Reports GAAP net loss of $(0.11) per share for Q3
Comparable non-GAAP net loss of $(0.07) per share vs. prior year GAAP net loss of $(0.17) per share
ANAHEIM, Calif., Nov. 22, 2010 (GLOBE NEWSWIRE) -- Pacific Sunwear of California, Inc. (Nasdaq:PSUN) (the "Company") today announced that net sales for the third quarter of fiscal 2010 ended October 30, 2010, were $258 million versus net sales of $268 million for the third quarter of fiscal 2009 ended October 31, 2009. Total Company same-store sales decreased 3% during the period.
For the third quarter of fiscal 2010, the Company reported a net loss of $7 million, or $(0.11) per share, compared to a net loss of $11 million, or $(0.17) per share, for the third quarter of fiscal 2009. Results for the third quarter of fiscal 2010 reflect the continuing impact of a valuation allowance against the Company's deferred tax assets. On a comparable non-GAAP basis, using a normalized 39% income tax rate, the Company's net loss for the third quarter was $4 million, or $(0.07) per share.
"Our third quarter results were led by positive comps in our Men's business and significant improvement in the sales trending of our Women's business," said Gary H. Schoenfeld, President and Chief Executive Officer. "We are eagerly anticipating Black Friday and the kickoff of the holiday season and the prospects for further strengthening of both our Men's and Women's businesses."
Financial Outlook for the Fourth Quarter
The Company's guidance range for the fourth quarter of fiscal 2010 contemplates a GAAP net loss per share of $(0.10) to $(0.29) for the fourth quarter of fiscal 2010 which reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and a very low effective tax rate. On a non-GAAP basis, using a normalized income tax rate of approximately 37%, the Company's guidance range translates to a net loss of $(0.07) to $(0.18) per share for the fourth quarter of fiscal 2010. The forecasted fourth quarter GAAP earnings range is based on the following significant assumptions:
- Same-store sales in the range of flat to -5%;
- Gross margin rate improvement of 100 to 400 basis points versus last year's 22.6%;
- SG&A expenses in the range of $82 million to $84 million;
- Income tax expense is expected to be minimal for the quarter because the Company no longer records income tax benefits against its operating losses.
About Pacific Sunwear of California, Inc.
Pacific Sunwear of California, Inc. and its subsidiaries (collectively, the "Company") is a leading specialty retailer rooted in the action sports, fashion and music influences of the California lifestyle. The Company sells a combination of branded and proprietary casual apparel, accessories and footwear designed to appeal to teens and young adults. As of October 30, 2010, the Company operates 877 stores in 50 states and Puerto Rico. The Company's website address is .
The Pacific Sunwear of California logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2087
The Company will be hosting a conference call today at 4:30 pm Eastern time to review the results. A telephonic replay of the conference call will be available, beginning approximately two hours following the call, for one week and can be accessed in the United States/Canada at (800) 642-1687 or internationally at (706) 645-9291; passcode: 23412284. For those unable to listen to the live Web broadcast or utilize the call-in replay, an archived version will be available on the Company's investor relations website through midnight, March 9, 2011.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the accompanying table titled "Reconciliation of Selected GAAP Measures to Non-GAAP Measures" and the section following such table titled "About Non-GAAP Financial Measures."
Pacific Sunwear Safe Harbor
This press release contains "forward-looking statements" including, without limitation, the statements by Mr. Schoenfeld in the third paragraph and all statements under the heading "Financial Outlook for the Fourth Quarter." In each case, these statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company intends that these forward-looking statements be subject to the safe harbors created thereby. These statements are not historical facts and involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Uncertainties that could adversely affect the Company's business and results include, among others, the following factors: adverse changes in economic conditions generally; adverse changes in consumer spending; changes in consumer demands and preferences; higher than expected same-store sales declines; higher than anticipated markdowns and/or higher than estimated selling, general and administrative costs; increased sourcing and product costs; currency fluctuations; competition from other retailers and uncertainties generally associated with apparel retailing; merchandising/fashion sensitivity; lower than expected sales from private label merchandise; reliance on key personnel; economic impact of natural disasters, terrorist attacks or war/threat of war; shortages of supplies and/or contractors as a result of natural disasters or terrorist acts, which could cause unexpected delays in store relocations, renovations or expansions; reliance on foreign sources of production; and other risks outlined in the Company's filings with the Securities and Exchange Commission ("SEC"), including but not limited to the Company's Annual Report on Form 10-K for the year ended January 30, 2010 and subsequent periodic reports filed with the SEC. Historical results achieved are not necessarily indicative of future prospects of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur after such statements are made. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
Forward-Looking Earnings GAAP to Non-GAAP Reconciliation:
1 The Company assumed a normalized effective income tax rate of approximately 37% against pre-tax operating losses which represents the expected effective tax rate for fiscal 2010 exclusive of any impact from valuation allowances.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated November 22, 2010 contains non-GAAP financial measures. These non-GAAP financial measures include non-GAAP net loss and non-GAAP net loss per share for the third quarter and first three quarters of fiscal 2010 and non-GAAP net loss per share guidance for the fourth quarter of fiscal 2010. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. The Company computes non-GAAP financial measures using the same consistent method from quarter to quarter and year to year. The Company may consider whether other significant items that arise in the future should be excluded from the non-GAAP financial measures. The Company has excluded the following item from all of its non-GAAP financial measures:
The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's operating results primarily because they exclude amounts that are not considered part of ongoing operating results when planning and forecasting and when assessing the performance of the organization, individual operating segments or its senior management. In addition, the Company believes that non-GAAP financial information is used by analysts and others in the investment community to analyze the Company's historical results and in providing estimates of future performance and that failure to report these non-GAAP measures could result in confusion among analysts and others and a misplaced perception that the Company's results have underperformed or exceeded expectations.
CONTACT: Pacific Sunwear of California, Inc. Michael L. Henry, Chief Financial Officer (714) 414-4003