PacSun posts Jan sales results, restructuring demo Real Estate Portfolio
07 Feb '07
2 min read
Pacific Sunwear of California Inc announced plans to close 74 underperforming demo stores. The Company also reported its sales for the month of January 2007 and updated its financial outlook for the fourth quarter of fiscal 2006.
Restructuring demo Real Estate Portfolio: The Company announced that it intends to close 74 underperforming demo stores that have not met the Company's financial operating criteria.
"We have conducted an extensive review of our demo division with the objective of improving the profitability of this business," commented Sally Frame Kasaks, Interim Chief Executive Officer of Pacific Sunwear.
"We believe that demo remains a viable concept. However, we have determined that 74 stores, which in total generated a pre-tax operating loss of approximately $9 million in the 2006 fiscal year, are not performing satisfactorily for a variety of reasons, including mall demographics, store layouts and store economics."
"Exiting the stores now will allow us to focus our efforts on our better performing locations which we believe will improve our future financial results. As we make this transition, the demo management team will continue to refine the new demo store prototype with plans to convert approximately 20-25 of the remaining demo stores into this new format during fiscal 2007," Kasaks concluded.
As a result of this action, the Company expects to record a pre-tax non-cash charge of approximately $25 millionto $27 million related to asset impairment and inventory write down costs in the fourth quarter of 2006.
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