Pacific Sunwear of California, Inc. reported that net income for the second quarter of fiscal 2005 increased 21% to $21.1 million, compared to $17.5 million for the second quarter of fiscal 2004. Total sales for the second quarter (13 weeks) ended July 30, 2005 were $309.1 million, an increase of 14% over total sales of $272.2 million for the second quarter (13 weeks) ended July 31, 2004. Earnings per diluted share increased 27 percent to 28 cents compared to 22 cents per diluted share for the second quarter of fiscal 2004. Same-store sales increased 3.2% for the comparable thirteen-week period ended July 30, 2005.

“I am very pleased with our record second quarter results,” commented Seth Johnson, chief executive officer. “Our 21% increase in net income reflects an improving sales trend and an increase in operating margin. I believe we are well positioned to achieve strong results for the balance of 2005.”

The company's second quarter results include a correction to the company's accounting for its PacBucks promotional program. In prior years, the full cost of promotional coupons issued in July was charged in the August redemption period. In 2005, the company has recognized a portion of the revenue reduction in July, and 2004 has been restated to reflect this correction. The accounting correction has reduced 2004 second quarter earnings per share by 2.4 cents. The impact of PacBucks on earnings per share for the second quarter of 2005 was 2.7 cents. In the absence of the PacBucks impact, 2005 second quarter earnings per share would have been 30 cents per diluted share. Third quarter earnings per share in each year will increase by the same amounts, with total year earnings unaffected. A more detailed description of this accounting correction is described later in this release.

Net income for the first half of fiscal 2005 increased 19% to $38.7 million, compared to $32.4 million for the first half of fiscal 2004. Earnings per diluted share increased 24% to 51 cents compared to 41 cents per diluted share for the first half of fiscal 2004. Total sales for the first half (twenty-six weeks) of fiscal 2005 were $589.0 million, an increase of 14% over total sales of $517.7 million for the first half (twenty-six weeks) of fiscal 2004. Same-store sales increased 3.1% for the comparable twenty-six week period ended July 30, 2005.

Corrections to PacBucks Accounting

Customers earn PacBucks by purchasing a specified dollar amount of merchandise during an issuance period. PacBucks can then be redeemed as a discount on a future sales transaction during a specified period (typically within two to four weeks), in conjunction with the purchase of an additional specified amount of merchandise.

The company has historically issued PacBucks at three separate times during the year (spring, back-to-school, and holiday). The issuance and redemption periods relating to PacBucks are typically contained within a given quarterly reporting period. As a result, the company has historically recorded the full impact of actual PacBuck redemptions as a reduction to net sales in the quarter redeemed. The company has determined that this accounting is correct for two of the three issuance periods. However, for the back to school quarter, PacBucks issued in the month of July (second quarter) are redeemed in August (third quarter). This results in a reduction in sales and net income for the second quarter of 2004 with a corresponding increase in net sales and income for the third quarter of 2004. There will be no impact on annual earnings in fiscal 2004.

The impact of PacBucks on the company's consolidated statements of income for the second quarter of fiscal 2005 resulted in a reduction of net sales of approximately $3.2 million, net income of approximately $2.0 million, and earnings per share of approximately 2.7 cents. Results in the third quarter of 2005 will be increased by the same amounts.

The impact of the corrections on the company's consolidated statements of income for the second quarter of fiscal 2004 resulted in a reduction of net sales of approximately $3.0 million, net income of approximately $1.9 million, and earnings per share of 2.4 cents.

The impact of the corrections on the company's consolidated statements of income for the third quarter of fiscal 2004 resulted in equally offsetting increases to net sales of approximately $3.0 million, net income of approximately $1.9 million, and earnings per share of 2.4 cents. There is no net impact to full year fiscal 2004 net sales, net income or earnings per share as a result of these corrections.

The impact of the corrections on the company's consolidated balance sheet at July 31, 2004 resulted in an increase in current liabilities of approximately $1.9 million with a corresponding decrease in retained earnings. Total cash flows from operations for the first half of fiscal 2004 are unaffected by this correction.

The company will file the corrections to its fiscal 2004 interim financial statements in its quarterly reports on Form 10-Q for the quarter ended July 30, 2005 and a contemporaneous Form 10-Q/A for the quarter ended October 30, 2004.

Stock Repurchase Program

During the second fiscal quarter of 2005, the company purchased a total of 907,500 shares of its common stock at an average price of $22.01. These purchases completed a previously authorized $125.0 million stock repurchase program and commenced repurchases under a new $100.0 million repurchase authorization approved by the company's board of directors on May 12, 2005, leaving $95.5 million available for future repurchases.

               PACIFIC SUNWEAR OF CALIFORNIA, INC.
                      SUMMARY STATEMENT OF INCOME
                              (unaudited)
           (in $ thousands, except share and per share data)


                   Second Quarter Ended          First Half Ended
                  ------------------------  ------------------------
                    JUL. 30,     JUL. 31,      JUL. 30,     JUL. 31, 
                     2005          2004          2005         2004

 Net sales        $   309,064  $   272,164  $   589,049  $   517,665
 Gross margin         110,357       94,639      207,707      180,844
 Selling, G&A
  expenses             77,592       66,865      147,714      129,457
                  -----------  -----------  -----------  -----------
 Operating income      32,765       27,774       59,993       51,387
 Interest income,
   net                  1,180          316        2,265          773
                  -----------  -----------  -----------  -----------
 Income before
  taxes                12,833       10,623       23,539       19,724

 Income tax
  expense              12,833       10,623       23,539       19,724
                  -----------  -----------  -----------  -----------
 Net income       $    21,112  $    17,467  $    38,719  $    32,436
                  ===========  ===========  ===========  ===========
 Net income per
  share, basic    $     0.28   $      0.23  $      0.51	 $      0.42
                  ===========  ===========  ===========  ===========
 Net income per
  share, diluted  $     0.28   $      0.22  $      0.51  $      0.41
                  ===========  ===========  ===========  ===========