NEW YORK — Pacific Sunwear of California said late Monday that a strong wave of sales allowed it to conclude its fourth quarter with double-digit increases in sales, earnings and even comparable-store sales.
The Anaheim, Calif.-based surf and snowboard retailer, which operates 794 stores under the PacSun and Demo nameplates, said profits rose 63.9 percent to $23.2 million, or 46 cents a diluted shares, for the three months ended Feb. 1 2 cents ahead of Wall Street’s average expectations. That compares with earnings of $14.2 million, or 28 cents, in the corresponding year-ago period.
Sales improved 27.9 percent to $265.6 million over $207.6 million with comparable-store sales improving 15.6 percent. By merchandising category at PacSun, footwear, accessories and girls’ were up in the double digits, while men’s comps were slightly positive.
The retailer also said February comps increased 14.8 percent with PacSun up 10 percent and Demo up 49 percent. Numbers came out after the market closed, but PacSun ended the day with its shares at $17.77, up 6 cents, or 0.3 percent. Its 52-week range is $10.81 to $20.11.
"We are gaining market share with the help of multiple brands and a growing girls’ business," Greg Weaver, chairman and chief executive, told investors on a conference call. "PacSun and Demo have carved out a niche in the teen retail business."
Weaver said Demo’s overall merchandising has substantially improved and it has also expanded its girls’ and accessories businesses. He noted the unit could generate $375 to $400 in sales productivity in 2003.
Growing the company’s girls’ business remains a major initiative, Weaver said, noting female customers are fueling sales in apparel, shoes and accessories, three of four product categories. Female apparel rose to 45 percent of total apparel sales by the end of 2002, up from 38 percent in 2001, and is expected to grow to 50 percent or greater this year.
Weaver said in a telephone interview last month the company has been fortunate to see both transactions and sales per transaction rising this year at a time when mall traffic is down throughout the country.
"The bottom line is you cannot just put stuff out there. You have to have a theme or lifestyle," Weaver said. "There are so many stores out there selling jeans and T-shirts, but we have a multiple brands driving the business and it is a lifestyle driven by sports personalities and hip-hop music that is not a Gap customer."Weaver said he believes it is PacSun’s brand diversity that creates newness is the stores each month, drawing its customers back into the stores. Top brands include Globe, Dickies and Fox.
As reported, despite depressed teen spending and slower expansion plans among many retailers, Pacific Sunwear of California said Wednesday it will increase its retail square footage by 12 percent this year. The rise doesn’t reach last year’s increase of 14 percent, but it is higher than planned, due primarily to the strength of the girls’ business at PacSun and Demo stores.
For fiscal 2003, PacSun plans to open 75 net new stores versus the 60 stores originally announced. The 75 net number comes from 87 new stores minus 12 planned store closings and will include 61 new PacSun stores, four new PacSun Outlets and 10 Demo stores. The Anaheim, Calif.-based retailer will continue its plan to relocate 30 stores to larger locations. Last year, PacSun added 73 stores and expanded or relocated 30 stores.
Looking ahead, PacSun said it is forecasting 2003 earnings per share of $1.19, including a 5 percent comp increase or better, with first-half comps up in the mid-single digits or better and the second half, up 3 to 4 percent.
For the year, income rose 80.2 percent to $49.3 million, or 99 cents, versus income in 2001 of $27.6 million, or 56 cents. Sales rose 23.6 percent to $846.4 million from $684.8 million and comps rose 9.7 percent.
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