Pacific Sunwear of California (PSUN) recently reported dismal second-quarter results despite cost-cutting measures adopted by management amidst a challenging global retail environment. Both top and bottom lines continue to struggle.
The company’s quarterly net loss of $14.2 million compared with net earnings of $3.7 million reported in year-ago period. Pacific’s loss of 22 cents per share was a penny better than the Zacks Consensus Estimate, but was down significantly from earnings of 6 cents in the comparable quarter last year. Its quarterly revenue plunged 22.4% year over year to $242.8 million, following a drop of 16.3% in the first quarter of 2009.
The decline was due to the slump in demand for apparel, accessories and footwear on account of waning consumer discretionary spending and rising unemployment. Wealth destruction and reduced access to credit markets have resulted in lower discretionary spending.
Same-store sales for the quarter fell 24% compared to a 1% decline recorded in the year-ago quarter. In the first quarter of 2009, same-store sales were down 18%. Apparel same-store sales dropped 19%, whereas non-apparel same-store sales dipped 45% in the reported quarter. Same-store sales of both young men’s and juniors’ merchandise contracted 24%.
With same-store sales expected to fall in the range of high-teens to low twenties and an anticipated store asset impairment charge of about $10 million, management guided to a third-quarter loss in the range of 16 cents to 23 cents per share.
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