ANAHEIM, CA-Pacific Sunwear is exploring strategic alternatives for its 154-unit urban-apparel Demo chain and is closing all nine of its One Thousand Steps shoe stores. During the first three quarters of the year, the chains generated a $21-million loss.

“We believe the best way to enhance shareholder value at this time is to focus management’s attention and capital on the core PacSun business,” says Sally Frame Kasaks, the company’s chief executive, of its 837-store namesake chain. As part of its third-quarter results Pacific Sunwear will take a $48-million charge on Demo and a $4-million hit on One Thousand Steps.

Pacific Sunwear launched Demo in 1998 and One Thousand Steps in April last year. In February, management announced that it was closing 74 Demo stores and launching a new prototype to overhaul the chain. When One Thousand Steps launched, executives said that the chain could grow to up to 800 stores.

During its third quarter, which ended Aug. 4, Demo’s same-store sales fell 10.7% year over year. Through the month of September, that plunge increased to 15.4%.

Pacific Sunwear posted a $10.5-million loss during its third quarter. Without the poor performances of Demo and One Thousand Steps, management predicts the company would have $4.8 million.

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