TEENS PROPEL PACSUN, BUCKLE IN QUARTER

Byline: Jennifer Weitzman

NEW YORK — To judge by a number of earnings reports issued Tuesday, youth-oriented specialty retailers are riding out the choppy economic waves, using the consumer’s need to look good for ballast.
Teens, constantly hungering for fashion, while often oblivious to the dollars-and-cents concerns of their parents, are helping to fuel the financial results of those retailers who deliver the right fashions.
And as proof that teens are out spending, Pacific Sunwear of California and The Buckle turned in double-digit gains in fourth-quarter sales and profits.
Deutsche Banc Alex.Brown’s Marcia Aaron said teen-focused retailers’ earnings per share are projected to tally ahead 9 percent for the fourth quarter, compared to an 8 percent decline for the overall apparel specialty group.
“That segment is one of the most robust of retail in this difficult economic time,” Aaron said. “They tend to be less influenced by what is happening in the overall economy, they don’t watch the news as much as their parents do, and they spend aggressively as well.”
Tucker Anthony’s Steven Richter agreed: “Kids love to shop, and they spend all of their money on music or clothing.” He said as long as they remain employed and their parents maintain allowances, the teen area should remain vibrant. It certainly held its own in the fourth quarter.
Pacific Sunwear said its net income increased 20 percent, to $14 million, or 43 cents a share, for the three months ended Feb. 4, beating Wall Street’s estimates by a penny. That compares to income of $11.7 million, or 36 cents, in last year’s fourth quarter. Sales improved 38.4 percent, to $181.2 million from $130.9 million, while same-store sales increased 5.2 percent.
Greg Weaver, chairman and chief executive, said on a conference call that the company saw strength in accessories, juniors and footwear offset by disappointments in boys’ pants.
During the year, the firm opened 139 new stores and grew square footage by 41 percent. In the current year, it plans to open 125 new stores, bringing its unit total to 714.
Weaver said that, while he is bullish about spring merchandise, the rainy weather out West and the snow in the East hadn’t aided spring selling. He said that the expected transition into spring goods didn’t take place in February, when comps were down 1.1 percent.
U.S. Bancorp Piper Jaffray said in research notes that it is very encouraged by the turnaround in sales trends at PacSun, driven by a focused effort to provide trend-right product to its target customer. In addition, Jaffray expects that the brand momentum will continue to build during the spring season, historically the company’s strongest selling period, helped by its sponsorship of ESPN’s Winter X games in March.
Tucker Anthony’s Richter said he is upbeat for PacSun in 2001 as its competitors like Old Navy and American Eagle Outfitter’s move away from the board lifestyle. “Fewer people are playing in that sandbox, and that is positive for Pacific Sunwear, which caters to that niche,” he said.
In contrast to the more narrowly focused PacSun, The Buckle, which markets a wide selection of brand-name casual apparel, mostly denim oriented, said net income rose 12.1 percent, to $14.6 million, or 68 cents a share, for the three months ended Feb. 3. That compares with $13 million, or 58 cents, in the year-ago period. Sales increased 13.5 percent, to $123.5 million from $108.8 million. However, comparable-store sales were down 1.9 percent.
Karen Rhoads, chief financial officer, said positive results could be attributed to a tight expense and inventory controls, the latter limiting markdown exposure.
She said denim was up moderately, 6.2 percent in women’s and 6.6 percent in men’s. Lucky, Silver and its own private label products — BKE for men and bkle for women — did well.
For the year, The Kearney, Neb.-based chain reported profits were down 7.6 percent, to $34.5 million, or $1.63, compared to $37.4 million, or $1.64, in the year-ago period. Sales rose 4.7 percent, to $393.2 million, compared to $375.5 million, and comparable-store sales were down 6.1 percent.