Pacific Sunwear of California Inc.’s third-quarter losses widened and Gary Schoenfield, president and chief executive officer, said the business suffered a “precipitous decline” over the past month that led the company to lower holiday expectations.
Longer term, the 904-door specialty chain said it was reconsidering its store base and would close as many as 150 doors.
“We have more stores than we need,” Schoenfield said on a conference call with analysts. “I don’t think the world ever needed 900 domestic PacSun stores.” The retailer expects to trim down to 750 and 800 stores within three years.
In addition to store closures, the ceo pointed to the need for a “deeper understanding” of its different customers.
“Simply put, we are missing sales, hurting our margins and damaging the customer experience by having had too much of a one-size-fits-all approach to merchandising,” Schoenfield said.
For the quarter ended Oct. 31, PacSun registered a loss of $10.9 million, or 17 cents a diluted share, compared with a loss of $2.5 million, or 4 cents, a year ago. Net sales fell 17.1 percent to $268.3 million from $323.6 million as comparable-store sales slid 18 percent. Analysts polled by Yahoo were looking for a net loss of 20 cents a share on revenues of $260.1 million.
Looking ahead, Schoenfield said that “for reasons not easily explained,” PacSun had “seen a dramatic falloff over the past four weeks that has left us little choice but to lower our internal expectations for holiday.”
Assuming comp-store sales decline by a percentage in the low 20s for the fourth-quarter, the company expects to report a loss of between 28 cents and 35 cents a share, including a noncash impairment charge.