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NEW YORK — Pacific Sunwear of California Inc. turned in record profits for the holiday fourth quarter, meeting Wall Street’s expectations, helped by a 12 percent increase in revenues.
The retailer said in its quarterly report that in the three months ended Jan. 28, the company earned $47 million, or 63 cents a diluted share, up 15.4 percent from $40.7 million, or 54 cents, last year. Net sales rose 11.9 percent to $424.9 million, while same-store sales gained 2.2 percent.
In the year, the company earned $126.2 million, or $1.67, up from $106.9 million, or $1.38, last year. Annual sales totaled $1.39 billion, up from the prior year’s $1.23 billion, and same-stores sales increased 3.2 percent.
The Anaheim, Calif., company said in a separate statement that consolidated same-store sales in February were down 3.1 percent, because of a 4 percent decrease at PacSun stores and a 0.8 percent increase at d.e.m.o. stores. Monthly comps were up against a 10.5 percent comp-store gain from February 2005. Total sales in the month were up 7 percent to $89 million.
On a subsequent conference call, management said it is pleased with the fourth-quarter financial performance, which the company attributed to tight merchandise margins and expense controls.
But Seth Johnson, chief executive officer of Pacific Sunwear, said the retailer missed opportunities for volume growth, particularly in its girls’ divisions. As a result, Johnson said the company is focused on righting its underperforming businesses.
To drive sales, PacSun said it would make improvement to girls’ skate and surf T-shirts, footwear and fabric, fits and washes in denim.
So far in the first quarter, sales have been strong in swimwear, skirts and capris. At d.e.m.o., the company will focus on offering new brands, including Adidas, and seeing continued strength in existing brands, such as Baby Phat, XOXO and Sean John.
For its new footwear concept, One Thousand Steps, the company will open nine stores this year, starting with six stores in mid-April, including units in the Mall of America, Minneapolis; Galleria at Tyler, Riverside, Calif., and Melbourne Square, Melbourne, Fla. Three more stores will open later this year at the Garden State Plaza, Paramus, N.J.; the Northridge Mall, Northridge, Calif., and the Smith Haven Mall, on Long Island.
This story first appeared in the March 1, 2006 issue of WWD. Subscribe Today.
Pacific Sunwear is cautious about the first quarter of 2006 based on its February same-store sales results. The company is comfortable with earnings per share in the quarter of 19 to 21 cents, including a 3-cent charge related to expensing stock options.
Full-year profits are seen increasing 10 to 15 percent, the company said. Analysts’ estimates are for $1.93 in the year and 27 cents in the first quarter.
Shares of PacSun closed down 1.4 percent at $23.81 Tuesday in Nasdaq trading.