NEW YORK — Pacific Sunwear of California continued to shine brightly on Monday, as the surf and board specialty retailer reported a 83.4 percent surge in its second-quarter net income and doubled its store-opening plan for its Demo unit.
Pac Sun is now shooting to have 400 Demo stores in operation by 2007, twice the number for which it had previously planned.
For the three months ended Aug. 2, the Anaheim, Calif.-based company said earnings skyrocketed to $13.4 million, or 26 cents a diluted share, on the upper tier of its previously raised forecast and a penny above Wall Street’s consensus estimates. In last year’s quarter, PacSun’s earnings were $7.3 million, or 15 cents. Sales for the quarter were $234.4 million, an increase of 22.8 percent over sales of $190.9 million, and same-store sale rose 13.9 percent, with PacSun stores up 13.2 percent and Demo up 21.9 percent.
At PacSun stores, girls’ apparel has been the merchandising focus recently and the strategy obviously is working. As more young women shop for apparel at PacSun, they are fueling sales in footwear and accessories. By division, while men’s comps grew 3 percent, the women’s business swelled in the high teens. Girls now account for 48 percent of apparel sales and the company said it expects the number to reach 50 percent by year’s end.
“I am obviously very pleased with the performance as we continue to make great progress in our operation,” Greg Weaver, chairman and chief executive, said on an afternoon conference call. “Both concepts posted comp increases in all key product areas in the quarter and year-to-date.”
Weaver said on the call that the increase at Demo, which started in April 1998 and currently operates 114 stores targeting 15- to 24-year-olds, reflects its strong performance over the past year, noting comps increased 12 percent in 2002 and are now up 29 percent year-to-date in 2003. In addition, new Demo stores opened in 2002 and through the first half of 2003 are trending at $1 million in first-year sales, and the firm anticipates that sales per square foot at Demo will be about $400 in 2003. The stores feature hip-hop brands such as Phat Farm, Ecko, Sean John, JLo and Rocawear.Overall, the company is currently targeting a total of 1,300 to 1,400 stores in operation by the end of 2007, including 900 to 1,000 PacSun stores, or a 55 to 67 percent increase in total stores. It currently operates 650 PacSun stores.
For the first half, PacSun, which operates a fleet of 839 stores, doubled its income to $21.4 million, or 41 cents a diluted share, from the $10.6 million, 21 cents, it reported in the comparable period last year. Sales for the six months were $432.7 million, an increase of 22.7 percent over year-ago sales of $352.6 million, and comps increased 13.6 percent, with PacSun up 11.9 percent and Demo up 29.1 percent.
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