Weakness Prompts Pacific Sunwear and Zumiez to Cut Earnings Outlooks

Apparel comps were up 1% and accounted for approximately 86% of total comp sales. Junior's apparel comps were up 5% driven by strength in tops and Bullhead denim. Young Men's apparel comps were down 3%. Accessory comps were down 41% and accounted for approximately 10% of comp store sales. Transactions were up mid single-digits and the average sale per comp store was down mid-teens.

During October, the company experienced negative same-store sales in all regions with the exception of the Midwest, where results were flat. Sales continued to be weakest in California, the desert Southwest, the Northwest, and the Rocky Mountain Great Plains regions.

The company now expects to report a third quarter net loss of approximately 7 to 8 cents per share, including a 6 cents per share non-cash goodwill impairment charge and a 3 cents per share negative impact due to a change in the company's estimated effective income tax rate.

When it announced September results, PacSun said that as a result of increased markdown activity, it expected fiscal 2008 third quarter earnings to be at the low end of its previously announced earnings guidance range of break even results to 5 cents per share.
Total PacSun sales for the Q3 were $323.6 million, a decrease of 5% from $341.8 million last year. PacSun same store sales decreased 7% during the same period.

Zumiez posted another monthly comps decline, its second in a row after a 9.0% decline in September, that led the company to cut its earnings guidance for the year. October comparable store sales dropped 13.1% as net sales for the month increased only 1.2% to $25.0 million from $24.7 million last year.

Zumiez now expects full year earnings per share in the range of 52 cents to 27 cents, well below an earlier estimate of 80 cents to 82 cents per share. Zumiez also lowered its Q4 comparable store sales guidance from a low-single-digits decrease to a mid-teens decline from the fiscal 2007 fourth quarter.

For the fiscal third quarter, comparable store sales declined 5.8%. The company expects to report diluted earnings per share in the range of 22 cents to 23 cents per share for Q3, versus diluted earnings per share of 28 cents in the third quarter last year.

The comp drop in October compares with a comparable store sales increase of 5.1% in the year ago period. Footwear comped positive for the month, but men's and juniors apparel, accessories, hard goods, and boy's apparel were all down. As was the trend in September, stores west of Texas saw comparable store sale declines in the negative mid-teen range. These stores make up about 55% of the comparable store base.

The Buckle, Inc. saw October comps jump 14.5%. Net sales for the month increased 20.7% to $60.3 million from $50.0 million last year. Men’s sales increased 16.5%, while women’s sales jumped 25%. Within the men's and women's categories combined, accessories sales for the fiscal month increased approximately 35% in comparison to the prior-year fiscal October, while footwear sales increased approximately 17%.