Pacific Sunwear of California, Inc., which has struggled profusely thus far in the fiscal 2009, outperformed most analysts estimates for the third quarter but warned investors that Holiday 2009 would be weaker than originally predicted.

In a conference call with analysts, President and CEO Gary Schoenfeld said strength from the Young Men’s business has driven sales during the first 11 weeks of the quarter, but a “precipitous decline” across both genders during the last two weeks and into the fourth quarter had stymied optimistic expectations.

“We have seen a dramatic fall-off over the past four weeks that has left us little choice but to lower internal expectations (for the) Holiday,” Schoenfeld said.

Additionally, Schoenfeld confirmed that PacSun had cut five key leadership positions within the company and is currently seeking new candidates for replacements. In the near future, PacSun will be hiring the positions of GMM, Head of Sales, Chief Marketing Officer, SVP of Operations and VP of Merchandise Planning and Allocation as management puts into motion new key initiatives designed to resuscitate business.

Among other initiatives, Schoenfeld said PacSun would continue its focus on tees while building its new footwear business. Likewise, PacSun will broaden its outerwear and layering selection and its swim business as it seeks to regain customers. Overall, Schoenfeld said PacSun would move towards a more “thoughtful localized store assignment and allocation” process in the coming days as it pursues a deeper understanding of its consumer. “Simply put, we are missing sales, hurting our margins and damaging customer experience by having had too much of a ‘one-size-fits-all’ approach to merchandising,” said Schoenfeld. “This will absolutely be a key initiative for us to implement in 2010… we will include the migration away from value stores as distinct store groupings within PacSun…”

Regarding outlook, management noted that PacSun was “clearly off to a slow start” after posting a comp decline of 17% over the first 11 weeks of the quarter and a run rate that dropped 10 points in the following weeks. Assuming same store sales decline low twenties for the quarter, management said it expects to report a loss of 28 cents to 35 cents per share with SG&A expenses to be in the mid-$90 million range.