compares to second quarter 2005 non-GAAP earnings of $0.24 per diluted share, which includes the adjustments above. For the full fiscal year 2006, the Company is comfortable with E.P.S. growth estimates of 10 to 15 percent.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF INCOME
(unaudited, in thousands except share and per share data)
First Quarter Ended
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APR. 29, APR. 30,
2006 2005
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Net sales $299,888 $279,985
Gross margin 97,282 97,350
Selling, G&A expenses 79,939 70,123
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Operating income 17,343 27,227
Interest income, net 1,795 1,086
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Income before taxes 19,138 28,313
Income tax expense 7,273 10,706
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Net income $11,865 $17,607
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Net income per share, basic $0.16 $0.23
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Net income per share, diluted $0.16 $0.23
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Wtd avg shares outstanding, basic 73,144,277 75,292,587
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Wtd avg shares outstanding, diluted 73,711,710 76,579,259
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