ANAHEIM, Calif. — Pacific Sunwear of California Inc. is on a roll, with robust sales growth and a plan to expand its store base by more than 50 percent in the next three years, said Greg Weaver, chairman and chief executive officer of the surf and skate retailer.
Weaver said at the annual shareholders’ meeting here on Wednesday that store numbers are expected to expand from 907 to 1,400 by 2007, bumping up sales. The retailer, comprising PacSun, PacSun Outlet and urban division Demo, surpassed $1 billion in sales last year and had an $80.2 million profit. PacSun, along with the company’s Outlet division, is projected to operate 1,000 stores by the end of 2007, Weaver said. Demo will run another 400 stores. Square footage growth is to increase by 13 to 15 percent each year for the next three years. Some 110 new stores are planned to bow in 2004.
“We’re off to an incredible start in 2004,” Weaver said. After noting that the company almost doubled its sales growth in 2003, he added that “By any measure, our plans remain highly aggressive. We will continue to grow PacSun stores, Outlet stores and Demo stores.”
Young women — especially the 15-year-old target customer — continue to be the driving force behind PacSun. PacSun’s goal for the last several years has been to evenly split merchandise between young women and men, once the dominant segment of business. In 2003, clothing for young women accounted for 47 percent of the mix — “its highest level of total sales to date,” said Weaver. “You can see we’re getting very close.”
Nodding to the 100 or so employees at the meeting, Weaver said, “Our employees constantly seek progress. We’re just shy of 1,000 stores, and already we’ve grown into a very dominant force in teen retailing,” he said, noting the U.S. demographic of 32 million teens with a total of $170 billion to spend. Comp stores to date have risen 12.7 percent.
Weaver also cited PacSun’s brand focus — now 67 percent of the total merchandise mix — and pointed to several new vendors the retailer began carrying this year, including DVS, Adio and Osiris. Footwear has racked up double-digit comps in the last three years, while accessories accounted for 19 percent of last year’s sales.
Urban hip-hop chain Demo continues to be the company’s growth vehicle, said Weaver. In 2003, the 16-to-24 age group bumped up comp-store sales 4 percent, and year-to-date is tracking 6 percent ahead of plan. “There is very limited competition,” said Weaver, noting that Demo’s sales per square foot topped $405 in 2003, higher than the company’s average of $363. Young women here, too, have been driving sales, making up 35 percent of total apparel sales. In response, the company is tweaking its store prototype. “We felt our stores were a little bit too urban, a little bit too masculine,” said Weaver.
Even if there’s a chance the economy could turn south, Weaver is optimistic. “Interest rates are going to go up in the next few years,” he said, noting that the indicator directly affects retail. “Our customers could care less. They have only one interest. They want to look good.”