PacSun loss widens in Q3 loss; to close up to 200 stores
Anaheim, Calif. -- Pacific Sunwear of California Inc. reported Wednesday that losses widened in the third quarter to $17.6 million, from $7.1 million a year earlier. The decline was due in large part to charges associated with store closures.
In a move to improve its position, the teen retailer also announced plans to close up to 200 underperforming stores over the next 14 months and said that it secured two multimillion-dollar loans. PacSun received a $60 million loan from Golden Gate Capital for two board seats and the right to buy a 20% stake in the company. It has also secured a five-year, $100 million revolver from Wells Fargo to replace an existing line.
"The combination of these transactions greatly enhances our financial and operating position, and is another critical step forward as we work to re-establish PacSun as a leading specialty retailer across the U.S.," president and CEO Gary H. Schoenfeld said in a statement.
The closures will allow PacSun to turn its full focus to the remaining 550 to 600 store locations. PacSun has agreed with landlords to buy out about 75 leases for a combined $13 million, and has negotiated short-term extensions for about 50. Leases for 115 stores are set to expire at the end of 2012.
Revenue declined in the period to $242 million from $257.9 million last year, beating Wall Street’s expected $233.2 million in sales. Same-store sales fell 3%.