Pacific Sunwear of California, Inc. fourth quarter of fiscal 2006 total sales were $458.2 million, an increase of 7.8% over total sales of $424.9 million for the fourth quarter of fiscal 2005 ended January 28, 2006. Same-store sales decreased 4.3% for the comparable fourteen-week period ended February 3, 2007.
Net income for the fourth quarter of fiscal 2006 was $9.1 million, or 13 cents per diluted share, compared to $47.0 million, or 63 cents per diluted share, in the fourth quarter of fiscal 2005. Fourth quarter results for fiscal 2006 include asset impairment and inventory write-down charges of approximately $16.6 million net of tax, or $0.24 per diluted share, primarily attributable to the Company's previously announced plans to close 74 underperforming demo stores during fiscal 2007. Before the impact of these charges, net income for the fourth quarter of fiscal 2006 was $25.7 million, or $0.37 per diluted share, versus a comparable non-GAAP income of $45.2 million, or $0.60 per diluted share, for the fourth quarter of fiscal 2005.
Total sales for fiscal 2006 (53 weeks) were $1.45 billion, an increase of 4.0 percent over total sales of $1.39 billion for fiscal 2005 (52 weeks). Same-store sales decreased 4.7 percent for the comparable 53 week period ended February 3, 2007.
Net income for fiscal 2006 was $39.6 million, or $0.56 per diluted share, compared to $126.2 million, or $1.67 per diluted share, for fiscal 2005. Before the impact of the impairment charges noted above and the charge taken in the third quarter related to a severance obligation to our former CEO, net income for fiscal 2006 was $56.9 million, or $0.80 per diluted share, versus a comparable non-GAAP $117.5 million, or $1.55 per diluted share, for fiscal 2005.
Interim Chief Executive Officer Sally Frame Kasaks commented, “Although fiscal 2006 was disappointing from an earnings standpoint, we have moved aggressively to get the Company back on track and positioned for future growth. Key to this effort has been decreasing the inventory density in our stores to enable us to offer a clearer and more compelling merchandise presentation to our customers. We are also moving forward with our plans to close down 74 underperforming demo stores to improve the profitability of the division. Finally, we have introduced updated store design packages for both PacSun and demo, which are receiving encouraging initial responses.”
At the end of fiscal 2006, the Company had $51 million remaining available for future share repurchases under the $100 million share repurchase authorization approved by the Company's board of directors on May 18, 2006.
As previously announced, the Company is in the process of closing 74 underperforming demo stores. The Company will incur lease termination and severance costs during fiscal 2007 as the 74 demo stores close, but the specific amount and timing of those costs are not yet known. The earnings estimates provided below do not include the impact of such lease termination and severance charges. At this time, excluding the lease termination and severance costs, the Company is projecting earnings per diluted share for the first half of fiscal 2007 in the range of $0.23 to $0.27 based upon achieving total Company comparable store net sales in the flat to up low single digits range during that timeframe. The Company expects approximately 80% of the projected earnings result for the first half of fiscal 2007 to be generated during its second fiscal quarter. The Company intends to provide its outlook for the second half of fiscal 2007 when it reports its results for the second quarter.
PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF INCOME
(unaudited, in thousands except share and per share data)
Fourth Quarter Ended Fiscal Year Ended
------------------------ ------------------------
FEB. 3, JAN. 28, FEB. 3, JAN. 28,
2007 2006 2007 2006
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Net sales $ 458,236 $ 424,944 $ 1,447,204 $ 1,391,473
Gross margin 144,365 154,346 445,397 506,491
Selling, G&A
expenses 130,464 80,599 385,802 309,218
----------- ----------- ----------- -----------
Operating income 13,901 73,747 59,595 197,273
Interest income,
net 1,027 1,841 4,620 5,673
----------- ----------- ----------- -----------
Income before
taxes 14,928 75,588 64,215 202,946
Income tax
expense 5,865 28,579 24,594 76,734
----------- ----------- ----------- -----------
Net income $ 9,063 $ 47,009 $ 39,621 $ 126,212
=========== =========== =========== ===========
Net income per
share, basic $ 0.13 $ 0.63 $ 0.56 $ 1.69
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Net income per
share, diluted $ 0.13 $ 0.63 $ 0.56 $ 1.67
=========== =========== =========== ===========
Wtd avg shares
outstanding,
basic 69,481,032 74,085,637 70,800,912 74,758,874
=========== =========== =========== ===========
Wtd avg shares
outstanding,
diluted 69,815,699 74,846,162 71,170,181 75,713,793
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