Pacific Sunwear Plans 74 Store Closings

Chaney noted that Pacific Sunwear expanded 38 of its most productive stores during the year, which resulted in an increase in square footage of 10% for the full year. During 2007 the company is planning "low-single-digit square footage growth as we prioritize reinvestment in our existing business as opposed to opening new stores in tertiary markets," Chaney said.

The plan for 2007 includes opening approximately 15 to 20 new PacSun stores in a new format and three new Demo stores in the new design for that chain, plus expanding or relocating 20 of the company's most productive PacSun stores to larger locations. The company will also expand five of its Demo stores and refresh 50 PacSun and 15 Demo locations.

During a conference call, interim CEO Sally Frame Kasaks commented that although fiscal 2006 "was disappointing from an earnings standpoint," the company has moved aggressively to get back on track and positioned for future growth. A key to this effort has been decreasing the inventory density in Pacific Sunwear's stores, she said, and the company also has introduced updated store design packages for both its PacSun and Demo formats.

The company's net income for the fourth quarter ended Feb. 3 plunged to $9.1 million, or 13 cents per diluted share, compared to $47 million (63 cents a share) in the fourth quarter of fiscal 2005, although this year's quarterly results included a one-time charge of 16.6 million net of tax associated with the closing of the 74 stores. Fourth-quarter total sales increased 7.8% to $458.2 million on a year-to-year basis, but same-store sales decreased 4.3% versus the comparable period last year.

For the full year, net income dropped to $39.6 million, or 56 cents per diluted share, compared to $126.2 million and $1.67 per share, for fiscal 2005. The same one-time charge dragged down the yearly income, which would have worked out to $56.9 million, or 80 cents per share, without the charge.

In addition to the PacSun and Demo concepts, Pacific Sunwear operates stores under the names PacSun Outlets and One Thousand Steps. Its latest store count shows 843 PacSun locations, 116 PacSun Outlet stores, 225 Demo locatins and nine of the One Thousand Steps stores.