Pacific Sunwear to close One Thousand Steps

ANAHEIM, Calif. Pacific Sunwear of California today announced that after reviewing its real estate portfolio and profit perfomance, it will explore strategic alternatives for its demo stores and close its One Thousand Steps stores.

"We believe the best way to enhance shareholder value at this time is to focus management's attention and capital on the core PacSun business. Over the past two years, our demo team has made many efforts to improve this business. However, as is evidenced by our demo division comp store sales, the urban streetwear business has been very challenging. At this time, the board has chosen to explore strategic alternatives for this division," stated Sally Frame Kasaks, ceo of Pacific Sunwear.

According to the company, the demo and One Thousand Steps stores collectively have generated a total pre-tax operating loss of approximately $21 million during the first three quarters of fiscal 2007 (excluding previously announced lease termination and asset impairment charges). As a result of the actions announced today, the company estimates that it will recognize non-cash fixed asset impairment charges on demo stores of approximately $48 million and inventory reserve charges for demo and One Thousand Steps aggregating approximately $4 million in its third quarter ending Nov. 3.