Another teen retailer in major shakeup

A California-based teen retailer is launching a major expense reduction initiative in the wake of disappointing second quarter results.



Pacific Sunwear of California Inc. is looking to eliminate $15 million from current expenses in fiscal 2016. Approximately one-half of the savings would come through more streamlined execution in store, PacSun said, and the other half through the restructuring of operations at corporate headquarters. To that end, the company announced that Michael Kaplan has departed as senior VP and CFO. It also announced the promotion of Chris Tedford to VP and interim CFO, and Ernie Sibal to VP of real estate, construction and strategy.



PacSun is also creating a more seamless omnichannel experience, including a new POS expected to roll out in spring 2016 and the launch of customer loyalty and CRM initiatives, which have gained more than one million members in their first month.



“Shifting trends in consumer spending and shopping patterns necessitate that we further reduce operating expenses, while at the same time strengthening our customer connections through a more seamless omnichannel experience,” said Gary H. Schoenfeld, president and CEO.



PacSun’s net sales in the second quarter dropped 7% to $195.6 million from $211.7 million. Same-store sales decreased 6%, and net store count decreased by 10 stores. Key seasonal categories including shorts, swim and sandals, were down in both genders, driving the decline in sales.



Profits shone through the gloom of falling sales as a non-cash gain helped PacSun boost net earnings 11% to $8.3 million from $7.5 million in the year ago period.



Looking ahead, PacSun is forecasting a guidance range for the third quarter of fiscal 2015 with a non-GAAP net loss per diluted share of between $(0.13) and $(0.05), as well as a same-store sales decline between 3%-6% and net sales from $196 million to $203 million.