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Pacific Sunwear Profit Soars 54%

November 11, 2003|Abigail Goldman | Times Staff Writer

Pacific Sunwear of California Inc. said Monday that net income rose 54% in its fiscal third quarter as teens snapped up embroidered jeans, action footwear and Western-style shirts for their fall wardrobes.

The Anaheim-based company, which operates more than 860 PacSun and d.e.m.o. stores, said it earned $24.5 million, or 31 cents a share, for the period ended Nov. 1, up from $15.9 million, or 21 cents, a year earlier.

Despite warmer-than-usual temperatures in October that impinged on sales, total revenue for the fiscal quarter rose 23% to $281.3 million, up from $228.2 million last year.

"There may have been some people who looked at the October numbers and started to get a bit nervous, but the issue clearly was weather," said Adrienne Tennant, an analyst with Wedbush Morgan Securities in Los Angeles who has a "buy" rating on the stock. "The company sounds very confident about their ability to achieve in the fourth quarter and the momentum is still on their side."

For the quarter, sales in stores open at least a year gained 14%, led by girls' clothes and accessories, which grew more than 20% compared with the same period last year, company executives said during a conference call after the market closed. Boys' items in stores open at least a year were up in the "mid-single digits," the company said, according to a transcript of the call by CCBN StreetEvents.

Same-store sales at the company's PacSun stores rose 13.2% for the quarter. Sales at d.e.m.o., the company's newer, urban-themed chain, were up 20%.

Same-store sales, or sales at stores open at least a year, are a key measure of a retailer's health because the figure excludes new and closed stores, which can skew results.

The company, which reiterated a positive outlook for this year's holiday season, also said it was raising next fiscal year's growth targets.

The company's target for growth next year in earnings per share is now 20%. The target for growth in the operating margin was raised to 13%.

Pacific Sunwear said it would open 13 PacSun stores and one PacSun outlet store in its fiscal fourth quarter. The company plans to open 100 stores next fiscal year. By 2007, executives said, the company expects to operate 1,400 stores -- 1,000 PacSun sites and 400 d.e.m.o. outlets.

Shares of PacSun, which announced its results after the market closed, fell 58 cents to $21.60 on Nasdaq. Shares reached as high as $22.30 in after-hours trading.

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