By  on August 12, 2005

LOS ANGELES — Pacific Sunwear of California Inc. is tapping deeper into the accessories craze.

The company said Thursday that it would launch a third retail brand, One Thousand Steps, a multibrand shoe and accessories concept aimed at 18- to 24-year-olds.

The new mall-based brand will bow in the first half of 2006 at eight to 10 locations across the country, and will focus primarily on footwear, with some accessories. The company declined to give percentages for each category, but said the stores would average about 2,500 square feet.

The company declined to give sales figures, but said the goal was to eventually have 600 to 800 locations. And the first location will be in Southern California, said PacSun division president Tom Kennedy.

The Anaheim, Calif., retailer operates two retail concepts: its surf- and skate-inspired PacSun division, and the D.e.m.o. division, reflecting the influence of hip-hop culture. There are 780 PacSun stores, 91 PacSun outlet stores and 183 D.e.m.o. stores, located in the 50 states and Puerto Rico.

The company's announcement of the new brand comes on the heels of its debut last month of a new PacSun store prototype, at the Tyler Galleria in Riverside, Calif., which will be rolling out to 20 stores by the end of the year, at sizes ranging from 4,000 to 8,000 square feet.

"Managing an assortment of brands is our skill set here, and it's really an underserved market, and we think we can add value in this domain and be very successful," said chief executive officer Seth Johnson.

PacSun's consumer is between 14 and 17 years old and lives in sneakers, said Kennedy, but the new concept will address the needs of a more fashion-conscious consumer.

"It's the fashion-forward, denim-based consumer," said Kennedy. "It's very much a California sensibility, but much less skate- and surf-focused. It's about, what is someone who buys a pair of Seven [jeans] going to wear on their feet?"

Kennedy said the company would start with about 10 to 12 vendors, including Steve Madden and Kenneth Cole.

Stepping deeper into footwear and accessories is not such a big leap for the company. It already does big business in the two categories, which together account for 37 percent of the PacSun division's sales. The accessories and shoe categories were increased by 40 percent each at the recently bowed 9,000-square-foot prototype.Kennedy said One Thousand Steps is not trying to replicate the volume of an accessories company such as Claire's.

"It's not going to be shoes plus Claire's. I'm envious of their volume, but it's about [finding] the great handbags and accessories that accompany the denim [this customer is wearing] and the shoes."

The company in general has been moving toward addressing the needs of a more fashion-conscious consumer. It also has been a big push for Johnson, who came aboard as chief operating officer last November from Abercrombie & Fitch and took the helm from former ceo and now executive chairman Greg Weaver this past April.

But the launch of the new brand was the brainchild of Weaver, who has been with the company 18 years and who will continue to work on the project until its launch. His current contract has him in the office two days a week until 2007.

"It's something I've thought about for the past two to three years," said Weaver. "I wasn't looking to chase the middle-age customer. We know this demographic. We just felt that the branded shoe business is one of the few things that is relatively underserved."

Weaver also said that he is not at all concerned about cannibalization within the brands because the consumer is so different. He put the demographic sweet spot for PacSun at 15 years old, and for the new brand, at about 20.

To attract a slightly older, more trend-savvy consumer, PacSun's Kennedy said store design is essential.

"It's going to have lots of glass, lots of white and wood tones, and feel like you stepped inside a great store in Southern California versus a generic store," said Kennedy.

Meanwhile, the company said Thursday its earnings for the second quarter ended July 30 rose to $21.1 million, or 28 cents a share, from $17.5 million, or 22 cents a share, in the same period a year ago. Sales were $309.1 million, an increase of 14 percent over $272.2 million the previous year.

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