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NEW YORK — Teen retailer Pacific Sunwear of California Inc. reported a better-than-expected 18.7 percent increase in fourth-quarter earnings, helped by strong sales at the company’s unit that features hip-hop merchandise.
Joining other specialty retailers who are seeking to remain competitive in the retail industry, PacSun disclosed during a conference call Tuesday that it has “officially begun work on a third concept.”
Anaheim, Calif.-based Pacific Sunwear earned $40.9 million, or 54 cents a diluted share, in the three months ended Jan. 29. That compared with $34.5 million, or 43 cents, a year ago. Analysts were expecting a profit of 53 cents.
Total quarterly revenues were up 16.2 percent to $379.7 million from $326.8 million, while same-store sales grew by 5.1 percent. By division, comps rose 4.8 percent at PacSun and 7.5 percent at the company’s hip-hop business, D.e.m.o.
Regarding its new concept, Pacific Sunwear was mum on details but said it will provide more specifics later this year. Gap Inc. and American Eagle Outfitters Inc., two of Pacific Sunwear’s competitors, also are working on unnamed new concepts. Gap has said it will target women over 35 years old with 10 test stores later this year. While American Eagle has provided no details about its concept, those within the industry have said that the chain also is planning to cater to a crowd older than its core teen and young-adult consumer.
Greg Weaver, PacSun’s chairman and chief executive officer, said in a statement that the company will open “120 net new stores [which will] include 70 new PacSun stores, 10 PacSun Outlet stores, and 40 D.e.m.o. stores.”
Pacific Sunwear said it is comfortable with analysts’ current consensus estimate for earnings of 23 cents in the first quarter and current estimates for earnings growth of 15 to 20 percent in 2005. Wall Street’s earnings per share consensus estimate is $1.62 for the year.
For 2004, profits at Pacific Sunwear jumped 32.6 percent to $105.9 million, or $1.37, compared with $79.9 million, or $1.01, in 2003. Results in both the quarter and the year reflect the impact of lease accounting changes, which the company first announced on Feb. 25.
Annual revenues were $1.23 billion, up 18.1 percent from $1.04 billion in 2003. Sales per square foot improved to $374 in 2004 from $363 in 2003, with PacSun sales per square foot at $370, and D.e.m.o., at $402.
At yearend, Pacific Sunwear operated 744 PacSun stores, 84 outlets and 162 D.e.m.o. stores.
Separately, the company said total sales for the four weeks of February 2005 gained 22.7 percent to $83.1 million, while comps rose 10.5 percent.