Pacific Sunwear Posts Weak Sales

Teen clothing retailer Pacific Sunwear of California Inc., lacking a hot fashion trend to fire up its young shoppers, posted disappointing results for April on Thursday and announced the departure of its second top-level executive in recent weeks.

While many retailers were basking in higher revenues, Pacific Sunwear’s sales at stores open at least a year, a key industry indicator, fell 4.1% in the four weeks ended May 6. The company also said it expects first-quarter operating earnings of 11 cents a share, 2 cents below analysts’ expectations.

Boys and girls simply aren’t warming to the trendy retailer’s selections of shorts and pants. Analysts attributed the sluggish performance to “new product malaise”--the absence of a new hot style, such as wide-leg jeans and cargo pants, that drove sales in previous years.

The stock slumped Thursday after the company disclosed the lackluster results and the departure of Chief Operating Officer Mark Hoffman. A month ago, Pacific Sunwear’s top merchandising executive, Michael Scandiffio, resigned.

Pacific Sunwear’s stock closed Thursday at $21.20, down $3.39, or 14%, in Nasdaq trading.

Analyst Steven Richter said he was disappointed about the departure of Hoffman, who had made no obvious missteps. Hoffman is leaving to pursue other business interests, the company said.

Richter noted, however, that a new merchandising chief may be a plus for the company.

Finding just the right mix of styles and brands is crucial for Pacific Sunwear, which targets a fickle group of shoppers whose tastes are hard to peg, including surfers and skateboarders.

“I think they’re walking into a strong head wind right now in terms of the trends,” said Joe Teklits, an analyst with Ferris Baker Watts. “Woven shirts aren’t selling well for anybody. Surf and skate vendors are big into woven shirts this year, so that’s what PacSun’s carrying.”

Company officials did not return phone calls for comment.

Although many retailers have been struggling this year, Pacific Sunwear’s downbeat announcement came as a number of other retailers were releasing cheery news about April sales.

Analysts say Pacific Sunwear has been at a disadvantage with its assortment of sunny weather clothes and its emphasis on boys and young men’s clothing. Cold weather chilled sales earlier in the quarter, and the boys and young men’s market has been particularly soft.

About 65% of Pacific Sunwear’s sales are driven by males, whereas many of its competitors’ sales are evenly divided between males and females.

Denim has been the closest thing to a sales driver this year, but Pacific Sunwear is not typically a “big denim player,” Richter said. The retailer has been stocking up on denim, which could help in coming months, especially in the key back-to-school shopping season, which begins in July.

In a recorded message, Chief Financial Officer Carl Womack said footwear has recently replaced accessories as the strongest seller in Pacific Sunwear stores. The sale of girls tank tops, dresses and capri pants helped offset the weak sales in other areas, he said.

Pacific Sunwear’s total sales for the four-week period were $43.9 million, up 15.2% over the comparable period last year. Sales for the 13-week period rose 22.3% to $137.7 million, but same-store sales were down 3.3%.

The company operates 631 stores in 48 states and Puerto Rico. In addition to its 547 namesake stores, it also operates 84 d.e.m.o. stores.